Californian games studio Backbone Entertainment has issued redundancies to an unspecified number of staff, an executive at the company has confirmed.
It is unclear how many are affected, though unconfirmed reports earlier in the week suggested that the studio has been considered for closure.
James North-Hearn, CEO of parent company Foundation 9, says all current projects are "unaffected" by the downsizing.
Backbone Entertainment is a work-for-hire studio that takes on a variety of projects for clients such as Capcom and Sega. It helped work on titles such as Super Street Fighter II Turbo HD Remix and Rock Band 3.
Despite the downsizing, Backbone will operate at a "reduced size", North-Hearn said in a statement to GameInformer.
"The studio will honour its commitments to existing partners," he said, whilst claiming that the downsizing is due to a "lower demand for conventional console development".
North-Hearn added: "I would like to publicly thank the departing members for their incredible service to the company."