Speaking to Gamespot, Walsh said an “undisclosed number” of its employees had been let go, but suggested that potential publishing deals may allow those let go to return.

“With declining game sales, the industry is really feeling the effects of the struggling economy. In spite of industry-wide cutbacks and Krome’s need to reduce costs, we’ve worked really hard to minimise the impact on our staff. These cuts, while incredibly difficult as they affect the coworkers we consider friends, are necessary as we position Krome for the future. We’re also actively pursuing several business opportunities which, if secured, will enable Krome to reemploy some of the staff given notice.”

Krome most recently shipped Star Wars The Clone Wars: Republic Heroes for LucasArts, but outside of pet project Blade Kitten (pictured) the studio has not announced any other games currently in development.

Aussie studio Krome cuts staff [Gamespot]

Robert Walsh heads up Krome Studios, one of the biggest indie studios on this blue planet we call Earth, and points out the very obvious: Game budgets are way up.

“I think that’s one thing that the press, to a certain extent, is forgetting,” said Walsh tells industry site Develop. “They’re saying sales have increased over ten percent since last year or whatever; I mean, dev costs have probably doubled or tripled in the console transition.”

Skyrocketing development costs means skyrocketing sales are need to stay in business. “Thinking about just the volume of sales that are required to recoup a twenty or thirty million dollar game,” he adds, “I mean, you’re talking many millions of copies.” Back in the PS2 days, Walsh explains, there weren’t that many games that costs tens of millions of dollars.

Wonder how long this trend can continue…

Interview: Krome’s Robert Walsh [Develop via GameBizBlog]

The first part of the interview sees Hilliam deconstruct the failure of Fury, citing poor sales in the US and Europe and the sheer size of World of Warcraft as contributing factors:

“Ultimately, sales of Fury were worse than our low case projections. We did OK in Australia, we were top 10 in Australia, but Europe was a complete write-off. In the US – again the Australian sales have nearly outstripped the US market altogether. When Australia is almost your biggest market, you have a problem.”

It’s not all rotten, though. Tom Crago paints a more alluring picture of the local development scene:

“I think the game development industry in Australia is in a great place in terms of the growth we’ve enjoyed,” said Crago. “Revenue-wise we’re in excess of $130 million.”

Understandably Hilliam doesn’t completely agree with Crago’s outlook. In fact, he’s quick to direct developers away from our sunny shores:

“I’ve spent a lot of time in China and once they … they’re very good at copying things at the moment and I think once they get a bit more creative, they’re really going to be a force to reckon with.

“Asia and Eastern Europe are going to replace Australia as an outsourcing post. I don’t see a lot of confidence in seeing the thing grow and grow as it has done in the last 10 years.”

Ah man, Tony, why do you have to go and be so down on Oz?

Don’t worry, there’s more to the chat than Hilliam’s negativity, so be sure to check out the InvestorTV link for the entire article.

Boom or gloom for battle-hardened video game studios [InvestorTV, via Sumea]