Disney Drops a Death Star-Sized Bomb on LucasArts

Not even Obi-Wan Kenobi could have saved this game studio. When Disney (NYSE: DIS ) acquired the entire Star Wars franchise last fall, many wondered what would become of the beloved saga.

The studio quickly announced that three new Star Wars films were in development. JJ Abrams, famous for directing two Star Trek films and for creating a number of hit TV shows, will helm the new trilogy.

Other directors are expected to take on a handful of Star Wars spin-offs, TV shows and other projects.

While this may not sound like the most productive way to use the Star Wars license, consumers will have to wait until the projects are finished before they can fully judge Disney's decisions.

Unfortunately, there has already been one casualty. Lucasfilm may be in full production mode, but LucasArts -- George Lucas' game division, which was acquired as part of the buyout last fall -- has been shut down.

According to Computerworld , LucasArts still exists as one of the many divisions at Disney. However, Disney has halted production of all games at the studio, indicating that LucasArts' days are numbered.

Lucasfilm spokeswoman Barbara Gamlen told Computerworld that "no decisions have been made yet" regarding the studio's future. "We've moved to a different structure and are considering whether we market under the LucasArts brand name."

At this point that seems very unlikely. According to CNN and Game Informer , the studio has been shut down. While it is not yet known how many individuals will lose their jobs, layoffs are expected across the board.

Disney reportedly intends to use third-party developers to develop fresh Star Wars games.

This is a very different strategy from the one Disney employed last decade when it acquired Climax Racing and other studios to beef up its game lineup. Disney also pulled Pixar game development away from THQ to publish those games internally.

The studio took things one step further when it acquired Junction Point Studios from Warren Spector, a man best known for the Deus Ex franchise. Spector was famous for creating dark, adult-oriented video games, but he was overjoyed to be working with Disney.

"I believe that the creative talents of our two companies and our shared ambition to bring distinctive, compelling experiences to gamers make this an ideal alliance," Spector told 1Up in 2007. "We look forward to bringing exciting, innovative, and entertaining new experiences to gamers and Disney fans alike."

After releasing two Epic Mickey games, Disney shut down Junction Point Studios. Disney also shut down three other studios -- Propaganda Games, Climax (known as Black Rock Studios) and Fall Line Studios, which was merged into a remaining division.

Disney eventually caved and moved Pixar game duties back to a third-party developer. In 2012, the studio turned to Behaviour Interactive to develop the video game based on Brave. Disney also enlisted in the help of Activision to produce and promote the Wreck-It Ralph video game.

Observers suspect that by closing LucasArts, Disney will cease production of Star Wars 1313, one of the most anticipated games to bear the Star Wars name. However, a Lucasfilm representative told Game Informer that the title could be saved and "come out via licensing."

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or Follow him @LouisBedigianBZ

(c) 2013 Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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