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foxtail said:
curl-6 said:

Yeah, I'm aware of all this, I just forgot that Prime was out by the time Barcia was replaced by Kelbaugh.

I'm pretty sure production was well underway on Prime at the time of the embezzlement, layoffs, etc. Production on Prime began in 2000, and Jeff was kicked out with Nintendo's purchase of Retro in 2002, for instance.

I feel like I'm just dragging the thread off topic here though.

I still think the mass of those layoffs were due to the cutting of the 4 game projects and dissolving those 4 extra teams.  The embezzlement happening in the chaos of those changes.

The reports said that Retro had anywhere between 200 employees (source IGN) and 120 employees (source Kelbaugh) at the height of production for those 4 failed game projects.

The last of the 4 failed projects was cut at the end of July (19th) 2001, after which they solely worked on Metroid Prime.  9½ months later (May 2, 2002) Nintendo buys out Retro and replaces Spangenberg and 6½ months after that (November 17, 2002) Metroid Prime is released. 

From the credits for Metroid Prime it seems to show around 41 full time employees directly working on the game at Retro.  That make me think going from 4 full teams to 1 team accounts for most of the massive the drop in staff (200/120 to ~41).  

A lot of people were just let go after projects were terminated.

That would account for a lot of the people who left, but there were quite a few who departed Prime midway through. For example, IGN's article credits James Dargie as a source, saying he did modelling, texturing, UI, and animation for the game, but left partway through, and was not credited in the final game as much of his work was redone by others.

Another told IGN that the situation in late 2000 early 2001 was pretty bad:

"Over time I became amazed at the sense of paranoia that permeated everything at Retro. There were security cameras mounted every twenty feet in our halls, and it was common knowledge that they were for keeping track of the employees rather than protecting against anyone breaking in. Apparently the network administrator had to provide a daily sheet detailing the Internet use of every employee." Our source continues, "We were micromanaged on little things like how long we took for lunch. Retro had made a big point of hiring seasoned industry veterans to work there, but there was a major drawback to that: they had a company full of people who knew they could get better jobs elsewhere, and they often did. The common line was that employees were 'not staying at Retro in droves'. It was not uncommon to have new employees leave two or three weeks after starting. It honestly felt a little like living in a communist block country: you kind of didn't know who to trust, who would rat on you, that sort of thing."

http://au.ign.com/articles/2004/12/18/a-retrospective-the-story-of-retro-studios?page=8