Hoped that those affected will find new positions within the Microsoft Studios network.
Lionhead, developer of the recently released Fable: The Journey, has confirmed up to 10 per cent of its workforce could lose their jobs.
However, Lionhead says this is simply a result of a smaller team being needed for the start of a new project, before this is ramped up once again.
"Following the completion of Fable: The Journey, Lionhead Studios has begun work on its next projects,” a statement released to MCV explained. "As is common in the games industry, a smaller headcount is needed as projects kick-off and ramp up as full-production gets underway.
"At this time a small number of positions have been identified as at risk of redundancy and the affected employees were notified today. We are working very closely with those people during this difficult time, to help them explore alternative opportunities within Microsoft – including new roles at Microsoft Studios which is growing in the UK and actively hiring across all locations, including Lionhead, Rare, Soho Productions and our recently announced new studio in London.
"There is a thoughtful and fair consultation process for all employees to ensure they have the best possible chance of finding a role inside Microsoft Studios. We are working closely with the affected employees during this difficult time, and helping them to explore opportunities.
"We do not have an exact number to share but by the end of 2012 these reductions will account for less than 10 per cent of the overall headcount at Lionhead. More importantly, we expect to add over 100 people to Microsoft Studios in the UK over the course of the year to June 2013."
Fable: The Journey failed to attract gamer attentions, charting at No.37 in the UK Video Game Chart.