It's been a capital "L" Lousy week for the industry in a pretty rocky few years that have seen quite a few layoffs, studio closures and newer, smaller studios formed after such shakeups. But the cost is certainly getting higher. Sony Online Entertainment has let go 205 employees and shot down the PS3/PC massively multiplayer online shooter/action game, The Agency, which had been in development for a few years. This news in particular irks me because I remember seeing and playing a very early demo build about two or three years back and thinking the team was onto something really unique. I recall asking if the team planned to do the game as single player with straight co-op modes and no MMO functionality in case things went south during the rest of long dev cycle, but everyone seemed to believe the game would find an audience based on the spy theme and solid Unreal 3-powered visuals... Now we'll never know.
Meanwhile, THQ has cut jobs at Kaos Studios here in NYC and Volition, two of the company's in-house development teams. Kaos's Homefront (a first-person shooter that's gotten mixed reviews) not performing as well as expected is no doubt the reasoning behind those layoffs and I'd gather that despite the successes of the Saint's Row and Red Faction franchises, it seems that Volition wasn't immune from cost cutting measures. Best of luck to all who've been shifted out in finding new work (drop me a line and if I'm around, we can have a beer and yak a bit about your future plans and anything else - it's that kind of a year, huh?)