Almost the entire team at UK independent studio The Chinese Room has been made redundant.
The only remaining members are creative designer Dan Pinchbeck, composer Jessica Curry and lead designer Andrew Crawshaw, although the trio will not be "a fully active development team for the time being."
The news emerged from a blog post published by Pinchbeck ahead of an interview with GamesIndustry.biz sister site Eurogamer. The co-founder explained that a combination of financial pressures, health issues and the stress of development on its more recent game, VR outing So Let Us Melt, made maintaining the studio in its current form impossible.
As a result, Pinchbeck and his partners made the hard decision to let the entire team go.
"Lay-offs are never pleasant, particularly when you're all trying to wrap a game," he wrote. "We did our best to try and help the team secure new positions, and then we all - the whole team - threw everything we had at wrapping the game. It didn't feel fair to anyone, least of all people who had spent a year working on a project, to have its completion and release overshadowed by news about the studio closing, so we've held off on the announcement until we felt we were clear of all of that."
Pinchbeck stressed that this is not the end of The Chinese Room. The three remaining team members will continue work on isometric adventure Total Dark, now renamed The 13th Inferior, and have secured the funding needed to build a prototype of mystery project Little Orpheus.
The studio's previously released titles, such as Dear Esther and Everybody's Gone To The Rapture, will continue to be on sale, as will merchandise, soundtracks and the Dear Esther concert tour.
While Pinchbeck says the studio (or what remains of it) will continue to talk to fans, the trio is "going dark" for a while as they find their feet and figure out the future of The Chinese Room.
"We're essentially artists, Jess and I, who made a hit game without realising it, and became a studio faster than we planned for," he wrote. "And it's been an amazing few years where we've made and released games we're very proud of, and we've worked with great people and made great friends.
"But we're makers, fundamentally, and our roles were increasingly making it very difficult to be practically involved in doing the things we love and we started the company to be able to do. We're taking time to figure that out; how we get to be creatives, not managing directors."
He concluded: "Is it the end of The Chinese Room? No, I don't think so. But it's the end of a chapter, and we hope you can all be patient with us whilst we figure out what happens next."