"It is sad that we cannot complete the project"

Starbreeze has "reached an agreement" to return System Shock 3's publishing rights to OtherSide Entertainment.

In a recent statement (thanks, GI.biz), Starbreeze said that since it had "partly financed the development of the game", it has returned the publishing rights in exchange for assurances that it can "recoup the development costs" it has spent since it acquired the rights in 2017.

“I believe this is the best solution for us, although it is sad that we cannot complete the project with OtherSide," said acting CEO Starbreeze, Mikael Nermark. "System Shock 3 is a fantastic title developed in cooperation with the industry legend Warren Spector and I am looking forward to seeing the game released."

Starbreeze retains publishing titles for Psychonauts 2 and Ten Crowns.

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".

"This is disappointing, of course, but we have a base to work with in regards to the number of games sold," Starbreeze chairman Michael Hjorth said at the time. "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."

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.

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