Following news of massive layoffs at Microsoft last week, the company has confirmed that Aces Studio has been shuttered. A spokesperson told IGN that the decision was made within Microsoft's Internal Entertainment Business "to align our people against our highest priorities." Apparently the studio that built the Flight Simulator franchise is no longer a high priority. The future of the franchise is unclear at the moment, but Microsoft doesn't appear to be giving up on it just yet.

"We are committed to the Flight Simulator franchise which has proven to be a successful PC based game for the last 27 years," said the spokesperson. "You should expect us to continue to invest in enabling great LIVE experiences on Windows, including flying games, but we have nothing specific to announce at this time."

With the closure of Aces, and previously Ensemble, FASA and Carbonated Games (not to mention letting Bungie go independent), Microsoft's first-party development stable appears to be dwindling. One has to wonder what the future holds for Rare and Lionhead if this trend persists.

In related layoffs news, Dean Takahashi at VentureBeat is reporting that Games for Windows – Live general manager Chris Early didn't survive the cuts at Microsoft. The company has had a challenging time getting PC gamers to warm up to the Games for Windows – Live service since it launched more than a year and a half ago.