Update: Added NCsoft comments.
The studio was making a space-faring MMO based on original IP. NCsoft originally signed the publishing agreement with Spacetime in early 2006.
"Regardless of how you look at it, we won’t be entering production in the immediate future, so we are retrenching and unfortunately had to let 12 folks go," stated Spacetime in a blog entry.
The studio said that employees who were laid off were given extended benefits, severance packages and will be given letters of recommendation. Spacetime, an independent studio, said that it would "do anything" possible to help those laid off find new jobs.
The cancellation of the MMO is surprising. By all indications made public, development was moving along well, with regular updates in Spacetime's development blog. The project has a complete MMO engine with networking infrastructure, a tools suite and rendering engine.
In late September, the studio had just hired a new visual director, and stated that it had increased its staff by 25 percent over the prior three months, with plans for further expansion.
Spacetime said that it harbors no ill will toward NCsoft, and that it is committed to the IP and will explore other options in order to eventually bring the game out.
"[NCsoft] have conducted themselves with honor and integrity, and we would work with them again in an instant," Spactime's statement read.
An NCsoft rep told Next-Gen on Friday that he could not go into the specific reasons for the cancellation, but stated, "The decision [to cancel the MMO] means that NCsoft no longer will fund the project. Though not an easy decision, NCsoft believes the move is in the company’s best interest as we continue to assess the multiplayer game market and weigh the risks and rewards in that market with our current product portfolio."
NCsoft's upcoming slate of games includes Aion and Guild Wars 2, among others.