Unity has announced a round of layoffs and the closure of Weta Digital, after it decided to end its agreement with Peter Jackson's Weta FX. The layoffs will impact 265 employees, a total of 3.8% of its workforce, Reuters reports.

Back in December 2021, Unity acquired a part of Peter Jackson's Weta Digital, including "Weta Digital's tools, pipeline, technology, and engineering talent" in a deal worth $1.625 billion. The remainder of Weta Digital remained under Jackson's ownership and rebranded to Weta FX, with the company maintaining an agreement to use Weta Digital's tools and services.

Now, Unity says it has terminated the professional services part of this agreement, which will result in the layoffs of 265 employees involved in the agreement. Weta FX issued a statement to FX Guide, saying it would be looking to re-hire as much of the Weta Digital team as possible. Unity will retain ownership of the tools it acquired, and they will remain readily available for Weta FX to use.