Activision has reportedly shut UK studio Bizarre Creations, the makers of Project Gotham and Blur.
According to respected industry publication Develop, 200 jobs are rumoured to have gone at the Liverpool company.
[Update: Activision has told CVG that it is "exploring options" over Bizarre's future.]
Suspicions over the sad news were first alerted by messages from senior UK games industry figures on social networking sites.
Traveller's Tales boss Jon Burton wrote on Twitter earlier today:
"Sad Day for games developers. Really glad I didn't sell my company to Activision."
Founded in 1994, Bizarre made its name by creating titles such as Metropolis Street Racer for the DreamCast, before developing Project Gotham Racing series on Xbox and Xbox 360 for Microsoft.
The company was purchased by Activision in 2007 for an undisclosed fee.
Today's news comes exactly two weeks after Blood Stone was released in the US to a lukewarm critical reception and underwhelming sales.
CVG has contacted Activision UK and Bizarre for confirmation.