A total of 185 people have been laid off after the collapse of video games firm Realtime Worlds, administrators have confirmed.
It comes as a Dundee MP called on the UK government to "look again" at tax breaks for the computer games industry.
The company, founded by the creator of Lemmings and Grand Theft Auto, went into administration on Monday.
In Dundee, 157 of the company's 210 staff have lost their jobs, along with 28 of the firm's US staff in Colorado.
The SNP MP for Dundee East, Stewart Hosie, said he was saddened by the news of Realtime's demise.
A tax break for the industry was cancelled by the UK government in June. The Scotland Office said the measure had only ever been a proposal by the previous Labour government.
Administrators Begbies Traynor have said they are hopeful of selling the firm as a going concern after interest from would-be buyers on both sides of the Atlantic.
"We are actively pursuing all these expressions of interest which have come from both the UK and US," joint administrator Paul Dounis said.
Realtime, which made 60 staff redundant last week, was viewed as one of the biggest players in the UK computer games market.
Mr Hosie said: "If we're growing a vibrant computer games sector we need to look at what competitor countries are doing.
"If they're offering tax breaks to encourage development to happen in those countries then we need to look again to do the same thing here."
He added: "This is a sad day for Dundee, to see our biggest computer games company go into administration.
"I will be making the strongest representations to the UK government to support Scotland's video games industry which is so important to Dundee."
The SNP said the party's local MPs and MSPs would be meeting Realtime management and administrators Begbies Traynor later.
And Labour MPs in Scotland have criticised the UK government for "pulling the rug" from under the feet of the games industry.
Jim McGovern, Labour MP for Dundee West, said: "The Scottish secretary cannot afford to stand idly by. He must urgently meet with Realtime so he can see for himself just how important it is to support the computer games industry."
A Scotland Office spokesman said: "The administrator has said the company's difficulties appear to be the result of commercial market forces.
"The tax break for the industry outlined by the previous administration was only a proposal and one which was never enacted. It is misleading to talk of any tax relief having been scrapped for the games industry."
Bafta-winning Realtime Worlds, founded in 2002 by creative director Dave Jones, had just released its newest title, online role-playing game APB.
But the administrators said there had been "lacklustre" demand for the product.
Dr Richard Wilson, from the UK's video game trade association Tiga, said Realtime Worlds was a "fantastic company with an exceptionally talented team".
"Despite today's terrible news, Dundee and Scotland remain good places to do games business," he said.
"Scotland has some excellent universities and offers large numbers of extremely talented programmers, artists, producers, managers, designers, audio engineers and testers."
Realtime has its main development operations in Dundee and its parent company head office and online operations are in Colorado, which employed 42 people.