US development studios Backbone Entertainment and The Collective are merging to form the largest independent developer in North America.
Speaking to the Wall Street Journal, Backbone CEO Jon Goldman blamed those pesky "market pressures" for the merger.
"There's a lot of nervousness about the scale and scope of games increasing," he said. "It will physically become impossible to do great games with a small team with the next generation of games coming on."
However, he added, the decision to merge was not a difficult one, saying: "We see great opportunities that can only be addressed by pooling talent and financial resources.
"We will be able to better invest in technology, processes and creative opportunities that will make us a key player in the future of game development and beyond."
Goldman is now CEO of the new company, which is going under the name of Foundation 9 Entertainment.
Recent Backbone projects include Death Jr. for PSP and Charlie and the Chocolate Factory for GBA and PC. The Collective is developing Episode III: Revenge of the Sith for Xbox and PS2 and Mark Ecko's Getting Up: Contents Under Pressure, to be published by Atari. There is no suggestion that the merger will affect any release dates.