In a blog post published on Irrational Games' homepage, director Ken Levine explains, "While I'm deeply proud of what we've accomplished together, my passion has turned to making a different kind of game than we've done before.
"To meet the challenge ahead, I need to refocus my energy on a smaller team with a flatter structure and a more direct relationship with gamers. In many ways, it will be a return to how we started: a small team making games for the core gaming audience."
The studio will close after it rolls out the last downloadable content package for BioShock Infinite.
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Levine and 15 of the current staff will form a "smaller, more entrepreneurial endeavor" within Take-Two with the aim of making "narrative-driven games for the core gamer that are highly replayable" and exclusively digitally downloadable. The remaining employees will be laid off.
Take-Two shares are rallying on Friday's news that David Einhorn's Greenlight Capital had taken a stake of 4.2 million shares, or 3.4% of shares outstanding. The stake is worth around $80 million.
By late afternoon, shares had added 6.3% to $20.32. Trading volume of 5.1 million exceeded its three-month daily average of 3.9 million.