Update -- 4:30 PM: The internet rumor mill continues to crank away. According to a source quoted by Engadget, more than half of OnLive's staff was laid off today, a move that comes just as the company is being purchased by another, unnamed firm.
Kotaku reports that OnLive has filed for a "bankruptcy-like process" called Assignment for the Benefit of Creditors. This status gives financially troubled companies a level of protection from creditors.
A "reliable source" reported on by TechCrunch says OnLive’s founder and CEO Steve Perlman has found a buyer for the company who has purchased all the intellectual property of OnLive, and that the massive staff reductions are teh result of trying to reduce the company's liability. The plan is, reportedly, to keep OnLive up and running.
According to reports on the Internet, game-streaming service OnLive is shutting its doors, although OnLive itself has denied that the company is closing.
Unnamed sources told Mashable that OnLive called an "all hands meeting" this morning, at which the entire OnLive staff was fired. Brian Fargo of inXile Entertainment backs up the initial report, tweeting that he received an email from OnLive reading:
"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else’s was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service."
OnLive responded by saying that the company will continue to exist. OnLive director of corporate communications Brian Jaquet said, "no comment on the news other than to say, the OnLive service is not shutting down.”
For right now, it's hard to know exactly what's going on at OnLive, so let's keep an open-mind. Perhaps there are some layoffs. Perhaps this is some kind of internet hoax. As we get more information, we'll keep you posted.