Developers at Fable developer Lionhead have been hit by layoffs.
In a statement, a Microsoft spokesperson said the reduction in staff would account for less than ten per cent of the overall headcount at Lionhead by the end of 2012.
He added that, "as was common in the game industry," studios a smaller number of employees were needed for the start of a new project.
The spokesperson also said Microsoft would be working closely with affected employees to help them find new jobs.
Despite the layoffs, Microsoft said it expects to add more than 100 staff in various positions across its UK studios over the course of the next year to June 2013.
“Following the completion of Fable: The Journey, Lionhead Studios has begun work on its next projects,” read a statement from Microsoft.
“As is common in the games industry, a smaller headcount is needed as projects kick-off and ramp up as full-production gets underway. At this time a small number of positions have been identified as at risk of redundancy and the affected employees were notified today.
“We are working very closely with those people during this difficult time, to help them explore alternative opportunities within Microsoft - including new roles at Microsoft Studios which is growing in the UK and actively hiring across all locations, including Lionhead, Rare, Soho Productions and our recently announced new studio in London.”
Lionhead’s latest release, Kinect title Fable: The Journey, garnered an average review score of 62 on Metacritic and has struggled commercially.