Troubled video game developer and publisher Starbreeze Studios currently lacks sufficient secured funds to continue operating for the coming 12 months, it admitted in a recent financial report for the first fiscal quarter of 2019.
The studio expects a liquidity shortfall before mid-2019 if it can’t get additional funding, it added.
A number of costly failures and general mismanagement reportedly led to Starbreeze’s financial troubles. It filed for reconstruction on Dec. 5 after low sales of its co-op action game “Overkill’s The Walking Dead.” That reconstructions was extended through Jun. 3 by order of the Stockholm District Court. Skybound, which owns the rights to “The Walking Dead” terminated its license agreement with Starbreeze, forcing the publisher to pull the game from Steam. If the two companies don’t come to a resolution, the title won’t be listed for sale again and planned console versions won’t be released.
A few days after it filed for reconstruction, authorities raided Starbreeze’s offices and arrested two people as part of an investigation into alleged insider trading. Its former CEO, Bo Andersson Klint, was later cleared in that investigation, and the Swedish Economic Crime Authority turned its gaze toward Carnegie Investment Bank, which sold Klint’s shares in the company.
Acting CEO Mikael Nermark said his main task now is to secure financing for the company’s future operations. “This involves both long-term financing we can use to build the Starbreeze of the future, but also making sure that the assets we have determined are unrelated to the core business are managed in a commercially viable way. Once this financing has been secured, we will be able to look ahead and present a more detailed strategy for the future,” he said.
Starbreeze reported net sales of SEK 47.8 million for the first quarter of 2019. Its online co-op game “Payday” accounted for about SEK 26.7 million. The company saw no revenues for its asymmetrical horror title “Dead By Daylight” during the quarter after selling the rights to Behaviour Interactive in March. It also sold the publishing rights to “System Shock 3” during that time, generating initial revenue of SEK 3.7 million. Overall, Starbreeze reported a loss before tax of SEK -167.3 million.