Developer Avalanche, the studio presently working on 2, have been forced to lay-off some 77 workers, after losing two publishing deals worth over 27 million Euros.

Employees were told of the move last week, and union negotiations are now underway at the Scandinavian developer.

"We have given notice that it's our intention to lay off 77 people," explained CEO Christofer Sundberg. "We have lost two publisher deals this year - those deals were worth around USD 34 million."

He told GI.biz: "We lost the first deal in February but we could survive that one because we had a shortage of staff in other projects and we decided to put together a team to work on a original IP that we had in development. But the team that were working on a project that was terminated last week - there were about 67 people on that team."

The firm are working on Just Cause 2 and The Hunter, as well as seeking out new publishing deals for new titles. "I'm very positive that we'll get back on our feet again. But will we become a 160-employee studio again? I'm not sure," he added.

Sundberg concludes: "Our focus is on original IP which we've done well with, but the is focused on licenses and sequels."

By Luke Guttridge