Speaking to a Midway representative just moments ago, Kotaku learned that around 180 people lost their jobs today due to the cost-cutting measures, which includes the complete closure of Midway Austin, which was working on long-term projects not due out until 2010 or 2011. Workforce reductions affected Midway locations in Austin, San Diego, and Chicago.

“The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed,” said Matt Booty, president and CEO of Midway. “These initiatives, along with the other steps we have taken this year, are a response to the specific challenges we are facing at Midway, many of which have been amplified by the current economic conditions.”

Those specific challenges of course include a tremendous amount of debt and the threat of delisting on the New York Stock Exchange. We wish the former Midway employees the best of luck. Hit the jump for the full release.

Midway Announces Cost-Reduction Measures
Actions include layoff of 25% of staff, closure of Austin studio, and suspension of several non-core projects

CHICAGO—(BUSINESS WIRE)—Midway Games Inc. (NYSE: MWY) today announced that the company is taking significant steps to reduce its cost structure, including a reduction in workforce, the closure of its Austin, TX, studio, and the suspension of development on several non-core games.

The cost-cutting initiatives will involve a reduction in force across multiple disciplines within the company in its Austin, Chicago and San Diego locations. Headcount will be reduced by approximately one quarter of Midway’s global workforce. The suspended non-core projects were previously scheduled to release in 2010 or 2011 and have not yet been made public.

“The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed,” said Matt Booty, president and CEO of Midway. “These initiatives, along with the other steps we have taken this year, are a response to the specific challenges we are facing at Midway, many of which have been amplified by the current economic conditions.”

Additional details on the reduction and the financial impact can be referenced in the report filed today on Form 8-K with the Securities and Exchange Commission.

Today's layoffs are said to cut deepest into the ailing company's product development and marketing team, though we're told all departments will feel a bit of the cuts. We are told that people who were laid off were called last night and told not to come in. The rumor places total lay offs as high as 160 people, though that appears to be an estimate.

This latest rumor comes a bit more than a month after 20 to 30 people were let go from Midway's Chicago office. This summer the company laid off 90 from their Austin studio. The news shouldn't be too surprising to those following the developer's apparent death spiral. Last week Variety uncovered SEC filings which showed that Midway is 50 days away from declaring bankruptcy.

It's never a good time to be laid off, but making it two weeks before Christmas certainly doesn't help. We've emailed Midway for comment and will update as soon as we hear confirmation, clarification or denial.

Update: The rumors are true.

Midway has not yet responded to request for confirmation and comment.

The rumored deep cuts are said to leave mysterious open-word crime game, code-named "Criminal", dead in the water and torpedoes the company's core-tech.

Another tipster tells us that a majority of those laid off were from the recently canceled Criminal team. So many people were laid off at the studio, the tipster says, that those who weren't received a phone call Sunday night telling them to stay home. Everyone else who showed up were "processed and laid off."

The rumor comes less than a week after Midway confirmed to Kotaku that a trio of high-level folks had left Midway's Chicago studio. Among those to leave were Mike Bilder, head of the studio, the internal developer responsible for Stranglehold, Mortal Kombat and Blitz: The League. Other confirmed departures include Mona Hamilton, vice president of marketing, and Reilly Brennan, director of media relations. Two other senior staffers were also said to have left the company, but we were unable to verify that they were indeed gone.

The news and rumor both come shortly after an earnings report that shows Midway lost some $34.8 million for the quarter.

We have contacted Midway for comment on Austin and on the company's health as a whole. Stay tuned for updates.

Update: Midway has confirmed layoffs.