Red 5 Studios has been the subject of a lot of whispers lately, with some claiming that the developer was experiencing money troubles. The studio, which had been funded by Benchmark Capital, apparently is undergoing reorganization, not a bankruptcy; while the in-development and unannounced MMO title still is in the works, according to the industry sources.

As part of this reorganization, apparently over 30 developers have lost their jobs as the company apparently will refocus its efforts away from a MMO futuristic military game, which is rumored to use the Offset Software engine, to a new project that is aimed at the Chinese market instead. MMO futuristic military project is on hold at the moment.

Red 5 has been watched with much anticipation as the studio was started by former World of Warcraft developers Mark Kern, William Petras, and Tawwon Yun. Some sources claim that the studio was close to total closure a few months ago, but has been sold to an unnamed buyer.

Little is really known about Red 5’s project plan going forward or if they will return to work at some point on the MMO futuristic military project that has so many wondering what these talented developers could have up their sleeve. It sounds like we will not know for awhile what the total fate of the studio is until the reorganization is completed.