Red 5 Studios reorg yields pink slips

Blizzard Entertainment experienced a number of high-profile departures in the mid-2000s, and many of the studios that formed in the wake of that exodus have proven to be short-lived. Namely, Hellgate: London developer Flagship Studios called it quits in 2009, while Castaway Studios failed to release its first effort before hitting financial hardship and reforming as Big Tree Games later that year.

Red 5 is working on an unannounced MMORPG.

Now, one more Blizzard splinter group is on the rocks, as Red 5 Studios announced today that it has undergone company-wide reorganization. Cofounded in 2005 by World of Warcraft team lead Mark Kern, art director William Petras, and Korean operations lead Taewon Yun, the studio has now "formed around a new direction" after picking up additional financial investment from an unnamed backer. According to a Red 5 representative, the studio plans to announce further details on this deal in the near future.

Red 5 also confirmed that an undisclosed number of employees either were laid off or voluntarily departed following the restructuring. Currently, the development team stands at 35, according to a studio representative, with plans to grow as needed. In 2006, the studio received $18.5 million in funding from venture capital firms Benchmark Capital and Sierra Ventures to build an as-yet-unannounced massively multiplayer online role-playing game.

Red 5 did not indicate how its current reorganization would impact development on the title. A studio representative said that additional details on the game, which is to be published by Korean MMOG house Webzen, will be unveiled in the near future.

Notably, Red 5's financial straits are a black eye for Benchmark Capital partner Mitch Lasky, who admonished his former employer Electronic Arts last week over its own economic downturn. "EA is in the wrong business, with the wrong cost structure and the wrong team," Lasky said of the studio. Speaking to Gamasutra today, EA corporate communications VP Jeff Brown said that Benchmark had made multiple attempts to sell Red 5 to the publisher.

"Now that Red 5 Studios is bankrupt, Mitch Lasky can devote more time to giving business advice on his blog," Brown shot back.