The $8m lawsuit against Def Jam Rapstar producer 4mm Games has left the firm “starved for money” and its fate uncertain.
Record label EMI took 4mm Games and developer Terminal Reality to court earlier this year for allegedly not obtaining song rights for the rap karaoke game.
4mm Games co-founder Jamie King told GamesIndustry.biz the company is currently “on hold”.
“We're rather starved for money,” he said. “It's a shame because it’s the only thing worth talking about, trust me.
“We have not got any new funding and obviously we need to resolve everything with Rapstar. And we've also got to eat.
“I get very annoyed at times. I would like there to be a way out of it but I don't know if that's going to happen.”
King is now focusing on the tablet, mobile phone and digital markets.
Def Jam Rapstar went on sale in late 2010 on PS3, Wii and Xbox 360. It allows players to sing along to tunes in-game and record clips of themselves.