There have been lots of rumors about Microsoft developing the next version of the Xbox game console, including the most recent rumor that it won't have a disc drive. However, there hasn't been a lot about the actual games that are being made to run on the hardware. Now there's a new rumor that claims at least one Next Xbox game that was under development has now been canceled by Microsoft.
Kotaku reports via unnamed sources that this week, Microsoft informed the game's developer, Obsidian Entertainment, that it was no longer going to publish the game which was being made under the code name North Carolina. Obsidian, which has a long list of credits including Fallout: New Vegas and most recently Dungeon Siege III, had reportedly been working on the Next Xbox game for the past several months.
The article offers no other information about what Obsidian's game was going to be like nor why Microsoft decided to pull the plug. However, as a consequence of Microsoft's decision, Obsidian reportedly laid off as many as 30 of its team members this week. At the moment the team's only announced project is an RPG based on the South Park TV series that's due for release in late 2012.