If this is true, then it is good news indeed, there's nothing I hate with more of a fiery passion than all these services trying to take away consumer rights and control under the guise of "offering a great service", so it is good to see OnLive failing and that GaiKai probably only managed to survive because they manage to sell themselves to SONY (which might have been their goal in the first place). It would be an even bigger bonus if they close down shop for their service entirely so people UNDERSTAND that they should fight for their rights of ownership and not pay money for something that could be gone in a years time, no matter the price.
Other than that I'll just Paste what I said in one of these articles on another site:
"You asked the guy that just rode this wave and managed to convince SONY to buy his company, what the hell did you think he would say? It's like asking the fox if he thinks henhouse doors are a good idea.
There was a pretty good article in a German gaming magazine about all the downsides of "Cloud Gaming" (god I even hate that embellishment for what is basically "we will run the software for you, and you lose all your rights!"): http://tinyurl.com/7map39a
The thought that something like OnLive or GaiKai (or anything like it) might at some point have the success of Steam is truly outright horrifying, not only do you lose any advantage PC gaming might have over consoles (from being able to Mod your game, to tweaking graphics settings and using any kind of control method you like etc.) and would replace all of that with a blurry mess full of compression artifacts, banding and input lag at low resolution and with the game on their side running on low or medium graphics settings to save on processing power so they can serve more customers, but you'd also lose every single consumer right you might still have left when you buy a game as a product (with companies being able to revoke your rights to your entire game library over any reason and physically being able to pull it off). Can't really count on courts like the ECJ doing ALL the thinking for you and protect you against abusive practices: http://tinyurl.com/77d5n43
I see it as the ultimate form of DRM, going back to having to use terminals and worse than anything I could have ever imagined a few years ago and I'm appalled that most people don't seem to regard it as such.
You would lose, among other things:
1) Being able to play all games at all times (see Uplays extended downtimes and the likes)
2) Playing with maximum graphics details and options enabled
3) Playing normal multiplayer (OnLive for instance only hosts Multiplayer between other OnLive players because of latency, it would be simply too high if you had to send packets this way: Client --> OnLive Server --> Game Server --> OnLive Server --> Compression Algorithm --> Client)
4) Setting up Multiplayer server and hosting LAN parties would be no more
5) No more playing Offline or when the Net is out
6) No more installing Mods
7) No more tweaking INI files
8) No more cheating (even the good Offline kind where you give yourself a little bit more money or a bigger head)
9) GaiKai or whatever service would likely sit on your save files.
10) No more being able to decide if you want to Patch or not or Rollbacks
11) They could make games even more of a micro transaction mess than they already are and add unskippable advertising to the list of things to worry about
12) They could remove games or game features FOREVER with nobody owning a copy if at any point games would be exclusive to such services (god forbid), Manhunt or similar damaging your reputation too much and not selling enough? Get rid of it forever. A certain feature or spot of your game (nude scene, Coffee Mod or whatever) giving you trouble with the media? Get rid of it forever. You put out the newest FIFA/NHL/NBA 2035 and want people to buy it? Discontinue services for any and all older versions.
13) Possible loss of Indie/free niche markets in favor of the big "AAA" titles, why would they support small/unknown companies that barely everyone will likely play in favor of the mass-market AAA market?
etc.
No, just NO, they'll establish these kinds of services over my dead body."