Walt Disney to shut video game production company LucasArts

Just five months after it purchased the video game production company LucasArts as part of its $4.05-billion acquisition of  Lucasfilm Ltd in October 2012, the Walt Disney Co is shutting the consoles game maker and laying off nearly 150 employees, to focus on the parent Lucasfilm Ltd and its "Star Wars" franchise.

Disney, which has its own interactive games division, had in December 2012 started an internal review after failing to produce a popular game in the recent past.

It has also been moving away from making games for consoles such as the Xbox 360 and PlayStation 3 and had already moved to the licensing model such as Rovio Entertainment's popular ''Angry Birds".

Founded in 1982 by filmmaker George Lucas, LucasArts is a leading publisher and developer of video games like Maniac Mansion, The Secret of Monkey Island, Grim Fandango and Indiana Jones and the Fate of Atlantis, as well as franchises including Star Wars Battlefront, Lego Star Wars, Lego Indiana Jones and The Force Unleashed.

With development facilities in San Francisco and Singapore, LucasArts leverages on the technology and resources of other subsidiaries of Lucasfilm, including visual effects leader Industrial Light & Magic, Lucasfilm Animation and Skywalker Sound.

Beginning today, Disney will continue to license out the LucasArts portfolio of games, and will stop development of all internal projects, including the much-anticipated "Star Wars: First Assault" and ''Star Wars 1313.''

But many of the laid-off software engineers are upset since the projects they were working on had been nearly completed.

"After evaluating our position in the games market, we've decided to shift LucasArts from an internal development to a licensing model, minimising the company's risk while achieving a broader portfolio of quality 'Star Wars' games," Lucasfilm said in a statement.

LucasArts said that it will maintain a small team in California and Singapore  to handle licensing partnerships.

This is not the first time that Disney has closed down some units of companies after investing into them.

Its gaming software firm Disney Interactive Studios had in 2005-2006 acquired Tron Evolution vide game maker Propaganda Games, and Black Rock Studio, which owned the popular game called Split/Second, only to shut both the companies in 2011.

In 2007, it acquired Junction Point, which made Epic Mickey 1and 2, only to close the company this January.