Update: EA has apparently informed industry news site Gamasutra that the rumors of Dead Space's demise are completely false. That didn't take long to get debunked. Here's the tweet.
Speaking on condition of anonymity to Videogamer, a source claims that Electronic Arts has canceled the next game in the Dead Space series due to poor sales of Dead Space 3.
Dead Space 4 was apparently in pre-production at Visceral Montreal, until EA execs paid them a visit to let them know they were shutting down the project and restructuring the company. Game Informer reported last month that every at Visceral Montreal has been laid off following completion of Army Of Two: The Devil's Cartel.
The source also says Dead Space 3 was almost canceled half way through production, and suffered several budget cutbacks. Visceral was apparently also mandated by EA to make the game more action heavy in an attempt to boost sales to a wider audience. If true, EA's meddling with the franchise may have been what killed it, since Dead Space 3's first week sales were reportedly down more than 30% from Dead Space 2. Official sales numbers for the game to date have not been released though, so we have no way of confirming if in fact Dead Space 3 sold poorly.
It's worth noting that Visceral Montreal was only doing some basic pre-production on the game. The Dead Space series is developed by Visceral Redwood Shores, which is Visceral's main studio. That studio was apparently unaffected by last month's layoffs and could very well still be working on Dead Space 4, if this anonymous tipster is wrong.
When contacted for comment, Electronic Arts gave a standard "We don't respond to rumors and speculation" statement.