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Updated: Telltale Games was so sure of its take on “The Walking Dead” and the conclusion of protagonist Clementine’s tale that they took the unusual step of announcing all of the release dates for the episodic game’s final arc this year.

Speaking last week with Telltale designer Mark Darin and Kent Mudle, creative director for “The Walking Dead: Final Season,” the two enthused about the work Telltale has put into both embracing the character and tone of “The Walking Dead” comic book while also managing to break free of the powerful gravity of its storytelling to forge their own tales and beloved characters. That work resulted in three major seasons of heavily narratively-driven gameplay episodes, culminating in this fourth final season, as well as two spin-off, self-contained games. Combined, those games sold more than 50 million episodes worldwide and garnered international praise as both games and compelling vehicles for storytelling. 

Another key to the massive success of the games, Darin and Mudle said, was delivering their stories through carefully paced episodes, which became as important a hallmark to their take on the universe created by Robert Kirkman as was the player’s ability to influence the story and shape character.

Where gaps in previous seasons may have filled fans with some trepidation, this final story wouldn’t. The studio was so far along in development and so clear on being able to craft a meaningful farewell to a character that grew up along the game franchise, that they dated all four episodes of the season. The schedule, posted alongside a serious-looking Clementine, showed the season kicking off on Aug. 14 and ending on Dec. 18.

Two days after that interview and three days before the release of the season’s second episode, the studio all but shut down, with 250 of a staff of 274 let go and all work, barring that of bringing Telltale’s existing “Minecraft” game to Netflix, was stopped.

In the span of about 48 hours the fate of “The Final Season,” the efforts of the hundreds of employees that worked on it and other ambitious narrative games, and the future of a studio about to turn 15 all seemingly crumbled. And it came, according to numerous sources inside the company who spoke with Variety, without warning.

Friday afternoon the company held a staff meeting. The staff, most of which worked in the San Rafael, Calif., offices, were told that all but 20 or so people were being let go effective immediately. They were issued paper paychecks for pay through Friday and told they had to vacate the building in 30 minutes. Email was shut down immediately. Employees were told there would be no severance and that healthcare would last through the end of the month. Everyone in attendance was encouraged to apply for unemployment by the end of the day.

Initially, the hundreds of employees were going to be given just three hours on Monday to return to collect their personal items. But following the reaction to the news, Telltale announced internally that it would sponsor a job fair on Thursday. Recently appointed Telltale Games CEO Pete Hawley offered to write a recommendation on LinkedIn for anyone who asked.

News of the mass layoff reverberated through the game industry, both in the U.S. and abroad, as hashtags for Telltale memories popped up on Twitter, fed by both fans of the games and current and former game developers from the studio. Some studios planned hiring meet-ups or dinners for the displaced Telltale developers. A form circulated online with the massive list of those let go and how they could be reached for new opportunities.

It was a devastation that both underlined the sometimes egregious working conditions of those who labor to craft games and the tumultuous environment in which game studios, even ones with legions of fans and multitudes of awards, live and die.

Telltale co-founder Dan Connors sounded shell-shocked when he answered his phone Monday morning to speak briefly with Variety. Later he responded to questions via email, saying that despite his sadness and feelings of loss, he knows “that all the people who have been part of Telltale are capable of exceptional things and I can’t wait to see them carry it forward. The process of building something that has meaning and touches people is the most fulfilling thing a creative person can do. But beware if you want to build a business: it is a perilous trip.”

He also noted that the sudden decision to shut down was connected directly to a failed round of financing.

“The company was working diligently to close a round of financing,” he told Variety. “Unfortunately, when the last potential financial backer abruptly pulled out, we were left in a position where we had no choice but to stop production. Sadly, everyone was so focused on doing what was required to keep the company going that when the last potential partner backed out, there were no other options.”

While Connors declined to note what company specifically backed out, several sources say it was, in fact, two companies: AMC and Smilegate.

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Lionsgate also recently notified the board that it had decided to stop funding Telltale so it could refocus on its core business. And Lionsgate was cited, one employee said, during the meeting Friday morning as one of several things that led to the decision to layoff the company’s staff.

Lionsgate invested a reported $40 million in Telltale back in February 2015 with the idea of working on a live-action and interactive project with the company called a “super show.” But the idea never took hold.

More recently, Telltale had seemed to have found a life raft in the form of two new projects it was working on with Netflix. Telltale was working to port “Minecraft: Story Mode” to the streaming service, and it was also was working with Netflix to develop a game based on the popular “Stranger Things” property. But those deals, it seemed were too little, too late.

Sources tell Variety that it wasn’t Netflix that killed the “Stranger Things” deal, but rather that Telltale felt it had to pull out due to a lack of financial backing from investors.

While many employees inside the company were aware the studio had major financial trouble, and that it could close one day, the worst that was expected in the immediate future was another round of layoffs. Many felt that the board would, once more, find a backer and preserve the company.

No one, it seemed, expected an overnight decision dropped on the entire staff.

The result is that the two dozen or so employees that remain will work to port over “Minecraft: Story Mode,” which won’t have any major changes to structure or narrative, and everything else on the books is unlikely to be released, at least in the short term.

The most pressing question about Telltale’s active projects seems to be about “The Walking Dead: Final Season,” which one employee said was unlikely to see the light of day anytime soon. The third episode is said to be extremely close to finished, while the fourth and final is still very rough. Monday night, though, Telltale’s official Twitter account noted that what remained of the company was in talks with several potential partners about wrapping up and delivering the final episodes of the final season.

Two days before they and nearly everyone else was laid off, Telltale’s Darin and Mudle both sounded very upbeat about the final season of Telltale’s “The Walking Dead” and the company’s potential future with the property.

“When we first started working with Skybound on ‘The Walking Dead,’ there was a lot of back and forth and hands-on trying to figure out what the game was supposed to be,” Darin said that day in the interview with Variety. “Figuring out who the characters were going to be, the setting, the gameplay. But when the first season was successful, they became less hands-on. We understood what ‘The Walking Dead’ was about and that trust is a bond that has grown over the years. They allowed us to develop our own ideas and create our own stories without them being so involved.

“There is such a responsibility that comes with this now that we are synonymous with ‘The Walking Dead’ comic. We have a responsibility to the fans and to the world in which ‘The Walking Dead’ lives.”

Creative director Mudle said that the pressure to deliver on the franchise was no greater than it is for the conclusion of Telltale’s “The Walking Dead.”

“There’s a lot of pressure that we come up with a conclusion [for Clementine] that feels satisfying to a lot of different fans,” he said. “We’re getting to a point where Clementine is raising someone just like we raised her. In this season, we’re allowing her to bring something to the world beyond simply surviving.”

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Telltale Games