After multiple Tweets and Facebook messages indicating that many employees of Microsoft's Vancouver-based studio have been laid off, it was assumed that the studio had been completely shut down.
Microsoft has quickly quashed rumors of a shutdown, though 35 employees have reportedly been let go. Instead, they have merely cancelled production of two projects, Microsoft Flight and Project Columbia (a Kinect TV project), in an official statement:
Microsoft Studios is always evaluating its portfolio of products to determine what is best for gamers, families and the company, and this decision was the result of the natural ebb and flow of our portfolio management. Many factors were considered in the difficult decision to stop development on "Microsoft Flight" and "Project Columbia," but we feel it will help us better align with our long-term goals and development plans. For "Microsoft Flight," we will continue to support the community that has embraced the title and the game will still be available to download for free at http://www.microsoft.com/games/flight/.
So luckily, Microsoft Flight will still be available for fans who have stuck with Microsoft's history of realistic flight simulators.
Unfortunately, this does not bode well for the Vancouver gaming industry, as this follows Capcom's layoff of 20 employees from their Vancouver studio and Rockstar's full move away from their Vancouver studio as well. Hopefully, all employees affected from this localized slump will be able to find work soon.