Some big news has come out of cloud streaming company OnLive.

According to Joystiq, OnLive has been restructured “into a newly formed company” that is being backed by a large funder. The funder, who is unknown at the time, is backing the company through “substantial funding,” according to a statement made by OnLive. All game and desktop services “will continue to operate.”

Unfortunately, to get to the restructuring, “at least 50 percent” of the staff was laid off. The company employed about 180-200 people. A former employee pointed out that operating costs of the company were about $5 million each month and may have been part of the reason. The reason for such large operating costs was that the scale of the company was too large. CEO Steve Perlman brought in thousands of servers, each with long contracts that put a huge dent in the capital.

A source told Joystiq that the actual amount of users for the company were about 1,800. The two million number thrown around is actually just the number of people that signed up for the service.

“Steve got all excited when Gaikai got acquired, because it kind of validated everything we did,” the source said.

As part of the layoffs, employees that volunteer to help the new investor with the transition may get stock in the company. However, stock will remain worthless unless the company is ever traded publically.

Update: We have gotten confirmation from a now former employee who tells GotGame that they layoffs have indeed happened and OnLive is no more as an entity while the service will live on under a new “investor”.