Kingdoms of Amalur: Reckoning 2 was allegedly in pre-production at 38 Studios' Big Huge Games in Maryland before all employees were dismissed last week, according to an anonymous source.

The company was in advanced talks with a publisher after Amalur publisher Electronic Arts passed on the sequel due to “executive politics”, the source claimed.

The sequel was to feature higher graphics quality across the board, no loading screens between zones, expanded and improved combat animations, fewer branching quests, and a greater effect on the world by players.

"We had a good base to work from, and it was going to be all about improving everything," said the source.

"We listened carefully to fans and critics and were going to implement everything we possibly could."

Should it reform under a different name, it’s unlikely Big Huge Games could continue working on Amalur 2 as the IP belonged to 38 Studios and would probably soon be owned by the state of Rhode Island.

The state's asking price to release the game to BHG was too high, the source said.