USgamer has a confirmation of layoffs at Telltale Games following a reports on Gamasutra that originally indicated developer may have shut down completely, and it sounds like only a matter of time before it does. The company is retaining a small team of about 25 after the layoffs, which The Verge says came with very short notice and no severance pay. They are not specifying what this skeleton crew is working on, but it's reported that they are to finish The Walking Dead game and then the studio will close (thanks Ars Technica), with their planned Stranger Things game and The Wolf Among Us 2 reportedly cancelled. Telltale has been the subject of some negative headlines recently, as there have been reports of a toxic culture there, and they were sued in the spring by their former CEO, and their statement to USgamer indicates things have taken a turn for the worse:

Today Telltale Games made the difficult decision to begin a majority studio closure following a year marked by insurmountable challenges. A majority of the company’s employees were dismissed earlier this morning, with a small group of 25 employees staying on to fulfill the company’s obligations to its board and partners. CEO Pete Hawley issued the following statement:

“It's been an incredibly difficult year for Telltale as we worked to set the company on a new course. Unfortunately, we ran out of time trying to get there. We released some of our best content this year and received a tremendous amount of positive feedback, but ultimately, that did not translate to sales. With a heavy heart, we watch our friends leave today to spread our brand of storytelling across the games industry.”

Telltale will issue further comments regarding its product portfolio in the coming weeks.