UPDATE 11.30am UK: Layoffs at Creative Assembly are expected in the wake of Sega's decision to cancel Hyenas, Eurogamer understands, with positions across the studio affected.

Creative Assembly staff were informed of Sega's decision this morning. We've contacted the publisher for more.

ORIGINAL STORY 10.45am UK:Sega has dramatically canned Hyenas, the upcoming space-set loot shooter from Creative Assembly.

The publisher demoed the game to press and public only last month at Gamescom.

Today, Sega announced it had cancelled Hyenas in a financial update. It blamed the decision on "lower profitability of the European region" which had caused it to review its project portfolio. "The resulting action will be to cancel Hyenas and some unannounced titles under development," Sega wrote.

Hyenas was being developed by Creative Assembly, the UK-based team better known for its long-running Total War strategy series.

But this space-based loot shooter was something very different: a hero shooter that looks a bit like Payday in space. Here, the loot was licensed objects you'd recognise from the real world - like a Sonic the Hedgehog figurine.

One of the heroes in the game was even a Sonic the Hedgehog cosplayer.

In early August, Sega top brass raised eyebrows by publicly branding Hyenas' development as "challenging". At the time, Sega said it was also looking into "adjusting" the game's business model - hinting it could launch as a free-to-play game instead.

After playing a few matches of Hyenas on the Sega booth at Gamescom, I sat down with two members of its development team to discuss how the project was faring, and Sega's comments.

At the time, Creative Assembly was upbeat on the game's chances, while acknowledging the risks involved.

"I think it's fair," product director Alex Hunnisett said, when asked about Sega's "challenging" comment.

"It's a new IP, a new genre for us, that is challenging. I think [associate game director Christoph Will] turned around and said 'if you ask 10 game developers if what they're doing is challenging, nine would say yes and the other one would be lying'."