Thirty-seven of the 80 staff at Sega Studios Australia have been hit by lay offs, as the developer announced it is re-structuring.
The studio was previously part of The Creative Assembly, but re-branded last year to work on London 2012 Olympics.
As a smaller developer, Sega Studios Australia will focus on digitally distributed titles.
"We can confirm that SSA has signed a multi-product deal focussing across the digital marketplace," said an official statement sent to Joystiq.
"This strategic re-structure will ensure we have a more effective and agile team that will enable us to quickly adapt to consumer needs and deliver strong content across multiple digital platforms."