LucasArts is to be disbanded by new owner Disney.
The firm's game publishing and internal development business will close, with Lucas properties such as Star Wars to be licensed to external businesses, Game Informer reports.
The full statement from Disney - which bought parent LucasFilm and the Star Wars franchise for $4bn late last year - reads:
"After evaluating our position in the games market, we've decided to shift LucasArts from an internal development to a licensing model, minimizing the company's risk while achieving a broader portfolio of quality Star Wars games.
"As a result of this change, we've had layoffs across the organization.
"We are incredibly appreciative and proud of the talented teams who have been developing our new titles."
This means that Star Wars 1313, a presumably next-gen title showcased to much fanfare at E3 last year, is no more. The studio was working on other concepts too.
It's an inevitable turn for a brand that despite being hugely respected for past glories in 1980s and 1990s lost its impetus over the last decade.
It was restructured in 2004 by president Jim Ward, and then again after he departed in 2008. In the midst of this, the company had invested in then-next-gen tech to build high-end Star Wars and Indiana Jones games, and publish more third-party games. But the publishing effort floundered, save for the LEGO Star Wars line, and eventually only The Force Unleashed emerged on console.
Under new boss Darrell Rodriguez, the firm looked to exploit new mobile platforms and its back catalogue, re-releasing older adventure games for phones. It also started work on the ambitious The Old Republic MMO with EA studio BioWare - although eventually it handed the publishing duties (at the expense of some revenue) over toe Electronic Arts.
But Rodriguez was gone two years later, with a new leader in the form of Paul Meegan. LucasArts clamped down on press activity over this time, with Meegan doing just one interview - with MCV.
LucasArts is a company with tremendous potential,” he said. I think people look at it and wonder why it hasn't done better in recent years.
Lucasfilm has some of the most beloved and powerful brands in entertainment, we have a loyal community of fans, and talented people in every discipline. We're surrounded by staggeringly bright and creative people at the top of their games.
In recent years, LucasArts hasn't always done a good job of making games. We should be making games that define our medium, that are competitive with the best of our industry, but we're not. That has to change."
But he left in August 2012, just after the unveiling of 1313, returning to his former employee Epic Games.
Since then, parent LucasFilm was shaping up for an acquisition - announced by Disney in October 2012. In retrospect, plans put in place in the last 18 months to exploit the exisiting Lucas properties in games, such as an Indiana Jones partnership with Zynga and deal for Star Wars Angry Birds with Rovio, look like value building exercises ahead of the purchase.
When Disney took over, the new owner's bosses said they would figure out how the two would work together in games, pointing out a lack of Star Wars content.
The firm is said to have clamped down and cut short all projects that aren't tied into the upcoming Star Wars: Episode VII movie and new trilogy due to arrive in 2015 - Star Wars 1313, set between the two existing trilogies, doesn't fit in that strategy.
Plus, Disney runs its own internal development operation, Disney Interactive, which has battled through its own transition as the games market grew to include a variety of online formats and as licensed brands lost share.
New game Disney Infinity - a toys-to-game property that include collectable figurines - looks set to redress the balance. And some have readily speculated that 'Infinity' versions of Disney divisions Marvel and Star Wars are inevitabilities if the August game is a success.
LucasArts was based in LucasFilm's offices in Presidio, west San Francisco, which it shared with other divisions such as Industrial Light and Magic.