OnLive restructuring meant HTC lost $40 million

OnLive, whose abrupt restructuring on Friday left half of its staff jobless, has also put some of its investors in the cold.

Among them is Taiwanese cellphone manufacturer HTC Corp., which reported on Monday that it has lost $40 million in OnLive’s financial reorganization.

OnLive, a video game streaming company, has been struggling in recent months to resonate with consumers who have been slow to embrace its cloud-based games model.

HTC, in a statement, said, “Due to lack of operating cash and an inability to raise new capital, OnLive had completed asset restructuring over the weekend. HTC estimates that it will need to recognize a $40 million provision for this investment loss.”

OnLive generated headlines in 2009, when it announced its business and invited game publishers to release their titles on the cloud, using OnLive’s patented streaming technology. The company, founded by entrepreneur Steve Perlman, promised near-instant online access to any console or high-end computer game, something that seemed unthinkable at the time.

Though its technology proved robust, players were reluctant to adopt cloud gaming, preferring to stick with discs. At the same time, not all game publishers signed on. Activision Blizzard, for example, was noticeably absent.

HTC apparently was the only investor that lost money from OnLive’s metamorphosis into a leaner company. Aside from losing their jobs, former employees who had equity in the company also lost $16 million in stock, according to AllThingsD.

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