The pink slips have started being handed out at Rare as a by-product of the announcement that Microsoft will restructure the studio in hopes of being able to simplify development. The art and engineering departments have been hit already with twelve employees being told that they need to reapply for possible open positions elsewhere in the company.

The decision to restructure Rare comes after the studio has had a string of only moderately successfully titles, including the latest Banjo release, as well as Viva Pinata sequel, which did well with reviewers but not with consumers who just didn’t buy the titles. The lack of sales has led some to speculation that this is a studio whose time has passed.

While Rare continues to be Microsoft Gaming Studios’ crown jewel, the restructuring should be able to make the studio more efficient and effective. Some are concerned that original IP would be sacrificed and pushed out to make way for the most popular titles which the company believes will generate the most revenue, which could lead to a halt in the type of innovation that a studio like Rare has been able to bring to the table.

Sources suggest that Rare currently has four projects in various stages of development. While there has been a lot of speculation on what these projects are, no one is currently talking. One of our sources is saying that we can expect an announcement on at least one of the new Rare titles that will be released later this year at E3. No, we don’t think it is a sequel to Grabbed by the Ghoulies (but who knows?), but we think it is more likely an addition to the Perfect Dark franchise.