Publisher Mindscape has left the games industry after closing its internal studio, Punchers Impact, at the cost of 40 jobs.
A number of the company's executives are also thought to have moved on.
In 2010 Mindscape published its U-Sing karaoke series, but the publishers's last big title was PC racer Crasher, which failed to meet expectations.
"We had relied much on that game," a company source told Develop.
"It was not a success and was important to us that it was. We are no longer going to work in the game software business."
The company has instead turned its attentions to the Karotz line of wi-fi rabbit toys.
Parisian company Mindscape was founded in 1983, while internal studio Punchers Impact was created in 2009. At the time, the studio included 40 members of staff from EA and Free Radical Design.