Fears of game developer Starbreeze closing have arisen due to financial troubles at the company. Following the lackluster performance of Overkill’s The Walking Dead, the Swedish developer is scurrying to stabilize their business before they run out of cash. What’s more, its sold the studio’s subsidiary Dhruva Interactive to Rockstar Games.
“My main task is to secure financing for the company’s future operations,” said acting CEO Mikael Nermark as reported by Gamasutra. “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.”
Starbreeze is currently facing a liquidity shortfall. In layman’s terms, that means they they simply don’t have the money available on hand in order to continue paying their expenses like invoices, employee salaries, and the like.
As a result, they’re likely going to have to sell off some assets and move some money around, and they they may need to secure some additional investors to get a fresh injection of cash into the company. The sale of Indian developer Dhruva Interactive to Rockstar Games could be one of its moves to bring the company back to financial health, although it’s possible that the deal had been arranged before any of this trouble came to light.
“Dhruva Interactive has been a beacon of Indian game development for decades and we are excited to bring them into the Rockstar family,” said Rockstar India Studio Manager Daniel Smith in a press release. “The addition of the Dhruva team to the existing talent at Rockstar India will expand the studio’s capabilities and reinforces our belief in and commitment to the local development community.”
While the situation at Starbreeze may seem dire, it seems that a goodly chunk of the problem is attributed to some odd accounting quirks. For example, they sold the publishing rights for System Shock 3 back to OtherSide Entertainment, but they can’t reflect the money they’ll earn from that sale on their accounting sheets as its a source of income that will gradually come in.
In any case, Starbreeze has less than a year to stabilize. Hopefully, an aggressive mix of selling off assets, restructuring, and potentially acquiring new investors will help them level off and get back to business.