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‘The Walking Dead’ Game Developer Hit With 90% Staff Layoffs as 225 Are Let Go

The team behind the highly successful narratively-driven “The Walking Dead” video game adaptation was rocked with massive layoffs this week, with nearly 90 percent of the estimated 250 employees let go, a source with the company who asked not to be named told Variety. That information was later confirmed by Telltale. The remaining employees will finish the Netflix “Minecraft: Story Mode” interactive series, in a decision the company is calling a “majority studio closure,” according to an official statement.

Employees were told of the company-wide layoffs starting Friday morning during a company meeting after Telltale’s board of directors made the call to move forward with the decision on Thursday evening, according to a source.

The news lands just before the release of episode two of the final season of the studio’s arguably most successful series, “Telltale’s The Walking Dead.” Suffer the Children is set for release on Tuesday, Sept. 25. The release of the rest of the final season is “uncertain,” the source told Variety.

Following news of the layoffs hitting, Telltale CEO Pate Hawley issued the following statement:

“It’s been an incredibly difficult year for Telltale as we worked to set the company on a new course. Unfortunately, we ran out of time trying to get there. We released some of our best content this year and received a tremendous amount of positive feedback, but ultimately, that did not translate to sales. With a heavy heart, we watch our friends leave today to spread our brand of storytelling across the games industry.”

The company added that it will be commenting its product portfolio in the “coming weeks.”

Telltale and Netflix revealed the two companies are partnering up earlier this summer during E3 2018 for new projects, including a game based on the “Stranger Things” TV series and the aforementioned “Minecraft” Netflix series.

Variety reached out to Netflix for comment, and a spokesperson commented on the future of its projects with Telltale Games:

“We are saddened by the news about Telltale Games – they developed many great games in the past and left an indelible mark in the industry. ‘Minecraft: Story Mode’ is still moving forward as planned. We are in the process of evaluating other options for bringing the ‘Stranger Things’ universe to life in an interactive medium.”

Earlier this week, both a designer and the creative director for “The Walking Dead” season spoke with Variety at length about the future of the series and the company for an unrelated feature. Neither seemed aware that potential problems were brewing at the studio.

That the news came suddenly was backed up by a source today who told Variety that “everything changed today.” That could be tied to news that the Telltale Games’ planned “Stranger Things” game as well as “The Wolf Among Us 2” were, according to a source, canceled.

Rumblings about the Telltale Games lay offs began circulating Friday afternoon on Twitter.

As for why the “majority studio closure” came into effect with so little notice, it’s still unclear.

“It’s a simple question of money in being significantly less than money out,” a source told Variety. “Our CEO was unable to secure financing to keep the lights on.”

The Netflix deal revealed earlier this summer seemed to signal a fresh start for the studio, which had a change in management in Sept. 2017 after its former CEO, Kevin Bruner, was ousted from Telltale Games.

Bruner and other leadership back in 2016 didn’t think the “Stranger Things” would work for Telltale Games.

“They thought it was just a bunch of kids on bikes,” a former source at Telltale told Variety. “They thought it was a terrible idea.”

In addition, under Bruner’s leadership, Telltale Games was reportedly known for having poor working conditions. The studio was known for pushing employees to work long hours and an overall toxic work environment. Those internal issues were hinted at by at least one former employee today.

So when new leadership signaled a change in working conditions and also made the deal for “Stranger Things” with Netflix a reality, some saw the new opportunity as a “life raft” for the studio. Ultimately, though, the deal couldn’t save Telltale.

Lionsgate is a minority investor in the company, but has already written down a portion of its investment. A spokesperson for the company declined to comment when reached by Variety.

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