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Rovio is shutting down its London studio and laying off all seven team members, just over a year after it set up shop.
The Angry Birds maker opened the fledgling in-house studio in January last year, with a view to creating massively multiplayer online games.
It initially planned to expand the studio to 20 employees, however, as Business Insider reports, an underwhelming fourth quarter performance has instead resulted in its closure.
"Although Rovio's business has a healthy foundation, we are not satisfied with the current performance," said company CEO Kati Levoranta.
"In the last quarter of the year our new games, Angry Birds Match, Angry Birds Evolution, and Battle Baylanded short of our expectations. Competition in the market intensified, which led to a significant increase in the unit costs of user acquisition, especially in the puzzle genre."
Given that its newest releases are struggling to compete, Rovio intends to change its fortunes by investing in its crop of top live games, such as Angry Birds 2 and Angry Birds Friends.