THQ has made 30 people redundant following disappointing sales of its uDraw Game Tablet.
The layoffs were confirmed to Game Informer by a THQ spokesperson, and are limited to the company's Play THQ development team in Agoura Hills, California.
"Due to weaker than expected sales of the uDraw Game Tablet, we are taking a difficult but important step to reduce the number of employees that supported this brand," the spokesperson said.
"30 people will be leaving the company and business unit leader Martin Good will also be leaving to pursue new opportunities outside the company. This action will allow us to reduce costs, increase efficiency and increase the focus of our organisation."
THQ posted a loss of more than $92 million for the quarter ending September 30, and was relying on the strong performance of its holiday releases to strengthen its full year results.
The news that the uDraw had sold poorly emerged last week when the company reduced its third quarter sales forecast by 25 per cent.
However, industry analysts suggested that the reduction in revenue - amounting to around $130 million - could not have been caused by the uDraw alone.
"Management blamed poor sales of uDraw on the Xbox 360 and PlayStation 3 for the miss," said Cowen & Company. "However, the $130 million revenue downside suggests that there was likely some incremental weakness elsewhere."
"At a roughly $50 for uDraw across all platforms, including the Wii, it would take a 2.6 million unit shortfall to account for the full revenue miss; THQ's planning implied less than 2.6 million units of total uDraw sell-in."