Updated: Activision shutting down Bizarre and Budcat studios?

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Anonymous development sources inside Iowa City-based Budcat Creations phoned into PC Gamer this morning to inform us that instead of developing games this morning, they're sitting in a bar down the street drinking together and calling friends and family. The reason? When they arrived at work this morning they found security guards outside their office building and "too cheerful" consultants brought in to tell them they're all being let go. Similar reports are coming out of UK developer Bizarre Creations, who made Blur for Activision just this year.

Update: Activision is taking 90 days to decide what to do with Bizarre Creations: restructure, sell, or close.

More Update:Kotaku's source told the game news site that instead of shutting down the entire studio, Activision has given 3 months' notice to over 200 of the employees at Bizarre Creations, and is considering its options for what to do with the studio. There are a lot of rumors flying around Twitter and game news sites right now, and Activision's only official statement on the matter so far leaves their options open:

"Over the past three years since our purchase of Bizarre Creations, the fundamentals of the racing genre have changed significantly. Although we made a substantial investment in creating a new IP, Blur, it did not find a commercial audience. Bizarre is a very talented team of developers, however, because of the broader economic factors impacting the market, we are exploring our options regarding the future of the studio, including a potential sale of the business."

Our anonymous source in Budcat Creations reports that the severance packages are very generous, but (of course) they'd all much rather prefer to continue developing the games they love. We at PC Gamer hope that Activision can find a way to keep these "very talented team of developers" employed and working on great games for us to enjoy.

After being acquired by Activision two years ago, Budcat Creations has created console-specific versions of popular Activision games recently, including many in the Guitar Hero and Band Hero franchises.

Bizarre Creations was acquired by Activision three years ago and is most known for developing Blur, which released this year.