Rare plans to restructure and possibly downsize in order to refocus on speedy, more simplified development cycles.
"As the entire industry struggles to address the increasing scale and cost of development, we too have felt a need to restructure our current approach so we can speed development and better manage the scale required to create high quality games," said Rare studio manager Mark Betteridge in a statement.
"With four projects recently under way, now is the right time to make this change. Throughout its history, Rare has demonstrated a willingness to embrace new approaches and commitment to delivering game-changing experiences to our customers.
"This announcement is no different and builds on that tradition as we work with MGS to make interactive entertainment as culturally relevant in people's lives as books, movies and television are today," he added.
Going forward, Rare will focus on three areas: expanding the Xbox 360 user-base through titles such as Viva Piñata and Banjo-Kazooie: Nuts & Bolts; help grow the New Xbox Experience after delivering the avatar feature; and "continue delivering AAA gaming experiences".
Betteridge said there may be a "small number" of redundancies as a result of all this.