Update: Kotaku reports than an internal source claims the company will file an Assignment for the Benefit of Creditors in California, and will cease to exist before a new company is reformed in its place. Gamasutra reports that an affected employee has confirmed that the entire staff was laid off this morning.
The original story follows:
According to game developer Brian Fargo, an employee of cloud gaming service OnLive e-mailed him this morning with news that "by the end of the day today, OnLive as an entity will no longer exist," and that its staff has been laid off. In response, OnLive Director of Corporate Communications Brian Jaquet told PC Gamer, "I have no comment on the news other than to say the OnLive service is not shutting down."
"I'm sorry I cannot be more specific," concluded Jaquet, neither confirming nor denying that layoffs have occurred.
The OnLive Game Service opened in 2010, and now offers over 300 games which can be rendered server-side and streamed to PCs and other devices. Given that game streaming competitor Gaikai was recently acquired by Sony Computer Entertainment, Forbes speculates that a similar acquisition may be in process at OnLive, among other possibilities.