OnLive Denies Rumors That the Company is Shutting Down [Updated]

According to Polygon and veteran video game developer Brian Fargo, video game streaming company OnLive has fired its entire staff and the company will cease to exist as of later today:

According to e-mails forwarded to Polygon from supposedly former OnLive employees, the company will no longer exist as of today.

"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist," reads an email forwarded to Polygon. "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."

However, according to Brian Jaquet, OnLive's Director of Corporate Communications, the story is untrue. The company's Twitter feed is still posting normally and, in response to an email from MacRumors, Jaquet wrote:

We don't respond to rumors, but of course not.

[…]

I have no comment on the news other than to say the OnLive service is not shutting down.

I'm sorry I cannot be more specific.

We've followed OnLive for a while, particularly after the company demonstrated an iOS version of its streaming video game software last December. That software was supposed to deliver "console-class gaming to tablets and phones", but is still awaiting approval from Apple to join the App Store.

Earlier this year, the company released a iOS app called OnLive Desktop that used its video game streaming technology to put a full-fledged Windows client on the iPad, including a Flash and PDF-enabled web browser.

Update: Kotaku reports that the company will be filing for bankruptcy and a new company will be created from the remains of OnLive and some employees will be brought over to that organization. Others have apparently been laid off.

Update 2: OnLive has issued the following statement to MacRumors clarifying the situation:

We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive's apps and devices, as well as game, productivity and enterprise partnerships. The new company is hiring a large percentage of OnLive, Inc.'s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services.