Disney has axed staff at its Vancouver studio Propaganda, the developer working on Pirates of the Caribbean and Tron titles.
The Pirates game, Armada of the Damned, has been cancelled, and according to a report by Kotaku, up to 100 members of staff have been let go.
"Disney Interactive Studios confirms the cancellation of the Pirates of the Caribbean: Armada of the Damned videogame which was scheduled to be released in 2011," said Angela Emery, Disney Interactive Studios' vice president of communication.
"As a result of this decision, Disney Interactive Studios completed a restructuring of Propaganda Games, its Vancouver, BC internal studio, affecting one of the studio's two development teams."
The studio will now become a one-game team focusing on Tron: Evolution, which is still due before the end of the year, along with additional downloadable content.
Disney acquired Propaganda in 2006 when it embarked on an acquisition spree, scooping up Avalanche Software and Climax Racing, and a year later Fall Line Studios and Junction Point.