With seven days to go, the Dizzy Returns Kickstarter stands at £24,665, more than £325,000 short of its goal.
In an update on the funding page, the Oliver Twins thanked fans for their support, before hinting at another Dizzy game, smaller in size and scope.
"This update is a bit of a serious one, and in which we're going to talk about that with eight days to go, Dizzy Returns in all likelihood won't meet its funding target.
"As of today the total amount pledged stands at just over £23,000 of our £350,000 goal - in order to meet that we'd need over £40,000 pledged every day, and realistically that's not going to happen.
"There's certainly no shame in admitting that though, and we believe that rather than posting updates under the pretence that we might hit our target, it's much better to be honest and upfront with you, our backers.
"As for the future of Dizzy, Dizzy Returns at least will not be made if the campaign is not funded successfully, as is looking likely. We may revisit the possibility of another Dizzy game at a later date, but the vision of that game would need to be considerably different."
The Oliver Twins admitted that a lack of gameplay footage may have harmed the project, and revealed plans to release a collection of Dizzy Returns digital content, alongside some unseen concept art in the near future.
The Dizzy Returns developers had previously been criticised for attempting to revive a retro franchise on Kickstarter.
Responding to the criticism, the Oliver Twins said that there was room for both types of projects to be a success.
The Olivers also said that they chose Kickstarter to launch the game because they wanted to work directly with the fans, gauging their feedback while retaining creative control.
The game was due to launch on iOS and PC between July and September next year.
> Read our review of Dizzy: Prince of the Yolkfolk
> Dizzy: Prince of the Yolkfolk interview: How the comeback happened
> Retro Corner: Dizzy
Watch a trailer for Dizzy: Prince of the Yolkfolk below: