Updated: Stage 9 Laying Off Staff

UPDATE: A Stage 9 spokesperson got back to us to provide the following statement: “Stage 9 will continue to develop/produce in a highly selective benefit /cost manner.” The Stage 9 brand will continue to exist on its own and will not be folded into ABC.com. The layoffs did happen, but because they just happened yesterday, decisions are still being made as to what form Stage 9 will take. The spokesperson could not confirm how many Stage 9 projects are currently in development, or what the fate of those projects will be. Updated original post follows.

As part of the layoffs it announced yesterday, Disney-ABC TV (s DIS) is folding its digital production studio Stage 9 into ABC.com, and sources close to the situation tell us that only Barry Jossen, EVP Production, ABC Studios; General Manager, Stage 9 and Quinn Taylor, EVP, Movies & Minis, ABC Entertainment; Creative, Stage 9 will stay on. Stage 9 still has at least one show, Trenches, still in production.

Unfortunately, the writing was on the wall for Stage 9. The digital studio was officially launched a little less than a year ago and at the time had a slate of 20 projects including the sit-com-ish Squeegees and the sci-fi epic Trenches. Stage 9 was also supposed to produce a second season of ABC’s initial digital series, Voicemail (initially released in March 2007, it predated the studio), but that never materialized (it’s still listed as “coming soon” on the Stage 9 web site). Squeegees failed to catch on with audiences and Trenches, which was supposed to launch last spring, has yet to be released.

Additionally, Stage 9 didn’t seem to have ABC’s full confidence. During a talk at NewTeeVee Live last November, Alexis Rapo, who runs ABC.com, said the site’s biggest web success was not with original content like Squeegees, but with web spin-offs from its TV programming like Ugly Betty. Instead of building an audience from the ground up, ABC.com was better able to leverage the built-in fanbase for its better-known oldteevee properties. Here’s Rapo’s full talk from our conference (it’s after the jump because of auto-play issues).

We’ve contacted Disney-ABC for official comment and will update as we hear more.