Following the report that GameStop are now gearing up for their streaming service, it seems the very popular OnLive streaming are heading in a different direction, with recent reports that the company is now filing for a form of bankruptcy.

Kotaku is reporting that the streaming service which recently was announced to be bundled with the upcoming Android-based Ouya device, is now filing for a form of bankruptcy after troubling times.

The source says that everyone at the company knew things were tight. This morning, an all-hands meeting was called at 10am this morning [EST] where CEO Steve Perlman said that OnLive would be filing for an alternative to bankruptcy called an Assignment for the Benefit of Creditors, or ABC, in the state of California—a status that affords financially troubled companies a level of protection from creditors. Perlman also said that the company as it stands now would cease to exist and that no one would be employed by OnLive. A subset of employees would be brought on to the company created from the remains of OnLive.

While it isn't clear how many people have lost their jobs, Mashable are reporting that the entire staff may have been laid off, an unfortunate circumstance for all affected.

The streaming service has yet to clarify whether OnLive will continue operating through the bankruptcy claim, however hopefully things will be as clear as possible to customers.

Update: An official statement from OnLive has been released, detailing plans to keep the service running, however nothing has come about as to what will happen to anyone who will be losing their job at the company.

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.

While we don't know what company bought the struggling streaming service, hopefully we will have news sooner rather then later as to what this will mean for many of its worried customers.