OnLive, the company most known for its video game streaming service and its remote desktop app, is rumored to be closing down by the end of the day today, and all of its staff could be laid off as of right now.

The news comes from an email that the video game news site Polygon received from veteran video game developer Brian Fargo:

“I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. 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.”

Mashable also ran a report saying that the layoffs, if real, will affect the entire OnLive staff.

As of the time of Polygon‘s publishing, OnLive hadn’t made a comment. However, as I’m writing this post, the company’s Director of Corporate Communications Brian Jaquet has responded to the rumors by emailing Mac Rumors and saying that the service is not shutting down:

“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.”

Let’s break that down: the service itself isn’t ending, but he makes no mention about the company, the staff, or anything else. Could this mean that OnLive was purchased? Perhaps OnLive is merging with another company, one that doesn’t want its existing staff? And, for what it’s worth, the apologetic sentence at the end of the email makes it seem that something is definitely awry at OnLive HQ.

OnLive’s official Twitter feed is still churning out tweets; in fact, as I wrote this article, two more tweets popped up in its feed. However, more tweets have popped up in Fargo’s Twitter feed, as well, adding fuel to the fire. Curiously, Fargo says that OnLive has requested a “recall” on the email, suggesting that it could be a fluke – or that its end is at a later date.

Update #1: I reached out to OnLive – here’s the response:

Hey Calob, thanks for your note.

We can’t comment on rumors, but OnLive is just fine.

The exciting news is the first VIZIO Co-Stars (Google TV stream players) with the OnLive app built-in have just arrived in customer homes, and our second of three ‘Indie Giveaway Weekends’ is going on now. OnLive users can get a free copy of the award-winning games Space Pirates and Zombies and SpaceChem (more details on our blog here: blog.onlive.com).

If you are interested we will be in touch about other new products that are in the works.

Update #2: OnLive has just announced that it has been sold to another company. Here’s the official statement:

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.

We apologize that we were unable to comment on this transaction until it completed, and were limited to reporting on news related to OnLive’s businesses. Now that the transaction is complete, we are able to make this statement.

[Polygon | Mashable | Brian Fargo | Mac Rumors | OnLive | The Verge]