Rare's secretly in-the-works Kameo sequel is just one casualty of a Microsoft project cull at the studio, to make way for more Natal development, CVG has learned.
Earlier this year the UK developer underwent a "company-wide restructure" to implement a "new approach" to its in-development projects, Microsoft revealed.
A source close to the platform holder has since told CVG that the "restructure" saw the canning of more than one 'traditional' franchise sequel, including Kameo 2.
Our source clarified that disappointing sales of the 360 launch game - and not just the march towards Natal - also played a factor in its cancellation.
Rare is now said to be "intimately involved" with the Project Natal launch, including one or two titles outside the traditional game space.
"The company is reviewing the current composition of its development teams and there is the possibility that a small number of current positions could be lost as a result of these changes," an MS statement said earlier this year.
We've left a message with Microsoft for comment.
UPDATE: A Microsoft spokesperson said: "Microsoft does not comment on rumour and speculation"