The company is best known for the mass market smash Diner Dash, which has seen iterations on a wide array of platforms.
Chief exec Zimmerman told us, "A few weeks ago, Gamelab did undergo a transition. We are now focused exclusively on Gamestar Mechanic, our multiplayer online game for kids that lets them create games."
Gamelab said the layoffs were strictly related to the new focus on the Gamestar Mechanic, not the quality of the former employees' work.
Zimmerman said that Gamelab's non-profit Institute of Play recently received a $500,000 grant from the MacArthur Foundation to help support the Gamestar Mechanic project. Gamelab is looking for further investments and publishing partnerships.
In 2007, the MacArthur Foundation gave Gamelab $1.1 million to create games that encourage learning and creativity.
Gamestar Mechanic is in closed beta currently, with a public beta slated for Q1 2009, according to Zimmerman.
"Gamestar Mechanic combines an easy-to-use drag-and-drop game-making application with a social network, all inside a rich narrative universe," he said.