There are various reports going around the internet today that game-streaming upstart OnLive has laid off its entire staff as of Friday, and that it’s shutting down operations. Reports say that the company might restructure itself and return in a new form, but that the current service won’t be around much longer.

Mashable broke the original story, stating that an inside source on the matter revealed that OnLive held a recent company wide meeting where everyone was fire. They contacted OnLive for clarification, and according to a statement by OnLive’s director of corporate communications Brian Jaquet, “no comment on the news other than to say, the OnLive service is not shutting down.” In contrast, the CEO of of InXile Entertainment tweeted the following today:

Fargo posted the followup tweet below:

In addition, he has released this email from an anonymous employee at the company.

“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.

It has been an absolute pleasure working with you and I’m sure our path with cross again.”

Update: Kotaku is now reporting that an inside source has told them that OnLive is indeed in serious financial trouble. The source reveals that a meeting did in fact take place where layoffs were made, the details of which are now being confirmed by GamePolitics. In addition, the source tells Kotaku that the company is in the process of filing for a form of bankruptcy called Assignment for the Benefit of Creditors or ABC, in order to protect itself from creditors.

Engadget has also gotten word from a source that the company is being bought out by an unknown third party, and that only a small number of current OnLive employees will remain. Things so far are not looking good for the company, but the service will continue to run as normal for the time being.

This story is developing and we will bring you more information as it comes in.

Source: Mashable, Twitter

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[Managing Editor] I love video games and have been playing since the SNES days. My favorite titles include Metroid II, BioShock, Resident Evil 4 and Left 4 Dead. I'm an avid internet junkie and gifted in the ways of computers, but don't ask me to fix yours. Also a big fan of indie movies and anime.