Sony has cancelled a number of games in development at its UK first-party developers and made an undisclosed number of people redundant.
Projects at Sony London, Sony Liverpool and Evolution Studios have been axed.
"It has been decided that production on a small number of projects within London Studio, Studio Liverpool, and Evolution Studios will be streamlined or closed due to a portfolio review and project prioritisation," Sony said in a statement issued this afternoon.
"This decision was made following an internal review of all games and it was deemed that with the incredibly strong list of exclusive first party titles coming up both this year and in the near future, resource should be reallocated to enhance those projects closer to completion."
Despite this, Sony inisted its UK studios will continue to play an important role in PlayStation's future.
"The affected first party studios have been and will continue to be vital assets within the WWS family, and have a history of producing genre defining games such as MotorStorm, WipEout, SingStar and EyePet. This decision will have no impact on the role that our first party studios will play in the future of all PlayStation platforms."
Sony's decision comes just a week before Evolution Studios' superb PlayStation 3 exclusive racer MotorStorm: Apocalypse launches. Eurogamer awarded it 8/10 in today's review.