Around fifty developers have been made redundant at Activision subsidiary Vicarious Visions, Develop understands.
The New York studio had been developing a new Guitar Hero game, among others, before Activision yesterday pulled the project.
Develop’s source claimed that the layoffs had amounted to “easily a quarter of studio staff”.
It is understood that Activision is helping those made redundant, likely though employment counselling and external placement services.
It was rumoured that Vicarious Visions would close completely. That is not the case, Develop’s source insisted.
The fifty layoffs come as part of Activision’s wider plan to axe around 500 staff – equal to about seven per cent of its global workforce.
Last month the publisher revealed it would close Liverpool studio Bizarre Creations, at the cost of around 200 jobs.