Denki has announced a major restructure that will lead to "many" job losses - a situation that has been reached after failing to secure a publishing partner for its next game Quarrel.
Colin Anderson, MD of the Dundee-based studio, said that the reason for the move was Denki's reliance on an old business model, which depended on the industry for funding.
"It’s with a heavy heart that I have to announce a major restructuring of Denki that will inevitably involve losing many of our supremely talented colleagues – not to mention friends – from the team," Anderson said in a statement published on the company's website.
"After ten years in business and despite weathering some truly awful periods in the industry during those years, it’s the first time we’ve been forced to take such extreme measures. So it's probably a good indication of just how tough the market conditions are becoming for mid-size developers at the moment.
"My advice? If you’re an Independent Developer, and you're not selling games directly to customers yet, start worrying, because this industry is changing beyond all recognition."
"The obvious first question is 'Why has this happened?' – the answer, unfortunately, is rather less obvious. The main reason is that Denki has been running on an old business model. We rely on 'the industry' for funding. Which wouldn’t be so bad, except we're making games for people who love games – which isn't necessarily 'the industry' unfortunately." Despite Quarrel being finished and polished, he added, the studio hasn't been able to find a publishing partner.
"We've slowly been remembering why we got out of the traditional games industry for so long and escaped to Interactive Television in the first place: this industry doesn't value good games," he said.
"Players do, but the games industry doesn't. Instead it values low risk games – not even 'calculated' risk games, just low risk. And that leads to bogus sweeping generalisations such as 'Gamers don't play word games.'"
Anderson said that the difficult decision had been made to scale back the business in order to build it back up using a different model - "not Casual Games; or Hardcore Games; but Denki Games," he said.
"It's taken ten years to put the current, most awesome line-up of the Denki team together, and there's not a single person here that doesn't bring something truly special to the group," he said.
"We'll miss every one of them that has to leave us. Quarrel is all the better for their input, but cashflow forecasts don't lie.
"We couldn't risk becoming another 'typical games developer' where the first anyone knows about the challenges facing the business is when the staff suddenly don't get paid and/or can’t get in to the building. That's just Totally Not Denki."
Denki was formed in 2000 by four ex-DMA Design staff members, including Anderson, Gary Penn and David Jones.