The bad news: Silicon Knights has had to cut nearly half its staff. The good news: The Company is still alive, is "returning to its roots" and is "working on one of its most requested titles."

The Canadian developer has laid off a grand total of 43 employees, slightly less than the figure reported earlier this week, after negotiations with the publisher backing the team's current project fell through.

"Last week Silicon Knights experienced layoffs due to extended contract negotiations falling through with a potential partner," the developer told Kotaku. "We are currently in discussions with other potential partners. The recent Ontario government funding is tied to future performance targets, spread out over the next 5 years, which we will meet."

Since 2008 Silicon Knights has received around $8 million in funding from the Canadian government, with the proviso that the company use some of the money to hire additional staff. At its peak, the developer employed nearly a hundred workers.

It's unfortunate that Silicon Knights is now known more for its few, admittedly huge, failures, than its successes. The long awaited Too Human ran massively over budget, took nearly a decade to complete, received a less-than-enthusiastic reception when it was finally hit shelves and then went on to spark a legal dispute between the developer and Epic Games over its use of the Unreal Engine. Their latest game, X-Men: Destiny met with poor sales and abysmal reviews, our own Susan Arendt described it as "ugly, stupid, and boring."

Perhaps in response to its poor performance in the last decade, the developer is "currently refocusing and returning to its roots, working on one of its most requested titles for the next generation."

Hands up if you read that last sentence as: "We're making Eternal Darkness 2" and promptly performed an embarrassing little dance.

Source: Kotaku