Sony is shutting down Knack and 'The Last Guardian' developer Japan Studio

Sony is reportedly shutting down its oldest in-house developer. According to VGC, the company hasn't been renewing the contracts of many of the employees at Japan Studio. The developer is best known for its work on franchises like Gravity Rush, Ape Escape and Knack, as well as for helping out with Bloodborne, The Last Guardian and the recent Demon's Souls remake. Some parts of the studio, including the team that works on Sony's Astro Bot franchise, will continue to work for the company, but by the sounds of it, Sony has parted ways with most of the other staff.

Recent tweets from several people who worked at the studio appear to corroborate VGC's reporting. The move comes after several prominent employees, including Gravity Rush and Silent Hill director Teruyuki Toriyama, left the company late last year. We've reached out to Sony for comment, and we'll update this article when we hear back from the company.

VGC suggests Sony's decision to close Japan Studio stems from the fact the developer hasn't been profitable in recent years. In November, Bloomberg published a report that said in recent months many of Sony Japan's development teams had been downsized. According to the publication, the feeling at Sony Interactive Entertainment's US division was that the company didn't need games that "only do well in Japan."

Update 8:37 PM ET: Sony has confirmed that it's reorganizing Japan Studio. "In an effort to further strengthen business operations, SIE can confirm PlayStation Studios JAPAN Studio will be re-organized into a new organization on April 1," a spokesperson for the company told Engadget. "JAPAN Studio will be re-centered to Team ASOBI, the creative team behind Astro's PLAYROOM, allowing the team to focus on a single vision and build on the popularity of Astro’s PLAYROOM." The company added that it will concentrate the majority of its localization, IP management and external production efforts within its PlayStation Studios brand.