Source: LucasArts to Halt Internal Development (Update: LA Affirms Internal Commitment)

Update 2: Speaking with Shacknews, LucasArts representative Margaret Grohne reaffirmed the company's commitment to its internal studio and noted that the studio is continuing to work on the next Indiana Jones game in addition to The Force Unleashed.

"We're committed to our internal studio," she said. "We're working on the next Indiana Jones game internally." When asked if this commitment extends to future efforts, Grohne responded, "I'm not going to comment on projects we have not announced."

As to whether LucasArts will begin focusing more on externally-developed projects, Grohne noted, "We've always had a good balance between the internal studio and working with external partners. Expect that to continue."

Update: When reached for comment, a LucasArts representative only told Shacknews: "LucasArts is committed to the internal studio."

The company did not address the subject of more layoffs or the outsourcing of future projects, which could theoretically leave the publisher as a "think tank" that contracts external developers to expand on internal concepts and design documents.

Original Story: Following word of routine terminations at developer LucasArts, a reliable source has informed Shacknews that the company plans to cease internal development and fire roughly 100 more employees after the completion of Star Wars: The Force Unleashed.

LucasArts is known to have at least one other title, an Indiana Jones game, in development. Shacknews was told that, following the team's termination, all other partially-completed internal projects will be outsourced, a move that fits with earlier rumblings.

Due out September 16, The Force Unleashed is the studio's first internally-developed Xbox 360 and PlayStation 3 release, and marks the first LucasArts-developed title since 2005's tactical shooter Star Wars: Republic Commando (Xbox).

Though the Xbox 360 and PS3 editions of The Force Unleashed are being handled within LucasArts, the PS2, Wii and PSP versions are in development at Krome Studios, with n-Space on the Nintendo DS release.

While LucasArts has been making an effort to do more in-house development since reforming its internal team in 2004, the studio has a rich history of outsourcing its properties.

Other past and present development partners include TT Games (LEGO Star Wars, LEGO Indiana Jones), Day 1 (Fracture), BioWare (Star Wars: Knights of the Old Republic), Pandemic (Star Wars: Battlefront) and Totally Games (X-Wing, TIE Fighter).

No reason was provided for LucasArts' decision to axe internal development. During his GDC 08 lecture, Force Unleashed lead Haden Blackman admitted that the studio encountered issues with "unchecked ambitions" and the use of multiple licensed technologies during the title's long development.

"Some that believe that more money can be made by licensing the SW and Indiana Jones IP to third party developers," an anonymous source, believed to be an ex-employee, wrote in the Gamasutra.com comments after LucasArts president Jim Ward resigned "for personal reasons."

"We are definitely committed to the internal studio," LucasArts public relations director Margaret Grohne said last week. "We have a good slate of games and we have some good stuff going on in production."