19 staffers at Ubisoft's Newcastle-based Reflections studio have been given their marching orders, the publisher has confirmed.
According to Develop, 12 employees have been made redundant while "about seven workers" will not have their contracts renewed. Creative director Craig Lawson and art director Jack Couvels are apparently among those out in the cold.
An inside source told Develop that the troubled gestation of its new title Driver: San Francisco was to blame.
"There have been delays with the project, and because of our delays, Ubisoft have had to change their plans for our studio. What that means exactly I'm not sure.
"Everyone is pretending that it hasn't happened," he continued. "Nobody has mentioned the people who have gone, and we haven't had any meetings about it. They have just said that for the time being, everyone who needs to be told has been told. 'For the time being' is worrying.
"People think that when we have finished this game we will all be told 'off you go now'."
An Ubisoft spokesperson insisted that this wasn't the case and that the studio had a future.
"What's key at Reflections is that we are working on a small reorganisation, we need to ensure that we have the right skills mix for the Driver brand. The brand is very important to us, and Reflections is crucial as a studio. They have an expertise that none of our other studios have. It will absolutely keep going after Driver."
Earlier this month Ubisoft announced the reboot of its Driver series had been pushed back into the 2011-2012 fiscal year.
CEO Yves Guillemot explained, "We are taking the time to create an outstanding game and, seeing the competition, it's very important to bring all the fine touches to the game so it can become a good racing game and help us to establish Ubisoft in the racing genre."