Cryptic were extremely ambitious. I wonder what their projected sales for Crysis 3 and Ryse were...
Doesnt matter really, they were not getting royalties from copies sold from those games.
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Pretty good decision from Crytek, but they need to still trim some fat. They probably still have at least 200 employees over their budget.
And they have no possibility to go completely under, CryEngine is still very profitable for them, especially when they started selling it to movie studios as a pre-production tool:
http://www.fxguide.com/featured/cryteks-cinebox-an-update/
Still, losing Tiago Sousa must be a big blow for CE's R&D department.