Original story: Today, Skybound Entertainment has announced it has terminated its contract with Starbreeze Studios, effectively canceling Overkill's The Walking Dead.
In an official statement, Skybound indicated that development of the game was not going well enough to merit continuing through further seasons of the game.
"Our creators and their stories are the core of Skybound, and since 2014 we have worked hard to expand the world of 'The Walking Dead' into an exceptional co-op action FPS," the statement reads. "We did our best to work with Starbreeze and resolve many issues that we saw with the game, but ultimately 'Overkill's The Walking Dead' did not meet our standards nor is it the quality that we were promised.
"We are exceedingly sorry to our fans and share their disappointment in the game. We remain dedicated to providing our fans with the most premium quality content we can offer, and will continue to look for alternative video game options for the IP."
Earlier this week, rumors were floated that the game was in trouble when PS4 users began getting messages telling them their pre-orders had been refunded. At the time, Sony stated that the publisher had told them the game was canceled. However, 505 Games (which was to publish the game on consoles) came back and said that Overkill's The Walking Dead had merely been postponed, not canceled.
GamesIndustry.biz has reached out to 505 Games for clarification on the circumstances now, but given that Overkill's parent company Starbreeze's contract has been terminated entirely it seems certain the console version has been killed as well.
All in all, it's been a terrible several months for Starbreeze, with the first season of Overkill's The Walking Dead doing little to help its precarious situation. The game brought in $3.7 million in revenue for Q4, and the publisher was forced to cut the price of the game from $60 to $30 as a result of its poor sales performance.
That, combined with previous rough financials forced the company to cut costs in November of last year, with the company eventually facing insolvency in early December and seeing CEO Bo Andersson step down. Just a few days later, the company was raided by authorities investigating suspicions of insider trading and arresting two. Andersson, one of the two arrested, was later cleared of any charges.
Nonetheless, earlier ths week Double Fine's Tim Schafer said he had "high hopes" that Starbreeze would be capable of fulfilling its end of the publishing deal for Psychonauts 2.
Update: Overkill's The Walking Dead is expected to be removed from Steam following a complaint issued by license holder Skybound.
According to a statement issued this morning, developer Starbreeze is in discussions with the Starbound to resolve the issue and "find an amicable solution."
"We are deeply sorry for the issues this may cause anyone who has bought the game looking forward to the resolution of Season 2 and are working urgently to attempt to resolve the issue," said acting CEO Mikael Nermark. "Please keep an eye on the official OTWD channels for further news."
At the time of writing, the game is currently available on Steam, and there is no indication when exactly it will be pulled from sale.
Update 2: In a statement to GamesIndustry.biz, 505 Games acknowledged the contract termination between Skybound and Starbreeze, but stopped short of saying the game was canceled on consoles, holding instead to its previous line that it was postponed.
The official statement reads as follows:
Digital Bros, the parent company of publisher 505 Games, acknowledges that Skybound announced it has terminated its contract with Starbreeze for the OVERKILL's The Walking Dead videogame rights. The console version of the videogame OVERKILL's The Walking Dead had already been postponed without any scheduled new release date.
We are very sorry about the relationship between Skybound and Starbreeze," commented Raffaele Galante, CEO of Digital Bros Group. "However, once this issue is cleared we will benefit from less uncertainty, which will help the Group to focus on the numerous upcoming releases of new videogames and the strategic relationships behind them."
Additional reporting by Haydn Taylor.