Starbreeze to lay off a quarter of its staff in bid to further ‘reduce costs’

PayDay developer Starbreeze has confirmed plans to lay off a quarter of its 240 staff as it works to remain solvent. In a brief statement on the company’s official website, the firm said it had decided to make organisational changes “in order to make the organization more efficient and reduce costs”, resulting in 60 redundancies – primarily from its Stockholm office – by November 2019.

“In the past six months we have made a number of changes to the business following our strategy to focus on the core business,” CEO Mikael Nermark said via the statement. “We have divested some operations that we consider non-core and we now have to look inward to make the core business more efficient. To make staff reductions is a tough decision to make, but necessary to enable Starbreeze to develop well long-term.”

In its candid Q1 2019 financial report, Starbreeze revealed it lacked the funding required to keep the studio operating for the next 12 months. Acknowledging it was “in a challenging situation”, the company admitted that it expected to have a “liquidity shortfall” before mid-year 2019 if no additional funds are found.

“Starbreeze and some of its subsidiaries have been in reconstruction since 3 December 2018,” the company wrote in its financial summary. “The company currently lacks sufficient secured funds to guarantee continued operations for the next 12 months and is expected to have a liquidity shortfall before mid-year 2019 if no additional funds are provided. These conditions indicate that there are significant uncertainties that can lead to significant doubts about the company’s ability to continue its business.”

“We are in a challenging situation,” Nermark said at the time. “I stand united with the entire Starbreeze team in the efforts to get the business in order. We have a very strong asset in Payday, which is the foundation upon which we will build Starbreeze’s future.”

Skybound Games terminated its contract with Starbreeze Studios, stating the FPS zombie game based on Robert Kirkman’s The Walking Dead “did not meet [its] standards nor is it the quality that [it was] promised”. According to the company’s Q1 financials, Starbreeze continues to “disputes the termination” and is purportedly attempting to “come to a resolution” with Skybound.

After the “disappointing” launch of Overkill’s The Walking Dead, Starbreeze’s board of directors announced it was reviewing operations costs and implementing a program “to reduce costs and sharpen focus on core business”. The plan initiated a cost-cutting program, which included scaling back both internal and external development and was expected “to generate significant cost savings during the full year 2019 compared to 2018”.

The developer confirmed initial sales revenues from Overkill’s The Walking Dead were “lower than forecasted”, but attributed the revenue issues to “the share of sales in low-price countries, such as China and Russia, [being] significantly higher than expected”.

Consequently, Starbreeze filed for reconstruction with the Stockholm District Court following a “shortage of liquidity” that requires the company to “negotiate a long-term financial solution”. Starbreeze’s headquarters were then raided by police following reports of insider trading, leading to at least one arrest and the seizure of equipment, including computers and documents.

These latest layoffs sadly come on the back of several other closures and cutbacks we’ve seen across studios in recent months, including Iron Tiger Studios, ArenaNet, Next Games, Forgotten Key, Define Human Studios, Bandai Namco Vancouver, and Trion Worlds. Telltale Games also laid off its staff in a ‘majority studio closure’ back in September.

About Vikki Blake

It took 15 years of civil service monotony for Vikki to crack and switch to writing about games. She has since become an experienced reporter and critic working with a number of specialist and mainstream outlets in both the UK and beyond, including Eurogamer, GamesRadar+, IGN, MTV, and Variety.

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