Germany's Daedalic Entertainment is shutting down its development arm.

The company confirmed the news – first reported by local publication GamesWirtschaft – to Polygon, in which it said that it will be focusing fully on its publishing business moving forward.

This comes in the wake of the less-than-stellar release of The Lord of the Rings: Gollum, something that Daedalic said "did not live up to the expectations we had."

"Daedalic Entertainment has made the decision to close its development department, with full focus now on our publishing business," the company wrote.

"Eight promising releases will be launching in this financial year alone.

"Even though The Lord of the Rings: Gollum did not live up to the expectations we had for the game, we are very grateful for the opportunity and the learning experience it brought us.

"Currently, we are working on another patch for The Lord of the Rings: Gollum. A follow-up project in The Lord of the Rings universe that has already been started will be discontinued. The Federal Ministry for Economic Affairs and Climate Protection, as the body responsible for the federal funding, was informed of this some time ago.

"We value each and every member of our team very much and it is important to us that the transition goes as well as possible. We will therefore support our former employees in finding new opportunities within our network.

"A difficult break, but also a new beginning in the already long history of Daedalic Entertainment."