Sony paid $380 mil for Gaikai, but OnLive sold for just $4.8 mil

New details about OnLive's spectacular implosion show that the company was sold for a paltry sum after declaring insolvency in August.

OnLive’s disintegration in August was abrupt. One day the cloud-based streaming video game service was plugging along, the next its entire staff was liquidated. As details emerged, it came out that one of the investment firms that had initially backed OnLive back in 2009, Lauder Partners, was now sole owner of the company. How much did it pay?

Lauder Partners has poured a good amount of capital into other streaming entertainment businesses, including local television provider Aereo and Smart TV software producers like TrickPlay. Streaming video game businesses cost a princely sum based on recent transactions. Sony dropped $380 million on OnLive’s competitor Gaikai in July. Lauder spent a comparatively paltry $4.8 million on OnLive.

The San Jose Mercury News acquired a letter written by Joel Weinberg, CEO of Insolvency Services Group, the company charged with handling OnLive’s liquidation of assets prior to the company’s near closure. Weinberg’s letter states that Lauder swept in at precisely the right moment to buy up what remained of OnLive.

“Had the sale to the buyer not taken place, the assignee would have been left with inadequate capital to fund the significant costs to preserve and market OnLive’s patents and other intellectual property, thus greatly reducing expected recoveries essentially to those of a forced piecemeal auction,” reads the letter. In short: Taking just a paltry sum from Laudner was better than incurring the cost of actually trying to sell OnLive’s assets.

The dire state of OnLive when it declared insolvency in August is enhanced by other figures revealed. While the company had raised as much as $40 million prior to opening for business in 2010, it had accrued nearly $19 million in debt by the time it dissolved this summer, not counting future costs for maintaining its facilities.

It was OnLive’s employees who got the rawest deal. Not only did they lose their jobs, but according to a report at The Verge, many of them had spent significant sums on shares in the company that were rendered worthless when it declared insolvency. That same report says that clients including Samsung and LG had offered to buy the company, but CEO Steve Perlman refused to sell, preventing those employees from seeing any return on their investment.

Source : digitaltrends[dot]com

38 Studios’ IP Kingdoms of Amalur up for auction. Will EA or Epic buy?

The state of Rhode Island now owns Kingdoms of Amalur and Project Copernicus and it plans to sell. Who might be interested in buying?

The disintegration of Curt Schilling’s 38 Studios, the company behind this year’s Kingdoms of Amalur: Reckoning and the cancelled MMO set in the same universe Project Copernicus, is coming to a close. Shut down in May with all employees shown the door, there are survivors emerging from the wreckage. Just today, Epic Games officially announced the opening of Impossible Games, a new studio made up of former staffers from Big Huge Games, the 38 Studios’ subsidiary responsible for Kingdoms of Amalur. With many of those imperiled talented people now in new positions, it’s time to wonder where the intellectual property developed over years by Schillings studio will go.

The current owner of the Kingdoms of Amalur, Project Copernicus, and other intellectual property created by 38 is the state of Rhode Island. The state was one of 38 Studios’ primary creditors and it was the inability to repay taxpayer-funded loans that forced the studio’s closure earlier this year. Bloomberg reported on Wednesday that the Bank of New York Mellon Trust Co. (BNY) and the Rhode Island Economic Development Corp. (RIEDC) were awarded all assets held by 38 Studios by U.S. Bankruptcy Judge Mary Walrath.

Intellectual property is the only asset of worth left at 38 Studios, and this is why BNY lobbied to gain control of it. Where 38 just dismantled, said court papers followed by both BNY and the RIEDC, “all or substantially all of the intellectual property could be irretrievably lost.” Meaning that the art, game prototypes, everything developed in association with Amalur and Copernicus could be destroyed before being preserved on RIEDC/BNY controlled servers.

The IP will now be sold off to the highest bidder to recoup the $75 million lost in loans given to Schilling’s studio.

Who’s buying? Big Huge Games was said to be working on Kingdoms of Amalur 2 pre-production when 38 Studios was shut down in May. Epic’s Mike Capps said on Thursday that Impossible Games will be working on Epic-owned intellectual property when it finishes its first project, Infinity Blade: Dungeons, later this year. Epic is slowly branching out its stable of IPs with Fortnite being the latest. Provided it could get the IP for cheap, it might pick up Kingdoms of Amalur and allow Impossible Games to finish what it started.

Amalur publishing partner Electronic Arts is also a candidate. EA Labels president Frank Gibeau said in July that his company would love to see a sequel to that game. “I think it’s unfortunate how everything worked out [for 38 Studios],” said Gibeau, “At the end of the day we saw a lot of creativity and vision in the team that Curt put together. We thought the game was terrific. It reviewed well. We built a good business there and hope there’s a sequel someday. We’d love to be a partner for that.”

Source : digitaltrends[dot]com