While the video game industry has been far outperforming many others in the economic downturn, and has even appeared recession-proof as sales have soared, there have been a number of layoffs and studio closings.
The main victim was ACES, a wholly owned studio producing the venerable Flight Simulator franchise.
A Microsoft representative confirmed on Friday that ACES will be shut down but added that the company remains committed to the Flight Simulator franchise, though she would not provide details.
But while Microsoft's game division was hit hard, VentureBeat reported that its Lionhead and Rare studios--the former just published Fable II--as well as its Forza Motorsports studio were untouched.
Microsoft did not immediately confirm whether those studios are being affected by the layoffs.