The rumors have been flying for more than a week now, that Psygnosis was closing down satellite locations in the UK, severing ties with developers, and dropping numerous games from its development roster. We've been told all US-based titles remain in development, along with titles including G Police 2, F1 Racing '98, Roll Cage, Drakken, Lander, Panzer Elite, and Nation's Fighter Command.

　　In an official statement released to the British press, however, Psygnosis' managing director Gary Johnson stated that the company's Manchester, England, development studio would close and 75 staffers would be let go - moves done to expedite the restoration of "the company's fortunes."

　　The statement to staff and press reads as follows:

　　Following an extensive review of its development activities in the UK, Psygnosis has implemented measures designed to place the company on a firmer footing for its continued development as a leading computer games publisher and developer within the Sony Corporation.

　　The principal actions being undertaken are:

　　- closure of Psygnosis' Manchester development studio- termination of certain UK game development projects that management believe are unlikely to achieve significant returns

　　As a consequence of these actions the company is making approximately 75 employees redundant mainly from the Manchester area.

　　Gary Johnson, Managing Director of Psygnosis said:

　　"Psygnosis has gone through a period of rapid growth in recent years. One consequence of this growth has been that our cost-base and our development spending have grown too large for the business to sustain. While difficult for those affected, we believe we have now taken the necessary steps to restore the company's fortunes and can look forward to a successful future for the company as a whole."

　　The word on the street, and among the various developers, paints a slightly more complex picture. Sources in the US and UK have indicated to GameSpot News that the staff reductions have in fact been more severe, and that this round of layoffs is likely to be followed by more. One insider said the staff reductions actually neared 200, bringing the Psygnosis head count close to 500, and that the company, coming under pressure from its Japanese owners, Sony, is aiming toward an even lower total head count.

　　Apart from those individuals who may find themselves out of work, there are numerous small development houses that had contracted with Psygnosis to develop games now wondering about the near future. While those contracts between the developers and Psygnosis are still in effect, some developers worry that Psygnosis may not honor its contractual obligations. Negotiations are said to be under way between Psygnosis and those dev houses to find amicable solutions to fulfilling or terminating those agreements.