Original story:

Disney is closing gaming subsidiary LucasArts and outsourcing development on all its IP.

The company acquired LucasArts as part of Lucasfilm deal last October.

A statement from LucasArts reads: "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.

“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."

According to Kotaku, these layoffs number 150, and that site is also reporting that Star Wars: First Assault and Star Wars 1313 have been cancelled.

However, a LucasArts representative has told Game Informer that the company may license out those projects to external development and publishing partners.

"It is worth noting that we are looking for proven external partners who can help us provide video games to our fans,” said the rep.

“We still believe in the video game industry, we still will provide Star Wars games, we're just looking at different models rather than internal production... They're evaluating everything. There's always a possibility that it [Star Wars 1313] can still come out via licensing.

"All of these things happened at once. Naturally, as any company that goes through a big announcement like this, you have to look through your whole portfolio and realign some things.

1313 was looking fantastic, the reception has been great.

“Our other unannounced titles are fine, it just got to a point where from a business standpoint we couldn't continue developing those internally and keep up with the direction that the company was going."

LucasArts was founded in 1982 and made its name with a string of acclaimed adventure games including Maniac Mansion, The Secret of Monkey Island, Zak McKracken and the Alien Mindbenders, Indiana Jones and the Fate of Atlantis, Day of the Tentacle, Sam & Max Hit the Road, Full Throttle, and Grim Fandango.

Double Fine alum Tim Schafer and Ron Gilbert both worked for the company.

Unsurprisingly, LucasArts also produced Star Wars games, notably 1993 space-combat simulation X-Wing.

However, its recent games based Star Wars license have been largely disappointing from a quality and sales perspective.

As a result, Star Wars: The Force Unleashed and the Battlefront series both seemed to have been shelved.

The cancellation of Star Wars Battlefront III was particularly nasty, with both LucasArts and developer Free Radical blaming the other.

BioWare-developed MMORPG Star Wars: The Old Republic (which was co-published with EA) began strongly, but couldn’t hold subscribers and eventually instituted a free-to-play business model.

Meanwhile LucasArt's other big franchise, Indiana Jones, has become something of a footnote.

The company’s management saw high turnover. In 2004 LucasArts president Jim Ward led a massive restructuring of the company, and left in himself in 2008. His replacement, EA's Darrell Rodriguez, lasted two years.

More recently, Far Cry and Splinter Cell veteran Clint Hocking was brought in as creative director, but he too lasted only two years and left without completing a game.

The last game published by LucasArts was the horrendous Kinect Star Wars.

Update:

Ron Gilbert has shared his thoughts on the demise of the studio he helped put on the map.

"It's hard for me not to be sad. I haven't worked there since 1992, but it was still home to me," Gilbert wrote on his blog.

"I grew up there. I learned just about everything I know about designing games there. I made lifelong friends there. Eight of the most memorable and influential years of my life were spent there. I would not be who I am today without Lucasfilm Games.

"I still have hope that I might get the rights to Monkey Island back someday. LucasArts shutting down doesn't change anything since Disney bought them back in Oct. Maybe there will be less of an emotional attachment to it. Who knows. Not me."

Similarly, Tim Schafer had this to say about his former employer: “Even though part of me felt this was coming, I’m still, somehow, shocked. I never thought that Lucas would actually shut down.

"I feel badly for all the talented people there. LucasArts was my first job in the industry. And I'm sad to see all that history go away. And all that concept art.

"I’m going to be dumpster diving behind their offices for a while to see if I can find any old Full Throttle concept art.”