Starbreeze struggles after Overkill’s The Walking Dead fails to set tills alight

Starbreeze says it’s cutting costs and refocusing on its core business after Overkill’s The Walking Dead failed to meet expectations.

Overkill’s The Walking Dead is a four-player co-op shooter that launched on 6th November but failed to make much of an impression (we called it “a limp Left 4 Dead-a-like” in our review). It’s currently not in Steam’s top 100 games by current player count, which means it has fewer than 2334 concurrent players at the time of publication.

In a press release, Starbreeze said it will now review the cost of operations and trigger a program to reduce costs and “sharpen” focus on core business. There’s no mention of job losses, but it sounds like the company is having to tighten its belt.

There’s also word Starbreeze won’t get a $10m licence fee from publisher 505 Games for the console version of The Walking Dead until after the end of the current financial quarter, which will hit the company’s full year 2019 earnings hard. Add to this lower than expected sales revenue of The Walking Dead, and there’s cause for concern.

“We will not be able to recognise the licence 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,” outgoing Starbreeze CFO Sebastian Ahlskog said.

The sales revenue is lower than expected because, according to Starbreeze, the share of sales in low-price countries such as China and Russia is significantly higher than expected. So, the game is doing okay in China and Russia, but has flopped elsewhere.

However, Starbreeze said it’s sticking with the game.

“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.

“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 has studios in Stockholm, Sweden, Paris, Los Angeles, San Francisco, Barcelona, Brussels, Bangalore and Dehradun. In recent years it’s dabbled in various video game projects, including virtual reality and publishing. It even made its own VR headset with Acer, although that failed to make much of an impact.

In terms of core video games, it’s got ongoing work on Overkill’s Payday 2, which is still doing well on Steam, and development of Payday 3 to contend with. It’s also working on a new FPS co-op game for PC based on Smilegate’s phenomenally-popular Crossfire franchise aimed at the western market.

As for publishing, it recently released Steam flop Raid: World War 2 (remember that?) and has signed deals to publish Double Fine Productions’ Psychonauts 2 and OtherSide Entertainment’s System Shock 3.