InXile Entertainment's Brian Fargo tweeted this morning that he heard from someone inside Onlive that it was closing down, and has now posted that everyone on staff has lost their jobs, and that "a new company will be formed" soon after. A Mashable report from an anonymous source alleges the same.

Joystiq reached out to OnLive directly to ask about the rumors, and Director of Corporate Communications Brian Jaquet replied to us with a blunt denial: "We don't respond to rumors, but of course not."

"The exciting news is that the first VIZIO Co-Stars (Google TV stream players) with the OnLive app built-in have just arrived in customer homes," he continued, "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." So it sounds like OnLive is still open for business.

Joystiq followed up to ask if there were any layoffs at the company this morning at all, and Jaquet could only confirm that "the OnLive service is not shutting down." We'll update this post with any more details if we can get them.