Activision has hit DJ Hero developer Freestyle Games with severe layoffs and axed the Guitar Hero series, Eurogamer understands.
United Front's open world game True Crime has been cancelled, sources have told Eurogamer.
An announcement is expected tonight ahead of the publication of Activision's financial results.
In December last year Activision Publishing CEO Eric Hirshberg said Guitar Hero, and the music genre, had a future following dismal sales of Warriors of Rock.
"It's no secret that not just Guitar Hero, but also Rock Band, and the music category in general, do not have the same mass appeal today that they did a few years ago," he said.
"That said, I think that we would be foolish to not try and build on the strength of the Guitar Hero brand, because as you said, it's a pretty strong brand with great recognition and great likeability, and there's a lot to work with there.
"I think the road to rejuvenating that category goes through innovation," he continued. "The premise of Guitar Hero - that everyone has an inner rock star - it's something that we've all done forever. Some version of singing into a hairbrush, or holding a tennis racket like a guitar, or singing karaoke, or singing into the bathroom mirror - we all do that.
"I think a lot of video game genres that have had tremendous staying power have a fantasy-fulfillment element at their core, whether it's driving the fast car, or participating in professional sports, or going into battle. People don't get to do this in everyday lives.
"So I think the core premise and the core insight at the heart of the Guitar Hero franchise is still very relevant. I just think we need to escalate the experience for people and innovate. I think the genre is still fairly new, and so I think it's probably time for us to really look at what the next level looks like for that genre."
The publisher had confirmed the return of the franchise in 2011.
Eurogamer's calls to UK developer Freestyle Games went unanswered this evening. United Front Games had not responded to Eurogamer's request for comment at the time of publication.
Eurogamer has contacted Activision for comment.