Call of Duty: Black Ops DS developer n-Space "is down, but definitely not out" after the rug was pulled from under it by a "licensor" that had a change of heart.
CEO Dan O'Leary had to take "drastic action" and sent all but a core team home. He attributed the studio's near-closure to a number of factors, including an industry that is "frankly, a mess", and Wii and DS markets that have "nearly collapsed".
"After supporting 70-90 employees for several months without funding, Friday's lay-offs were unavoidable," O'Leary explained on the n-Space blog. "If all goes as planned, we'll be calling people back before the end of the week."
"Life as an independent developer is often a painful hand-to-mouth exercise of love," he elaborated. "This has never been more true than in the last few years. The games industry is, frankly, a mess. The economy has robbed customers of disposable income, reducing the number of titles that purchased per year. Huge-budget titles have to sell massive numbers to return a profit and the App Store has disrupted our industry in the same way iTunes changed consumer expectations for music.
"People that used to buy many games every year now buy a few AAA titles, supplementing their need with games that are free or cost less than a pack of gum. Anything in the middle is struggling.
"The Wii and DS markets have nearly collapsed," he said, "and 3DS is a brave new world the publishers are excited about but also very cautious to enter. Even for an extremely successful Wii/DS developer like n-Space, with a long history of delivering quality titles on time and on budget, this creates a very challenging business environment."
O'Leary said n-Space had several games on the slate for 2010. Among them were DS games COD: Black Ops and 007 GoldenEye for Activision, and Tron: Evolution (Wii, DS) for Disney.
One of these was finished and "several" were "soon to follow". "Then," O'Leary added, "with a last-minute change of heart from the [unnamed] 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'Leary concluded: "Since 2008 the n-Space family has faced and overcome a number of tremendous challenges, and it seems our work is not yet done."