Ian Bell, head of Slightly Mad Studios has said employees have been warned of job losses due to a publisher backing out on a project deal.
Speaking with GI.biz. Bell said he told staff that the firm :may need to make some cuts," and that is "in the process of getting more work in."
"Essentially we were let down at the last minute by one publisher who we'd signed a deal with only for it to be canned before we even started," he revealed. "I can't say who. We are however still talking to them and a number of other publishers and are very optimistic for the future.
"As you probably know we have just completed Shift 2 for EA. It's reviewing well and it's a great product but we haven't been able to secure a deal for a new project... yet. Being a AAA studio means that you are normally reliant on third party publishers, of course. If you'd asked me earlier this year or late last year when we were finishing off Shift 2, and had publishers literally queuing up to speak to us and were turning them away because we had our next project signed and, I thought, secured I would have said 'no'.
"Now though, publishers are making different decisions because consumers are making different decisions. The market has changed but I am surprised by the decisions some publishers are making."
Bell recently announced the formation of mobile and social games studio Gamagio, which includes former staff members of Slightly Mad.
"Gamagio was something I have been thinking about doing for a while but on a much smaller scale," he said. "When the 'next' project got canceled I decided that we had this great team of people and even if I did have to make cuts they'd have a job for the time being and so it made sense to utilize them.
"So, as well as talking to publishers about a AAA console title I'm also raising finance for the new venture. The quality of the team we have means we have the potential to make something truly awesome in the casual and social space and I am excited about the opportunities."
Shift 2: Unleashed is out March 29 in the US, March 31 in Europe, and April 1 in the UK for PC, PS3, and Xbox 360.