OnLive acquired by Lauder Partners, but who will own the streaming video game company in the future?

onlive microsoft

OnLive is dead, long live OnLive. Or at least live a little longer than previously expected. The world’s first full cloud-based streaming video game business isn’t closing shop completely, just as corporate communications director Brain Jaquet said on Friday. Rumors that the entire OnLive staff was laid off on Friday as an anonymous investor with “substantial funding” took ownership of the company and its assets also turned out to be true though.

Who is OnLive’s new master? GamesIndustry International reported on Monday that Lauder Partners, one of the initial investors that backed OnLive during its second round of fund raising in 2009, has taken control of the company.

The news clarifies just who lost their jobs and who made the transition to the new corporate structure of OnLive in the wake of its dissolution as a private entity. Reports from Kotaku and Joystiq are corroborated by an official statement.

“Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees.”

The stock deal for former employees does not extend to OnLive’s founder and CEO Steve Perlman. “Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.”

Anonymous sources from within OnLive said that it was Perlman’s mismanagement and refusal to sell his company to interested bidders that caused it to implode this month.

Lauder Partners has invested heavily in streaming technologies over the past three years. Following its investment in OnLive in 2009, the LLC has backed local television streaming service Aereo, as well as Smart TV software makers Flingo and TrickPlay.

Lauder isn’t likely to maintain full ownership of OnLive. The transition period will entail streamlining OnLive’s business beyond mere staff cuts, establishing firm content deals like the service’s agreement with Ouya’s Boxer8, and hunting for a new buyer. OnLive competitor Gaikai was purchased by Sony earlier this year, the first shots fired in the new streaming battlefield for video game console makers. Priority one for Lauder will be polishing OnLive until it shines and selling it to the highest bidder.

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