A month ago, we reported that SEGA had hit troubled times. Massive financial losses had forced the company to completely restructure its games division, focusing exclusively on established, well selling franchises. Particularly franchises popular in the west (Total War, Football Manager, Sonic, and Alien). Everything else? Cancelled, with the exception of games already on the fringe of release (eg: Anarchy Reigns). Give the secretive nature of game development, it was impossible for us to know what in production games had given the flick. Until now, that is.

Originally reported by Spong, rumours are circulating that Platinum Games’ Bayonetta 2 has been cancelled. Sequel to the popular 2009 brawler Bayonetta, reports from both Spong, and sources close to Rocket Chainsaw, indicated that Bayonetta 2 would include multiplayer options via the introduction of a new character, one Spong is reporting as a member of the US military. Rocket Chainsaw has been lead to believe that Bayonetta 2 was also quite deep in production, rather than cut early, having already has two planned announcements (including the 2011 Tokyo Game Show) cancelled at the last minute.

If true, this would indicate a major loss to Platinum Games, as well as director Hideki Kamiya, who hasn’t released a game since Bayonetta. And, of course, fans of the series looking forward to a new entry.

We’ll have more on this report as it develops.