Furthermore, The Chronicles of Narnia: Prince Caspian developer Fall Line Studio will be rolled into Avalanche studio. The consolidation will be responsible for less than 20 layoffs, according to a GameDaily report.

Sources have reportedly told Kotaku that the Propaganda layoffs coincided with the cancellation of a sequel to the studio's shooter Turok.

Disney Interactive spokeswoman Angela Emery did not comment on the rumor, but noted that Propaganda is still a two-team studio with two unannounced projects in the works.