Capcom is to close its Clover Studio in March 2007 in an effort to increase efficiency.
The studio was established to develop creative titles, with the team working on acclaimed games Viewtiful Joe, Okami and God Hand.
"Clover Studio has met the goal of developing unique and creative original home videogame software," said a statement from the Japanese publisher.
"However, in view of promoting a business strategy that concentrates management resources on a selected business to enhance the efficiency of the development power of the entire Capcom group, the dissolution of Clover Studio has been raised and passed at a Board meeting."
As a result of the closure, the publisher has included a 400 million Yen loss in its earnings forecast for the year ending March 2007.