Lays off their 40 staff. It's now 'in limbo'.
Apparently, Silicon Knights was developing Eternal Darkness 2 for Nintendo as their 'last saviour'.
However, after all the studio troubles, Nintendo decided to cancel it...
Seems that, since last year, Silicon Knights and Nintendo started to work together once again on a new title. Apparently, it was Eternal Darkness 2, based on the fact that they already had Wii U dev-kits and some of the comments from Denis Dyack (head of the studio).
However, after SK lost its trial against Epic, Nintendo noticed that things may not look as shiny anymore, so decided to cancel it...With Nintendo being a major owner of Silicon Knights, they were pretty much the studio's last saviour. After the commercial and critical failure of Too Human, just as well as long delays of both Too Human and The Ritualist (Sega, later THQ), Silicon Knights was pretty much avoided by 3rd parties. While they still got a contract for X-Men Destiny, the title received miserable reviews. All of this led to a series of layoffs, going from 150 employees in 2007 to only 40 in 2012.
Looks like Dyack "anticipated what was to come", as he said that they'll appeal the Epic ruling, so that will be last attempt to save the studio as "they've got nothing to lose anymore".I do not know what the budget for a mid-tier HD game like Eternal Darkness 2 would have been, perhaps 40, perhaps 50 millions USD? When Nintendo saw that they would need to pay an additional 10 million USD to have the company survive that develops the game, they didn't seem to like it, especially as they wouldn't get anything in return. This has happened in the past too, do you remember Factor 5?
So it looks like there have been internal discussions between Nintendo and Silicon Knights. NCL reviewed its decision and it appears as if Eternal Darkness 2 is cancelled for now. Hence, many of the 40-man team were laid off, leaving the studio in limbo now.
However, it doesn't look good at all for them.
Keep in mind this is still a rumor, but seems that another studio will bite the dust.
NEWS SOURCE: Forum Thread #477741 (via) NeoGAF
Our thanks to 'Gauss' for this news item!