The developer of the DS versions of Call of Duty: Black Ops and GoldenEye has been forced to lay off staff - as it claims that Nintendo's current formats have "nearly collapsed".

n-Space CEO Dan O'Leary said admitted it laid off staff on Friday - a move he called "unavoidable".

However, he said that rumours suggesting the studio was to close completely "draw the wrong conclusion".

On the contrary, O'Leary says the studio is negotiating more deals to add to its already lengthy list of high-profile titles which, in addition to CoD, include the DS version of GoldenEye and Wii version of Tron: Evolution - Battle Grids.

"If all goes as planned we'll be calling people back before the end of the week," said O'Leary.

"Life as an independent developer is often a painful hand to mouth exercise of love. This has never been more true than in the last few years. The games industry is, frankly, a mess," he added.

"The economy has robbed customers of disposable income, reducing the number of titles that purchased per year. People that use to buy many games every year now buy a few AAA titles, supplementing their need with games that are free or cost less than a pack of gum. Anything in the 'middle' is struggling.

"The Wii and DS markets have nearly collapsed and 3DS is a brave new world the publishers are excited about but also very cautious to enter."

He explained that the last-minute fall-out of a deal last week, along with the lack of "commitments from other publishers to offset this setback", forced the studio to "take drastic action".

Call of Duty: Blacks Ops is due out on November 9.

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