The cancellation comes on the heels of rumors, reported by Kotaku, that the Vancouver-based Propaganda Games has been hit with another wave of layoffs. In February 2009, multiple sources told me that Propaganda Games saw "at least 75 employees" shed at both Propaganda and, the now defunct, Fall Line Studios. At that time, sources also revealed that a planned sequel to Turok was scrapped due to the layoffs.
According to the Kotaku report, Propaganda Games, which is also working on Tron: Evolution, have lost "as many as 100" employees. In a statement made to press, Disney Interactive confirmed the layoffs, but would not detail how many employees would be affected.
Disney Interactive Studios confirms the cancellation of the Pirates of the Caribbean: Armada of the Damned video game which was scheduled to be released in 2011. As a result of this decision, Disney Interactive Studios completed a restructuring of Propaganda Games, its Vancouver, BC internal studio, affecting one of the studio's two development teams.
The studio is still in active production of Tron: Evolution, the video game, which will be released on December 7, 2010 with additional DLC (downloadable content) support following the game's release.