Day 1 Studios, which developed F.3.A.R. and MechAssault, has had to lay off 95 per cent of its main development team after losing a contract to develop a reboot of Konami's Silent Scope series.
It's not known how much work had been done on the new vision for the franchise, which last saw an outing on the PS2.
The job losses just leave a 'significantly smaller' unit at the developer working on another game, Gamespot reports. Around 100 staff are thought to have lost their jobs in the shake up.
In Spetember this year, Day 1 celebrated its tenth birthday, marking a decade of development since Denny Thorley and TJ Wagner began work on MechAssault for the original Xbox in 2001. The company's information page lists the staff total as 140 people.
So far, no explanation has been made public as to why Konami may have decided to terminate its arrangement with the studio. Both Day 1 and Konami have been contacted for comment.