Australian developer Krome, who most recently worked with Microsoft to release the Xbox Live Arcade Game room, is apparently facing some difficult decisions. The situation isn’t good and according to various reports, employees have been notified that recent economic challenges could lead to layoffs and studio consolidation. and perhaps even a closing.

From the news that has been leaking out, despite the fact that Krome is committed to trying to keep the Adelaide, Melbourne and Brisbane studios working, the outcome of upcoming projects as well as deals that are in the works could dictate the future for the developer and those employed by the developer.

Krome has not been immune to staff reductions, as the company has taken action to adjust headcount to better keep in step with the projects that the studio had. Most recently back in April, the company let some employees at the Adelaide studio go once the release of the Game Room project had been completed. The company also had another staff reduction prior to that in November.

As with many other studios, the fate of the employees rests on a number of factors, which are mostly in part out of the studio’s direct control. While the struggle continues for many developers, the employees in general cite the lack of knowledge and stability in the industry as one of the major reasons that they often times leave the industry altogether. Until the economy rebounds for the video game industry as a whole, we are concerned that additional studios will continue to struggle and more developers will be left without employment.