Starbreeze Cut Costs After Overkill’s The Walking Dead Miss Sales Targets

It seems Telltale Games was not the only studio to struggle while working on The Walking Dead. Starbreeze Studios have begun to “reduce costs and sharpen focus on core business”, citing poor sales of Overkill’s The Walking Dead.

GamesIndustry.biz claim the studio had pre-tax loss of 11.3 Million in quarter 3 prior to the launch of the game.

Some decline was expected as they had bought the publishing rights for Dead by Daylight, though Payday 2 did generate $2.9 million- two-thirds of Starbreeze’s revenue during that period.

The studio’s press release states that the $10 million purchase of Overkill’s The Walking Dead for consoles from 505 games will result in a “negative impact on Starbreeze’s earnings in the fourth quarter.”

Acting Starbreeze CFO Sebastian Ahlskog states similar to the above, but does say that the games initial sales are under-performing.

“We will not be able to recognize the license fee from 505 Games for Overkill’s The Walking Dead as revenue until after the end of the fourth quarter, while initial sales revenues from the game are lower than expected. This will have negative impact on fourth-quarter earnings, but our target of positive EBITDA for Q4 stands.”

Starbreeze cites the poor performance “primarily because the share of sales in low-price countries, such as China and Russia, is significantly higher than expected.” Starbreeze Chairman Michael Hjorth explained further.

“This is disappointing, of course, but we have a base to work with in regards to the number of games sold. We have a pulse of concurrent players, which is essential to future performance within the framework of our Games as a Service concept. The team is working at full capacity to deliver improvements to the game and new content, and Season 2 will be starting soon.”

Starbreeze Studios has now begun to review operations and “has initiated a program to reduce costs and sharpen focus on core business – internal and external development.” They expect it to generate “significant” cost savings in 2019 in non-core business. Though they do state “The long-term target of positive EBITDA for the full year 2019 no longer applies.”

“We have initiated a review of our costs to ensure better alignment with our revenues.” Ahlskog says. “We are designing a program towards that end, naturally while keeping a careful eye on revenue development. We must focus on our core business and ensure delivery of the company’s important games.”

Overkill’s The Walking Dead is out now on Windows PC. The PlayStation 4 and Xbox One versions of the game are launching on February 6th of next year in North America and on February 8th in Europe.

Ryan Pearson

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Taking his first steps onto Route 1 and never stopping, Ryan has had a love of RPGs since a young age. Now he's learning to appreciate a wider pallet of genres and challenges.