Nobody used it. Which makes it hard to run a company that needs that much overhead to keep running.
Company was going to shit for ages before they finally just said fuck it and sold it off.
Also a lot of people lost big chunks of their game collection when stuff was removed. Which was a common thing. Granted it's still a problem with, say, Steam but OnLive was apparently super terrible and frequent about it.
So the few people who were using it tended to get burned and were less likely to invest more money in a service that could yoink a game away whenever it became unprofitable to keep it up. Bad, bad business practice.