Update: OnLive's director of corporate communications Brian Jaquet responded to Mashable with this: "no comment on the news other than to say the OnLive service is not shutting down."

OnLive — a cloud gaming startup focused on bringing a console experience to devices such as the iPhone, iPad and Android phones — laid off its entire staff Friday.

According to a source close to the situation, the company called an all hands meeting at 10am PT, at which the entire staff was fired. Some staffers may be rehired as the company transitions to its next unknown iteration.

OnLive most recently announced a partnership with Ouya, the Android-based hacker friendly game console that broke records and stole hearts on Kickstarter.

The company was preparing to launch a new connected device in conjunction with Vizio. Past conversations with the company also indicated that a focus on mobile and tablet devices would continue.

Our source tells us that many employees blame the failure of the company squarely on the CEO — who refused to sell the company many times, to companies including HP. There is speculation that the future company may simply be a pure intellectual property play, selling access to patents.

OnLive reportedly has patents covering cloud-distributed content, especially in 3D graphics.

Game developer Brian Fargo has tweeted information OnLive employees are sending him, all of which suggest the company will cease to exist by days end.