Disney's LucasArts Lays Off 150 Employees

UPDATED: Disney has canned all work on two in-house projects, effectively shuttering the video-game studio.

Disney has canceled all in-house work on the only two projects at LucasArts and has laid off about 150 people, effectively killing the entity as a working video-game studio.

“After evaluating our position in the games market, we’ve decided to shift LucasArts from an internal development to a licensing model, minimizing the company’s risk while achieving a broader portfolio of quality Star Wars games," LucasArts said in a statement issued to The Hollywood Reporter.  "As a result of this change, we’ve had layoffs across the organization. We are incredibly appreciative and proud of the talented teams who have been developing our new titles."

LucasArts, founded in 1982 by George Lucas, published several games based on the Star Wars and Indiana Jones franchises in its 31-year-history. Its current projects were Star Wars: First Assault and Star Wars 1313, which could survive as licensed or outsourced games or be shuttered completely.

The news was fist reported by several video-game outlets, such as Kotaku, Joystiq and Cubed3.

"Disney Interactive looks forward to working with Lucasfilm on new games opportunities that leverage their incredible IP and brings it to life across gaming platforms," Disney Interactive said in a statement Wednesday.

One insider says that LucasArts had spent hundreds of millions of dollars over the years developing, releasing and marketing console games but lately it has been difficult to justify such expenditures given the trend toward online mobile games.

Disney gained control of LucasArts when it purchased Lucasfilm for $4.05 billion in December.

Disney, too, hasn't had too much luck turning a profit with video games. In September, it reorganized Disney Interactive and laid off 50 people, and 18 months prior to that it laid off 200 people from the same division. In January, Disney shut down Junction Point Studios, which was behind the Epic Mickey video game.

The next big bet at Disney Interactive, the unit in charge of video games, is Disney Infinity, which is a console game but also a toy that will include mobile and online components. The game was due in June but Disney recently pushed its release to Aug. 18.