Oct 15, 2010 06:20 GMT  ·  By

Pirates of the Caribbean: Armada of the Damned has been canceled, as Disney confirms that the whole project was scrapped and the development studio, Propaganda, will employ major layoffs today.

Pirates of the Caribbean: Armada of the Damned was set to use Disney's blockbuster franchise to push a whole new type of gameplay onto gamers around the world.

The title was set to be launched next year, and was a third person role playing game, set in the Pirates of the Caribbean universe.

"Disney Interactive Studios confirms the cancellation of the Pirates of the Caribbean: Armada of the Damned video game which was scheduled to be released in 2011," Angela Emery, Disney Interactive Studios' vice president of communication revealed to Kotaku.

"As a result of this decision, Disney Interactive Studios completed a restructuring of Propaganda Games, its Vancouver, BC internal studio, affecting one of the studio's two development teams. The studio is still in active production of TRON: Evolution, the video game, which will be released on December 7, 2010 with additional DLC (downloadable content) support following the game's release."

According to inside sources, Propaganda will lay off somewhere around 100 employees since Armada of the Damned was canceled, and it isn't known if the studio will continue as it is, or if it will be restructured from the ground up.

Rumors started last month about a tense situation at Propaganda, but nobody thought that one of the studios triple-A titles would be scrapped as a consequence.

Pirates of the Caribbean: Armada of the Damned was set to appear in 2011, for the PC, PlayStation 3 and Xbox 360, and would have placed the player in the pirate boots of a Captain James Sterling, who would travel around the world and make a name for himself.

Armada of the Damned was part of Disney's new assault on the video games industry, as the company has developed a large network of studios and is preparing quite a few new games based on its properties, including the aforementioned Tron: Evolution or Epic Mickey.

It's sad to hear that the game was axed, and hopefully things will get better over at Propaganda.