After the "disappointing" launch of Overkill's The Walking Dead, Starbreeze's board of directors is reviewing operations costs and implementing a program "to reduce costs and sharpen focus on core business".
In a statement (thanks, Eurogamer), 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".
"This is disappointing, of course, but we have a base to work with in regards to the number of games sold," said Starbreeze chairman Michael Hjorth. "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."
The company now plans to review operations and has initiated a cost-cutting program, which includes both internal and external development. The statement purports that the plan is expected "to generate significant cost savings during the full year 2019 compared to 2018".
"We have initiated a review of our costs to ensure better alignment with our revenues," said Starbreeze CFO Sebastian Ahlskog. "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."
Additionally, the console release of Overkill's The Walking Dead looks like it'll suffer a further delay as the $10m licence fee from publisher 505 Games now won't be finalised until the end of the financial quarter. This additional pushback is likely to detrimentally affect Starbreeze's end of year financials.
“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,” added Ahlskog.