n-Space issued the following statement:

Life as an independent developer is often a painful hand to mouth exercise of love.  This has never been more true than in the last few years.  The games industry is, frankly, a mess.  The economy has robbed customers of disposable income, reducing the number of titles that purchased per year.  Huge budget titles have to sell massive numbers to return a profit and the App Store has disrupted our industry in the same way iTunes changed consumer expectations for music.  People that use to buy many games every year now buy a few AAA titles, supplementing their need with games that are free or cost less than a pack of gum.  Anything in the “middle” is struggling.  The Wii and DS markets have nearly collapsed and 3DS is a brave new world the publishers are excited about but also very cautious to enter.  Even for an extremely successful Wii/DS developer like n-Space, with a long history of delivering quality titles on time and on budget, this creates a very challenging business environment.

n-Space is shipping 7 titles this year (plus an iOS game we’ll be announcing next week), 5 of which were approved in September.  This is quite an achievement for a studio of our size (approx 90 at that time), but it also creates a real challenge from a business development point of view.  Placing 4-5 follow-on titles in a vibrant market is tough enough.  In 2010 it’s damn near impossible.  We’ve worked tirelessly to secure work, preparing literally dozens of concepts and proposals this year alone, built two impressive demos since E3 and even delivered, in good faith, the first milestone of one of the projects we are pursuing.

Last week it looked as though all that hard work would finally pay off, with one deal “done” and several more soon to follow.  Then, with a last minute change of heart from the licensor, that deal was dead.  When the week ended without commitments from other publishers to offset this setback, I was forced to take drastic action.

Since 2008 the n-Space family has faced and overcome a number of tremendous challenges, and it seems our work is not yet done.  Through it all the entire n-Space crew has demonstrated a level of professionalism and support that is beyond compare.  This week was no exception.  I am truly blessed to have assembled such a talented, hard working, and resilient creative team and I look forward to sharing their future accomplishments with you.