Darkside Game Studio, developer of the Phantom Dust reboot announced at last year's E3, is shutting down.

Microsoft has severed ties with the studio, cancelling their take on the original Xbox RPG.

"Microsoft partnered with Darkside Game Studios in the development of 'Phantom Dust,' but our working relationship has now ended," a Microsoft spokesperson said in a statement. "We have great respect for their studio and their work in the industry. While we do not have anything new to share on 'Phantom Dust' at this time, we can confirm that development of the title continues. We look forward to sharing more details on the game as we get closer to release."

Darkside employees seem to have been caught off-guard by this turn of events. An employee speaking anonymously told Kotaku that "executives who saw it were impressed and as late as this morning gave our team every indication that the project was on solid ground. Yet we got the phone call today that someone up on high who in all likelihood wasn't even aware of the game in detail shut it down."

Darkside had previously done contract work on games like Gears of War: Judgment, Sunset Overdrive and BorderlandsPhantom Dust was the team's first headlining gig. When Microsoft cancelled the game, studio executives made the decision to shutter the studio, which employed about 50 people.

It's unclear if Microsoft's decision to part ways was caused by missed milestones or simply a desire to take the project in a different direction, but we hope the former employees of the Florida-based studio can land on their feet and find new positions soon.