Sources at Darkside Games, the developer of the Phantom Dust reboot for Xbox One, say Microsoft took the game off the studio after it was unable to meet the publisher's expectations.

Speaking with Kotaku, anonymous sources at the studio said issues between the two companies arose when Microsoft aired a trailer for the Phantom Dust reboot at the E3 Xbox Media Briefing last year.

The sources claimed Microsoft aired a pre-rendered trailer that they had no knowledge of, and that wasn't representative of the work the studio was doing on the reboot.

“We didn’t even know if they were going to show it,” said one source. “We were basically told, ‘Hey check out the E3 presentation.’ The whole studio’s in the living room, we have a TV going with an Xbox watching the presentation, and then all of a sudden there’s that two-minute CG trailer. And we were like, ‘That’s amazing.’

“But at the same time, they didn’t use any of our assets, they didn’t use any of our card packs, nothing. Basically what they showed had nothing to do with the game whatsoever. We had no idea that was even happening… It was like, ‘Holy crap, now fans are expecting characters to look like that, and that’s not what we’re making.’”

The sources said that they were under a strict non-disclosure agreement, and that Microsoft had not announced that Darkside Games was working on the reboot. The sources said employees at the studio took Microsoft's reticence as a sign it had no confidence in their ability.

Finally, the publisher's demands exceeded what could be achieved on the US$5 million budget, claimed the sources.

“They asked for things pretty quickly,” said one source. “We kept telling them, ‘We cannot make this game for the budget you want.’ There was just no leeway. After spending $2 million, [Microsoft] said, ‘OK, let’s cut our losses.’”

Darkside Games ceased development on Phantom Dust in February.