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Paramount Pictures is folding it microbudget division Insurge into its main movie studio, forcing the label’s president Amy Powell to give up all film duties.

The only film on Insurge’s slate, Bad Robot/Insurge thriller “The Cellar,” starring John Goodman, will be released under the big Paramount banner.

Of the division’s three remaining staffers, two will now report to newly appointed president of production Marc Evans. Powell will now answer to Paramount chairman and CEO Brad Grey and focus on TV and digital projects, with one other staffer moving with her. Powell is currently overseeing four pilots including “School of Rock” at Nickelodeon (which was ordered at right to series), “Minority Report” at Fox and “Shooter” at USA. New hire Dina Hillier will join Powell as an exec focused on scripted comedy.

On March 13, Variety asked Paramount whether the studio was shuttering Insurge, and Par spokeswoman Katie Martin Kelly said that it was “utterly untrue.”

The news comes only weeks after president of production Adam Goodman was fired and replaced by Evans, and the sense around the lot was that more dominoes could still fall. Several sources who had business with Insurge told Variety they had already began reassessing further development on some projects based on the rumblings of the division’s demise.

Insurge launched following the success of “Paranormal Activity” in 2010 in hopes of delivering low-risk products at smaller budgets with a high profitability potential.

The division saw early success with pics like “The Devil Inside,” which overperformed with $101 million worldwide, but subsequent movies struggled. The division’s most recent pic, “Project Almanac,” disappointed at the box office, and except for “The Cellar,” no other project was even close to a greenlight from the studio.

This is the second niche label, after Paramount Vantage, that the Viacom-owned studio has failed to turn into a viable business.

TheWrap first reported the news about Insurge.

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