OnLive Sold To OnLive And Nothing Will Change(techcrunch.com)
techcrunch.com
OnLive Sold To OnLive And Nothing Will Change
http://techcrunch.com/2012/08/19/onlive-sold-to-onlive-and-nothing-will-change-heartbreaking-transition-notwithstanding/
13 comments
Why was it in a dire financial situation if it had millions of subscribers?
I can't find any descriptions of the cause of the crap finances, especially with millions of subscribers. A likely scenario seems possible: their financiers/vcs decided they didn't like the direction the company was taking/unhappy with growth and called in their loans and forced everyone out.
Everyone, except the vcs, takes a haircut.
(Was there a more straightforward reason?)
I can't find any descriptions of the cause of the crap finances, especially with millions of subscribers. A likely scenario seems possible: their financiers/vcs decided they didn't like the direction the company was taking/unhappy with growth and called in their loans and forced everyone out.
Everyone, except the vcs, takes a haircut.
(Was there a more straightforward reason?)
> Why was it in a dire financial situation if it had millions of subscribers?
I've said it from the very first beginning (and got flamed for it), but IMO the business case for cloud gaming is simply very weak. If there is one at all. It requires highly specialized data centers everywhere around the world to work, and to cover the expenses you need to charge people as much or more as they would have to simply buy the hardware and games directly, and have a better game experience.
Hardware is getting cheaper and more powerful all the time, so you have to wonder why anyone should be surprised building data centers everywhere in the hope that people will pay to use them to play games, is not a very solid way to make money.
I've said it from the very first beginning (and got flamed for it), but IMO the business case for cloud gaming is simply very weak. If there is one at all. It requires highly specialized data centers everywhere around the world to work, and to cover the expenses you need to charge people as much or more as they would have to simply buy the hardware and games directly, and have a better game experience.
Hardware is getting cheaper and more powerful all the time, so you have to wonder why anyone should be surprised building data centers everywhere in the hope that people will pay to use them to play games, is not a very solid way to make money.
There was a rumor about 8,000 servers with only 1,600 simultaneous users; in other words an out-of-control burn rate.
That rumor was reportedly a rhetorical question asked by Perlman during the last company meeting. Anybody know why they didn't use a flexible virtual server solution like Amazon EC2?
"There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it," Perlman told employees. Those servers, he said, came with lengthy contracts -- contracts that tied OnLive's capital up in maintaining servers that few (if any) users were actually using. "If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?"
-- http://www.joystiq.com/2012/08/18/documenting-the-death-of-o...
"There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it," Perlman told employees. Those servers, he said, came with lengthy contracts -- contracts that tied OnLive's capital up in maintaining servers that few (if any) users were actually using. "If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?"
-- http://www.joystiq.com/2012/08/18/documenting-the-death-of-o...
As the other guys here have mentioned, they basically need CDN-level latency virtually everywhere for OnLive to properly work and while Amazon does have a CDN (Cloud Front), their normal datacenters only have a few regions within the United States (which aren't close to any major metropolitan hubs (except maybe DC)).
The other big thing is that GPUs have very limited scheduling (i.e. no pre-emptive multitasking), so it's virtually impossible to virtualize into multiple VMs efficiently. So when you get a GPU machine you end up with isolated hardware which doesn't share the same economics as other Amazon solutions. As GPGPU become more popular, this should, however, improve.
The other big thing is that GPUs have very limited scheduling (i.e. no pre-emptive multitasking), so it's virtually impossible to virtualize into multiple VMs efficiently. So when you get a GPU machine you end up with isolated hardware which doesn't share the same economics as other Amazon solutions. As GPGPU become more popular, this should, however, improve.
You don't need preemptive multitasking for a known set of games, though; context switching can occur at frame boundaries (or even finer-grained than that, the GPU just has to go idle in some sense). It's necessary for GPGPU because you may have one kernel that runs for 10 minutes, but that's not the case with graphics apps (especially not a known set).
I also question the need for one VM per client. There's a very small set of inputs (input devices from the client) and a lot of static output (rendered frame). Why not share the same VM for a set of games that share the same GPU?
I also question the need for one VM per client. There's a very small set of inputs (input devices from the client) and a lot of static output (rendered frame). Why not share the same VM for a set of games that share the same GPU?
I have no inside knowledge into OnLive, but you're correct, you could certainly context switch for games. I would assume that the limiting factor would likely be texture bandwidth if you were switching between too many different scenes (on the same or multiple VMs). It might be that some of OnLive's IP is smartly managing resources in n->1 VM->GPU configurations (and maybe why games IIRC require some adaptation).
There are EC2 instances with beefy consumer graphics cards?
(How do the GPU clusters even work? And, at $2 it seems way more expensive.)
(How do the GPU clusters even work? And, at $2 it seems way more expensive.)
Kinda... there are GPU instances, but they are targetted towards GPU cluster computing for HPC applications. I suspect that GPU clusters work largely the same way that generic/CPU clusters work. You have a cluster manager that dishes jobs out to the worker nodes. The common HPC job scheduler that we use (Torque/PBS) includes support for scheduling jobs that require GPU access. (I assume SGE does as well).
Cluster GPU Quadruple Extra Large Instance
22 GB of memory
33.5 EC2 Compute Units (2 x Intel Xeon X5570, quad-core “Nehalem” architecture)
2 x NVIDIA Tesla “Fermi” M2050 GPUs
1690 GB of instance storage
64-bit platform
I/O Performance: Very High (10 Gigabit Ethernet)
EBS-Optimized Available: No*
API name: cg1.4xlargeI suspect EC2 is not good for games, since the only GPU they offer is pretty high-end. Also, I think OnLive has more data centers than EC2 to reduce latency.
1. Seems a bit strange asking that question AFTER you spend the money. Surely you should ask it before you spend the money.
2. Worst case, at the very least you sell your excess capacity as cloud computing resources so your servers aren't sitting there doing absolutely nothing.
2. Worst case, at the very least you sell your excess capacity as cloud computing resources so your servers aren't sitting there doing absolutely nothing.
Millions of paid subscribers or millions of (mostly free) accounts? I suspect the latter is closer to the truth.
HN is focusing far too much on the employee stock options. Once any company gets into a "dire financial situation", the options are already completely worthless.
The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.
The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.
How exactly does screwing the employees out of stock options help the company not shut down? Outstanding stock options have zero effect on a company's profitability/burn rate.
In any event, OnLive might as well just shut down anyway. It has completely poisoned its name and nobody worth a damn would go work there after this stunt. And it's far too ambitious a project to have any chance to thrive with B-level engineering talent working on it.
In any event, OnLive might as well just shut down anyway. It has completely poisoned its name and nobody worth a damn would go work there after this stunt. And it's far too ambitious a project to have any chance to thrive with B-level engineering talent working on it.
They're going to give stock options to former employees in exchange for consulting work? Stock options similar to the ones the just forcefully discarded from said employees?
I'd be camping out to take them up on that offer!
I'd be camping out to take them up on that offer!
if that is true, that's just a mess. They would not have any product without them.
I really wonder how you can face your fired employes and tell them that all their stocks are gone but that they can do some consulting do get those back.
I really wonder how you can face your fired employes and tell them that all their stocks are gone but that they can do some consulting do get those back.
Options in the old company would have been worth even less given the preference overhang from existing investors! The new company is actually good news for employees as a clean cap table and a reasonable (lower) valuation gives employees a realistic chance that their options will ever be "in the money."
The old OnLive was poison.
The old OnLive was poison.
> and that rumors of Steve Perlman cashing out of the old company were not true.
Gee techcrunch, I wonder who started those rumors?
Gee techcrunch, I wonder who started those rumors?
> All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party.
What is the name of this assignee? They seem very motivated to not state that piece of information, or how much he was paid by the OnLive Mk II company for these assets.
What is the name of this assignee? They seem very motivated to not state that piece of information, or how much he was paid by the OnLive Mk II company for these assets.
One of the commenters on http://www.joystiq.com/2012/08/18/documenting-the-death-of-o... claims to be an employee, and names Microsoft as the assignee:
> We start cutting corners and being a bit more conservative, and then finally Sony comes to our rescue. But when they look into how our business is being run, they see it's a mess, and pass. We're basically left screwed, but then Steve approaches Microsoft and begs them to take us. They see we're on the verge of bankruptcy and tell him they only want the top-earners and "brains" behind the operation (the 1%) and that they'll pass if he doesn't "trim the fat." So that's exactly what he does.
> We start cutting corners and being a bit more conservative, and then finally Sony comes to our rescue. But when they look into how our business is being run, they see it's a mess, and pass. We're basically left screwed, but then Steve approaches Microsoft and begs them to take us. They see we're on the verge of bankruptcy and tell him they only want the top-earners and "brains" behind the operation (the 1%) and that they'll pass if he doesn't "trim the fat." So that's exactly what he does.
From the press release quoted in the article:
"An affiliate of Lauder Partners was the first investor in the newly-structured company..."
http://www.lauderpartners.com/
Edit: Ah, I just realized that isn't exactly the answer to your question, but may be relevant at least...
"An affiliate of Lauder Partners was the first investor in the newly-structured company..."
http://www.lauderpartners.com/
Edit: Ah, I just realized that isn't exactly the answer to your question, but may be relevant at least...
Actually it is Lauder Partners also invests in a Comapny called "Active Video Networks."[1]
Active Video Networks has for years been trying to do the same thing on Cable Set Top Boxes what Onlive has been doing with Games to PCs. Which is basically move all the processing to the cloud with low end thin clients in the home. In the TV Case they'd push interactive apps (via an MPEG frame over your cable infrastructure) to your cable box and basically you could get a whole interactive TV system on crappy old cable boxes.
Looks like Gary Lauder (who's the main guy at Lauder Partners) is doubling down on this strategy.
[1] http://www.activevideo.com/
Active Video Networks has for years been trying to do the same thing on Cable Set Top Boxes what Onlive has been doing with Games to PCs. Which is basically move all the processing to the cloud with low end thin clients in the home. In the TV Case they'd push interactive apps (via an MPEG frame over your cable infrastructure) to your cable box and basically you could get a whole interactive TV system on crappy old cable boxes.
Looks like Gary Lauder (who's the main guy at Lauder Partners) is doubling down on this strategy.
[1] http://www.activevideo.com/
Sooner or later, you gotta make money. Hype doesn't pay the bills (and all I heard about is hype about OnLive). There's no free lunch.
A transaction like this is sure to raise the confidence of any enterprise thinking of using the onlive desktop product. :)
If it was a pure asset transfer and not ownership. Did the investors and other share holders get burned?
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If the company is effectively bankrupt, then your equity is worth nothing. That's the risk you take when you accept shares in a company as payment.
It's more of a restructuring?
For me, the key phrase in this article is the first one: "Faced with a dire financial situation...". The nature of working for a startup where you trade current income for potentially huge future income implies a level of risk. Looking at the breathless press coverage, it's easy to imagine that most startups are a raging success. The truth is that most will be in a "dire financial situation" and have no choice but to perform some juggling if there's any chance that they'll stay in business.
It's quite possible that the owners were deliberately trying to screw the employees, but more likely is that it's a desperate move by desperate management who are trying to salvage their dream.