Microsoft is currently considering whether to close Lionhead Studios.
The Fable creator had been working on free-to-play spin-off Fable Legends, development on which has now been halted.
“After much consideration we have decided to cease development on Fable Legends, and are in discussions with employees about the proposed closure of Lionhead Studios in the UK,” Hanno Lemke, GM of Microsoft Studios Europe, wrote on the Xbox blog.
He added that Danish outlet Press Play Studios has already been closed, with work on the firm’s title Project Knoxville similarly cut short.
“These have been tough decisions and we have not made them lightly, nor are they a reflection on these development teams – we are incredibly fortunate to have the talent, creativity and commitment of the people at these studios,” Lemke continued.
“The Lionhead Studios team has delighted millions of fans with the Fable series over the past decade. Press Play imbued the industry with a unique creative spirit behind games like Max: The Curse of Brotherhood and Kalimba, which both captured passionate fans.
“These changes are taking effect as Microsoft Studios continues to focus its investment and development on the games and franchises that fans find most exciting and want to play.”
Regarding those affected, Lemke said that Microsoft would work to find laid-off staff “new opportunities at Xbox” or would partner “with the broader development community to help place them in jobs elsewhere in the games industry should they desire”.