Well, this is a weird one. The online gaming company OnLive was in pretty desperate shape and it took a rather odd course correction to try to solve it. OnLive laid off its entire staff, then sold itself to a new company that will also be called OnLive. The new OnLive was then able to hire back half of its staff immediately. So it’s all a little strange for those staff members but they still work for something called OnLive and collect their full salary. The remaining half of employees are being given offers to consult for the company (do their old jobs, presumably) in exchange for options in the company.

What it basically comes down to then is the old company dumping its stock options system and retaining most of its now-rattled employees.

What does it mean for Joe and Jane Gamer?

The company’s posted FAQ says:

Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.

Yeah, yeah, great. But it’s hard not to conclude the whole system is shaky, which in turn tosses the idea of a cloud-based gaming system into question. That’s good news for the old guard gaming arrangement of expensive consoles and $60 games in clam shell boxes.