The layoffs were part of a "strategic workforce reduction" enacted by the troubled publisher, which will see a cut of about 10% of the company's global workforce. Interim CEO Matt Booty expressed remorse over the reduction.
"While this was a very difficult decision, we feel it was the right thing to do for the future of Midway," Booty said. "We view every game as an investment that must meet certain standards for quality, scheduling, and profitability."
While Booty did not specify which title was axed, sources within the company told Kotaku that the cancelled game was Criminal, an open-world crime effort in development at Midway's Austin branch.
Midway had announced in October of last year that it was developing two "ambitious open-world games." The first of the two was eventually revealed as Surreal Software's This Is Vegas (PC, PS3, 360), while Criminal was likely the second.
The news follows last week's revelation of a staggering $34.8 million loss in its 2008 fiscal second quarter, which in turn followed similarly disappointing first quarter losses of $34M.
Shortly after the disclosures, Midway Chicago head Mike Bilder resigned to pursue a position at another Chicago-based game development studio. Midway marketing vice president Mona Hamilton and media relations director Reilly Brennan were also confirmed to have left the company.
The layoffs mark the latest developments in what has proven a difficult year for Midway, which late last year announced a massive restructuring effort to bring the company to its first annual profit since 1999.