N-Space has confirmed its laid off an unspecified number of employees, but insists the studio has not closed.
The Call of Duty: Black Ops DS and Goldeneye 007 DS devs were upbeat in a post on the company's blog, saying it was "is down, but definitely not out" following the layoffs, which was blamed at the collapse of a done deal between the studio and an unnamed licensor.
"After supporting 70-90 employees for several months without funding, Fridays layoffs were unavoidable," said CEO Dan O'Leary.
"I will be back in the office next week, along with our core team, to firm up a few of the many deals we are negotiating. If all goes as planned we'll be calling people back before the end of the week."
O'Leary continued: "We’ve worked tirelessly to secure work, preparing literally dozens of concepts and proposals this year alone, built two impressive demos since E3 and even delivered, in good faith, the first milestone of one of the projects we are pursuing.
"Last week it looked as though all that hard work would finally pay off, with one deal “done” and several more soon to follow. Then, with a last minute change of heart from the licensor, that deal was dead. When the week ended without commitments from other publishers to offset this setback, I was forced to take drastic action."
O'Learly also said the industry was a "mess", adding that DS and Wii markets have "nearly collapsed".
Good luck to those involved.