Social games and media company RockYou is shedding around 50 per cent of staff, according to new reports.
As part of the move, the company will sell recent acquisition Playdemic back to its founders, states Tech Crunch, with the developer keeping its game Gourmet Ranch.
Manchester's Playdemic was only acquired at the start of this year, at a time when RockYou was pushing to become a name in social gaming.
However, senior games exec Jonathan Knight, who was brought on board to spearhead the games business and secured the Playdemic deal, left the company last month.
"We went too far down the creative path and lost our way in terms of being a profitable organisation," said CEO Lisa Marino. "While today is a tough day, I am incredibly bullish on the business going forward."
According to a leaked internal document reprinted on Venture Beat, RockYou is hoping to trim the team to stay profitable, cutting as many as 55 jobs.
"[G]oing forward we will need to be much more focused and lean in order to ensure we keep hitting these success milestones," it reads.
"Unfortunately, that means that over then next week or so the management team will need to make some very tough decisions that will result in an overall reduction of our workforce."
Speaking to Inside Social Games Marino confirmed it has cancelled its deal with Loot Drop, giving control of two games back to the development team founded by John Romero.
She also blamed the company's games for not delivering the right content and being difficult to monetise.
"We made a lot of mistakes in the last 12 months," she said. "We built up a central studio that looks a lot like EA or Zynga with 45 heads in it when we really only needed 10 or 12.
"We developed two large-scale sim games - Social Life and Cloudforest Expedition - and Social Life was [canceled] in May and Cloudforest is in the process of being kicked back to Loot Drop. Gourmet Ranch is profitable, but [the developer] is not building the core content that we want."
The company was founded in 2005 and has raised $129 million from investors.