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"n-Space is down, but definitely not out," says the studio's CEO, Dan O'Leary, addressing rumors that the developer of Call of Duty: Black Ops' DS version has closed its doors. O'Leary says the independent shop had supported 70 to 90 employees "for several months without funding," making mass layoffs on Friday "unavoidable." That said, O'Leary is optimistic that deals n-Space is currently negotiating can be firmed up this week in time to hire them back. "If all goes as planned we'll be calling people back before the end of the week," he wrote.

O'Leary laments the current state of the games industry, calling it "frankly, a mess," thanks largely to a sour economy. "People that used to buy many games every year now buy a few AAA titles, supplementing their need with games that are free or cost less than a pack of gum," O'Leary writes. "Anything in the middle is struggling. The Wii and DS markets have nearly collapsed and 3DS is a brave new world the publishers are excited about but also very cautious to enter."

The complaint notwithstanding, n-Space has still had a very busy year. It is working on Nintendo DS versions of Call of Duty: Black Ops, GoldenEye and James Bond 007 Bloodstone, as well as Tron: Evolution - Battle Grids for the Wii. n-Space released Toy Story 3 for the DS earlier this year. O'Leary said, in all seven titles will ship this year, five of them approved in September. One is an iPhone game the studio will announce next week.

n-Space, the Orlando based studio behind GameCube title Geist and the Nintendo DS versions of numerous Call of Duty and James Bond games, is reported to have closed its doors earlier today. According to a report from Gameblurb citing unnamed sources, the developer laid off its current staff and is "essentially closing shop." The developer saw significant cutbacks in August, laying off approximately a quarter of its staff due to what n-Space president Dan O'Leary called "momentary reduced demand."

If n-Space is closing its doors, it would be doing so during its most prolific year and while working on some very high profile franchises. The developer has Nintendo DS versions of Tron: Evolution, Call of Duty: Black Ops, GoldenEye and James Bond 007 Bloodstone on the way, as well as Tron: Evolution - Battle Grids for the Wii. n-Space released Toy Story 3 for the Nintendo DS earlier this year.

When Kotaku spoke with O'Leary earlier this year, he indicated that the studio was coming off multiple projects, but that it had "lots of great things ahead." We've put in calls with n-Space, but have not yet heard back from any current or former employees.

Janco Partners' Mike Hickey thinks Sledgehammer Games - and not series creator Infinity Ward - is currently at work on Modern Warfare 3 for publisher Activision.

He said in a research note this afternoon that he expects the game to launch in the financial year ended March 31, 2012.
"We believe Call of Duty: Modern Warfare 3 will be released in fiscal '11, likely developed by Sledgehammer Games, and could sell in excess of +18 million units," Hickey wrote.

The analyst also thinks an online-only Call of Duty game will launch in China during the same timeframe, and an MMO game from Bungie the following financial year.

It's not inconceivable that Sledgehammer could have taken the reins of the Modern Warfare series from Infinity Ward following the latter's well documented problems this year, when up to 50 per cent of staff were thought to have left the studio.

However, Activision has said that Sledgehammer's at work on a CoD title in the action-adventure genre, leading to speculation that it's a third person spin-off rather than a main FPS series entry. That said, a quick look on the developer's website today showed the following message: "We are currently in production on a Call of Duty FPS game."

In April Hickey predicted the closure of Infinity Ward, although the Call of Duty creator has since been on a rebuilding drive and Activision has said it expects the studio "to rise from the ashes".