Superbot Entertainment and Sony have gone their seperate ways following the release of PlayStation All-Stars: Battle Royale.
No official figures have been released, but the game is not thought to have done well, having failed to make the top ten list either for its November release or the following month of December.
In the UK the simultaneous Vita and Playstation 3 release launched at number 38 on the charts.
But last month the studio made a number of redundancies, although Sony would not reveal the extent of the layoffs. The developer stated however it would continue work on DLC for PlayStation All-Stars.
"We have had a positive working relationship with this talented studio, and wish them the best of success in their next endeavor," a Sony spokesperson told Gamasutra.
The publisher described the split as "amicable" and said post-release support for Playstation All-Stars would continue at its Santa Monica studio.
Superbot is an independent company, but was incubated at Sony Santa Monica.
Some reports suggest the studio was formed specifically for the creation of Playstation All-Stars.
Speaking to Kotaku, Superbot boss David Yang said the companies parted "on good terms."
"We are extremely grateful to have had the opportunity to work on with Sony on Playstation All-Stars Battle Royale, and are extremely proud of the work we have done," said Yang.
"SuperBot Entertainment will continue working on projects that reflect our passion for games and our commitment to creating award winning titles."
Though Superbot isn't currently planning on further layoffs, Yang admits that the current staff levels will be difficult to maintain.
"We don't have a reduction plan as of yet, however it is unlikely we can continue with our current work force for an extended period of time," he said.
"We are still working things out and hope to continue on with as many of us as possible."