Recalling Cyan's status in late summer: their game development division was down to a skeleton crew, whose only funded project was iPhone Myst. They were working getting Uru back up as a low-budget, low-profile sandbox for fans to play in. Most of the company's revenue came from CyanTest, their game-testing service.
Unfortunately, in October, Cyan announced that "a major revenue stream to Cyan was disrupted". We now have a little more information: CyanTest's biggest customer was Gamecock Media -- which was recently bought out by SouthPeak Interactive. Cyan's testing deal with Gamecock apparently didn't survive the acquisition.
As a result, we now hear that fifty employees of CyanTest were laid off today. (News article from the Spokesman-Review.)
Presumably Cyan has spent the past month looking for new customers, and failing. The layoffs leave seven people in CyanTest. So, a skeleton crew on both sides. They have a few small game-testing customers, and iPhone Myst is on track, but Cyan is now nearly nonexistent.
Cyan has pitched the idea of a new video game to several publishers but hasn’t been given any funding yet. If the new project is funded, the game development side of the company will ramp up, [CEO] Fryman said. (ibid.)
As long as I've got this thing lit up, have some comments from Rand Miller on Myst Online, given at a panel discussion at the Austin GDC in September.
Elaborating on why the game couldn't manage to initially keep itself alive, Miller said, "I'm always going to fall back on 'we were ahead of our time,' because it's easy."
"The biggest thing we did was an all or nothing proposal from an entertainment point of view," he continued. "It's not like you can start up a new TV network and give one show a month and expect it to be successful... We couldn't quite pull that off with the money we had." (from the writeup on gamesindustry.biz)
EDIT-ADD: The layoffs may have been as early as October 7th, the day Cyan posted about revenue trouble. The news article only says "recently" (and not "today", as I originally misread). Rumors about layoffs popped up that day (see this forum thread), although I had no confirmation until now. Some time between then and now, anyhow.
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