Tweets from staff at Activision-owned Radical have revealed the studio has been all but shut down.
Audio chief Rob Bridgett tweeted "RIP Radical Entertainment 1991-2012". Activision has since confirmed the move.
It appears the publisher made the choice following the relatively flat commercial performance of Prototype 2, the studio's latest game. Although released to much fanfare, and a No.1 debut in the UK charts, its Metacritic sits beneath the magic 80 average.
A handful of staff has been kept on to act in a 'support' capacity for other Activision studios. For the time being at least.
The company said in a statement that the game had "not been able to find an audience."
But it's a sad end to a studio that has had an otherwise illustrious career.
Radical was founded in Vancouver, Canada, in 1991 by three former staff of nearby EA Canada (then known as Distinctive Software). Radical was independent studio but a trusted partner to publishers. It worked with Ubisoft, THQ, Microsoft and Fox Interactive - but in its early days it was one of the few non-Nintendo developers allowed to handle the Mario IP, making games like Mario Is Missing.
It was acquired by Vivendi Games in 2005, two years after it had built the huge money-spinner GTA-a-like The Simpsons: Hit and Run.
The Vivendi relationship was very fruitful - it trusted Radical with some massive licences it had paid highly for, including the Incredible Hulk and Scarface.
When Vivendi bought Activision, the studio was integrated in the publisher's studio business - one of the surviving teams in process that had actually seen other sister Vivendi teams sold off or closed.