Was OnLive defeated by a lack of users?

Reports suggest that even at peak periods, just 1,800 gamers were using the service at any one time

Over the weekend, OnLive was sold to another company and over half of its staff were laid off. At first, the news appeared shocking – after all, OnLive claimed to have around two million subscribers – but now it seems that there simply weren’t enough users at any one time.

Joystiq reports that the average peak number of concurrent users was around 1,800, suggesting that most of the two million people who had signed up for OnLive simply weren’t using it.

And OnLive’s CEO Steve Perlman suggested that this was the chief cause of the company’s financial woes, reportedly telling employees at a final meeting: “If you’ve got 8,000 servers and 1,600 users, how could we ever get cash flow positive?” Perlman said that, without any way of estimating how many users OnLive would have, the company had no choice but to purchase thousands of servers – and apparently this was a gamble that didn’t pay off.

OnLive has announced that the service will continue “as normal” during the transition to the new owner – the identity of whom is not yet known, but according to Perlman is a “very accomplished and well known venture capitalist”.

[via Joystiq]

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