OnLive Gaming Platform Flailing

W

ith online gaming being as insanely popular as it has been lately, OnLive seems to be struggling pretty hard.  And while the reasons why are seemingly obvious, it's still a bit strange that a company in that industry isn't doing so well.

It all started when the company spent a lot of money on server expansion to improve their service, but didn't have the growth in usership needed to fund said expansion. And things have been going downhill ever since.

"There's no way to exactly estimate how many servers we'd need." -- OnLive CEO Steve Perlman.

HTC reported to the Taiwan Stock Exchange last week that it suffered a $40 million loss, after OnLive fired its entire staff.  Since then, though, OnLive has been bought by an private owner, and rehired about half of the staff. OnLive has restructured in order to return some investor funds, as other large corporations like Warner Bros., Autodesk, Maverick Capital, AT&T, and British Telecom had also invested in OnLive. However, none of those companies have announced losses.

With the OnLive platform offering cloud-based gaming, it's surprising that it's not doing that well.

As for what's next for the company, it's unsure, but we don't see OnLive becoming the cloud-gaming superstar that people once thought it had the potential of becoming. Even the company's CEO, Steve Perlman, has expressed doubt, when explaining why the company initially failed:

"There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it. If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?"

Right, indeed. But one would think that a company's CEO would have a better grasp on how to handle the servers vs. users issue than just overestimating the need and overspending into failure.