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The fall of Starbreeze

According to the people who lived through it.

By Wesley Yin-Poole. 28/01/2019

At Starbreeze's 2016 Christmas meeting, held in a cinema close by to the studio's Stockholm headquarters, CEO Bo Andersson told staff the company was in rude health. Payday 2, a co-op first-person shooter Steam hit, was still making money, virtual reality investments were about getting ahead of the game, and in-development titles, such as Raid: World War 2 and Overkill's The Walking Dead, were on course for success. Starbreeze's top brass even announced a new staff bonus system. The message was loud and clear: Starbreeze had evolved from the plucky developer of Payday into a big, important, successful entertainment company.

Just two years later, Starbreeze is on the brink of extinction. Following the disastrous release of Overkill's The Walking Dead in November, Starbreeze's board of directors unceremoniously booted Andersson out of the company. In a remarkable email obtained by Eurogamer and sent to everyone at the company the day after he was fired, Andersson even seems to lament the laziness of some of his staff - the same staff who claim they had just endured months of crunch for a project that was doomed from the start. A day later, Swedish authorities raided Starbreeze's office, arresting two people as part of an investigation into alleged insider trading. Riddled with millions of pounds of debt, Starbreeze has effectively gone into administration and is looking to sell off as many of its ill-advised virtual reality ventures as possible while it still can. The future of Payday, that old reliable cash cow, is in doubt. And for the staff who remain - those who put their blood, sweat and tears into Starbreeze games even as they endured late nights and alleged mismanagement - the threat of layoffs looms.

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How did things go so badly wrong in such a short space of time? According to over a dozen current and former Starbreeze staff members, who asked to remain anonymous in order to protect their careers, the writing had been on the wall for some time. But even as staff lost faith in the studio and its bosses, nobody, it seemed, thought Starbreeze's fall from grace would turn out to be quite so dramatic.

The story of "new" Starbreeze, those familiar with its history have told me, is really the story of Overkill, an independent developer set up by the people who used to run Grin. Grin was the Swedish studio founded by brothers Bo and Ulf Andersson in 1997 that's perhaps best known for building 2009's Bionic Commando for Capcom. Grin went under after its deal with Square Enix to make a Final Fantasy spin-off codenamed Fortress collapsed. So Bo and Ulf founded Overkill and made Payday, a small-scale co-op FPS that found a modest audience on Steam when it came out in 2011. But Overkill ended up in financial difficulty, too. Enter Starbreeze.

In 2012, Starbreeze was itself in dire straights after the troubled development of Syndicate for publisher EA. Before Syndicate even launched in February 2012, key staff left to form Wolfenstein developer MachineGames. "MachineGames started up and were heavily recruiting, and it wasn't difficult for them," one person who worked at Starbreeze at the time told Eurogamer. "By the end of Syndicate we were just a small team finishing up the game."

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The Syndicate team was crushed, but Starbreeze still had the Brothers team. Brothers: A Tale of Two Sons was led by outspoken designer Josef Fares and was Starbreeze's first owned intellectual property, but funding was needed to complete it. Effectively, Starbreeze was on the brink of bankruptcy. Enter Overkill.

At this time, Payday was doing well enough, but it was not considered a smash hit. Overkill needed funding for development of the sequel. So Starbreeze and Overkill cooked up a plan to save both companies. Starbreeze took in money from investors with a rights issue and bought Overkill with shares, but, according to people familiar with the deal, Starbreeze was in such a terrible financial position that these shares were essentially worthless. And so, the owners of Overkill were paid with so many "worthless" shares, they became the majority owners of Starbreeze by default. In 2012, just a couple of months after the launch of Syndicate, Starbreeze announced it had acquired Overkill, but this announcement was misleading. The reality was Overkill took over Starbreeze. "In practice, Starbreeze was given away," one source says. "On the other hand, both Starbreeze and Overkill would probably not have survived without this merger and Payday 2 would never have been made."

The Starbreeze name moved from Uppsala, where the company was based, an hour's drive south to Stockholm and Overkill. Investors were sold on the idea of the merged Starbreeze / Overkill having two original, owned IPs: Brothers and Payday. The merger might have saved both companies, but it left a bad taste in the mouth of many staff who worked at Starbreeze before the takeover. "I understand it was needed to avoid bankruptcy," one source said, "but Overkill was never interested in taking over the studio and using our talent. The plan was always to use Starbreeze to bring in money, then close the Starbreeze studio, which happened quite quickly."

Brothers: A Tale of Two Sons came out in August 2013 and was a critical darling. Fares, his work as a contractor complete, left. It was the final "old" Starbreeze game to come out.

The way the Starbreeze/Overkill deal was billed has led to a number of misconceptions on forums over the years. Every now and then, when Starbreeze launches a new game or is in the news for some reason, you'll see a comment or two from people who wish they'd make another Darkness game, or another Chronicles of Riddick game, or maybe even have another stab at Syndicate. But the people who made those games are no longer at Starbreeze. In fact they haven't been for many years.

Payday 2 launched in August 2013 and it was a monster hit. The game's phenomenal popularity ensured the DLC sold by the bucketload and Starbreeze's share price soared. But internally, Starbreeze was tearing apart. According to multiple sources, Bo and Ulf had a bitter falling out. I've been told Ulf, burned out by the making of Payday 2, wanted to make something smaller-scale. Bo, on the other hand, had grander ambitions.

Neither Bo nor Ulf Andersson have responded to Eurogamer's request for comment for this article.

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"After Payday 2 was released, he didn't come to work anymore," one source said of Ulf Andersson. "I didn't think much of it, I thought he was a bit burned out and took some time off. After a few months they said he had some back problems and needed more time off. People who knew him more said he's probably not coming back. After a while everyone knew, but pretended not to. It was a bit weird."

Bo bought his brother out of his share of the company they co-owned, Varvtre AB, which also happened to be Starbreeze's largest owner. Ulf, who was the creative chief of Payday while Bo handled business matters, went on to found a new independent developer called 10 Chambers Collective and set about making a new game titled, perhaps appropriately, GTFO. According to those close to the pair, the brothers do not speak to this day.

In August 2014, Starbreeze announced it had signed a deal with Skybound Entertainment to make Overkill's The Walking Dead for release in 2016. The project promised Payday meets The Walking Dead, and given how well Payday 2 had gone, there was plenty of excitement. Back then, Overkill's The Walking Dead was set to be built on Starbreeze's in-house Diesel game engine, which was originally developed by Grin and first used in the 2001 game Ballistics before powering Payday. Game engines would prove particularly troublesome for Starbreeze.

According to a person who worked at Starbreeze at the time, Bo Andersson's idea for The Walking Dead was that it would be a "forever universe", a persistent, always-interesting game players would come back to to see what's changed. Over the years there was talk of it being as big as Destiny: a game that would sell tens of millions of copies and last for a decade. It did not turn out this way.

Meanwhile, Andersson invested in setting Starbreeze up as a boutique publisher. The first game it published was Canadian developer Behaviour Interactive's multiplayer horror title Dead by Daylight, which launched in 2016 and went on to sell an impressive 3m copies (Starbreeze eventually sold the publishing rights back to Behaviour in order to raise cash in 2018). Starbreeze also funded a handful of indie titles and signed publishing deals for Psychonauts 2 and System Shock 3. The latter two are yet to release.

The Dead by Daylight deal worked out for Starbreeze, but some of the other deals struck were proper headscratchers, according to staff. In May 2015, Starbreeze announced it had invested $8m in publishing Raid: World War 2, which was developed by Croatian studio Lion Game Lion. Lion Game Lion had worked on Payday DLC for Overkill, so a relationship was already established. In fact, Lion Game Lion's bosses were old friends of Bo's, according to people familiar with the deal. Lion Game Lion co-founder Ilija Petrusic, for example, had worked with Bo at Grin (the Bo Andersson / Grin association is a running theme at Starbreeze).

But Raid: World War 2 looked disappointing from the off. Internally, Starbreeze staff considered it a bad investment and wondered why the company would fund an obvious Payday 2 competitor. Those who played it thought it looked like little more than Payday 2 DLC. "It's Payday 2: World War 2," one source said. "Why are we making this? Why are we competing with ourselves? Why don't we make this an expansion to Payday 2 or something like that?" Starbreeze's deal for Raid: World War 2 was supposed to see it recoup 120 per cent of its investment plus a 50/50 royalty split. It's safe to say it lost money. Within three months of its September 2017 launch, the game had an average of just 40 concurrent players.

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Also in May 2015, Starbreeze announced it had bought the Valhalla game engine with shares worth 73m SEK (around £6m). The plan was for Valhalla to power all of Starbreeze's games, but the engine itself was near unusable, according to those who had to use it. According to these people, Valhalla was, essentially, a renderer. "There wasn't even a file open button when we got it," one person said. "It was impossible to use. And this is when it all started to get a bit fucked up."

All the while, Andersson's spending spree spread to virtual reality. In June 2015, Starbreeze bought French VR engineering firm InfinitEye for $2m and set up StarVR, its virtual reality company. Andersson planned to launch a high-end VR headset, and secured a $9m investment from Taiwanese hardware and electronics company Acer to finance it. Starbreeze invested $10m to set up and provide titles for a virtual reality theme park in Dubai. It signed a VR deal with Imax (Imax VR is now dead). It spent 7.1m euros on a company called Nozon to build VR movie experiences. It bought an Indian outsourcing company called Dhruva and used it as a second studio. It opened offices in Los Angeles, San Francisco, Paris and more - all expensive, high-profile locations that cost an arm and a leg, according to Starbreeze staff. Starbreeze made a John Wick VR game. It even opened a VR café in Stockholm, although, according to locals, hardly anyone goes there.

"They needed a lot of titles to fill the VR centres, so we were just hitting up VR developers left, right and centre without any big background checks," one person who worked on the VR side of things said. "They pretty much threw money blindly at that."

While Bo was jetting off to sign Hollywood deals, back in Stockholm, developers of The Walking Dead were fighting a losing battle with Valhalla. As one person tasked with building it said, bluntly: "Valhalla was a piece of shit." "It was unworkable," said another. "In most cases it was like the engine was fighting against you." Staff said Valhalla lacked a solid core from which the developers could build tools or create content. "It was taking too long to develop to a decent level of usability," one person said. "Valhalla felt to me it was barely 50 or 60 per cent of the way in terms of usability and stability. It was just not good. Like most engines, it had good potential, but it wasn't in a good place for people to properly develop a game. That was the problem. It was just way too far behind in the pipeline."

The developers knew The Walking Dead would not meet its announced 2016 release window and the game was delayed to 2017. But the development issues continued. In 2017, Starbreeze management, finally admitting Valhalla hadn't worked out, tried to rescue the project by forking out for a licence to use Epic's game engine, Unreal instead. Starbreeze announced the switch in August 2017, a few months after it had announced a new delay for the game, this time to the second half of 2018. You'd think the developers at Starbreeze would have rejoiced at finding out they had ditched Valhalla for Unreal. But they didn't, because they knew it meant they had just over a year to rebuild the entire game from scratch.


In April 2017, Starbreeze staff were called to a company meeting. Management announced Overkill's The Walking Dead was moving over from Valhalla to Unreal. Two years of work was chucked in the bin. The developers were stunned. "People had been warning them for years, saying, you need to use Unreal now, otherwise all the assets everybody has been working on will be completely useless," one person said.

"The time wasted and the money wasted on that engine!" another person said of Valhalla. "If we used it for a year-and-a-half and the team using it ramped up from four to 150-200 people or more, then I don't even want to know how much money was wasted on that thing. There was the salary for us, the web developers, the contractors based in LA, San Francisco, the lead tech guys working in LA and San Francisco, Dhruva, who were doing all these assets for it - it was an insane waste of money. And it was really stressful as well, working on that thing."

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Starbreeze management expected the developers to turn around The Walking Dead quickly now it had moved over to Unreal, but this was, most thought at the time, an unrealistic expectation.

"We oversold Unreal," one person who worked on the game told Eurogamer. "It was as if switching to Unreal was going to solve everything. In their minds it was magical, but we had other problems that couldn't be fixed just by changing the engine. The goal was to produce a triple-A multiplayer game in a year on Unreal. Anybody with common sense knew from the start it wouldn't be possible. A lot of people expected us to postpone the release of the game."

Starbreeze developers were tasked with rebuilding The Walking Dead in Unreal, but most of the staff did not know Epic's engine well - or at all. It meant there were developers learning how to use Unreal while they were using it to build a game.

"If you go to any studio now, there is always a good hope at least 50 per cent of the people know the engine they're working on, so they can coach the rest," said one person who was at the coal face. "But in this case, it felt like just 10 per cent of the people understood the engine. 90 per cent of people were just relying on that 10 per cent, or checking online. So we were using tutorials to try and make a game. That was bad."

Multiple people who worked on The Walking Dead project - and others within Starbreeze who worked on other projects going on at the time, such as Payday 2 DLC, Raid: World War 2, a co-op take on Korean FPS Crossfire for publisher Smilegate, and virtual reality projects, told Eurogamer the company suffered from mismanagement. According to staff, Starbreeze producers caused huge problems that affected not only the quality of the company's products, but the mental health of the people who built them. The Walking Dead, however, seemed to suffer in particular. From unreasonable demands ("Let's make it like The Division! / No, we don't have nine months to put that together...") to dramatic changes ("I've been playing a game all weekend and I've got this great idea, let's do an exploding zombie! / You've been playing Dying Light..."), staff struggled to cope with a project that had no cohesive vision or leadership. "Every day there would be a different change," one person said.

"I need the game designer to tell me the intention of his design, so I can make something the user will follow," another said. "In most cases the reasoning behind stuff was the game they played over the weekend. You would hear stuff like, can we have this like Far Cry? We start making it, and two weeks later, can we have this like Assassin's Creed? Dude, just tell me what you want to do, and I'll make it so. Don't worry. Just tell me what you want to happen."

The senior producers in charge of The Walking Dead lacked experience of leading a supposed triple-A video game project made by hundreds of people, and fell into "insane micro-management" mode, one source said. Inevitably, these senior producers then became a bottleneck for every decision on the project.

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While the developers were deeply concerned about the state of The Walking Dead, production seemed to be displaying a collective ignorance, multiple staff told Eurogamer. "It's very hard to be on a train when you see it's wrecked," one person said. "There's nothing you can do about it. We're going to fail in six months, you just don't want to admit it, and you're lying to yourself and you're lying to the team."

This collective ignorance came under scrutiny at crucial points during development. One such point was the big video game show in LA, E3 2018, at which Starbreeze publicised The Walking Dead with an expensive show-floor booth themed in the zombie-filled setting.

"When we showed the game at E3 last year, when we came back we said everybody loved the game, everybody was waiting hours to play the game and they loved it," said one person.

"And then of course we saw the press and we saw people saying at best it was an average... not a bad game, but not a good game at all at this time. So the team is watching and reading this and they don't understand. They said, how is this possible?

"We said, 'don't worry about the negative people. It was not like this. We can assure you on the booth, people loved the game.' But we had guys on our team who were there who said, 'no, that's not true. We had to cancel one demo because people didn't want to play that level because that level was not good or fun.' But they never said that to us. You can't solve an issue if you don't admit you have one."

Starbreeze staff were familiar with crunch, but it had been limited to two or three week bursts that revolved around project milestones or, for the Payday 2 team, seasonal Crimefest events where 10 days' worth of free DLC had to be made ready for release. As one local put it to me, Swedes don't do crunch unless it's to hit a crucial deadline.

This is not to belittle these crunch periods, which, according to those who worked through them, would sometimes involve 100-hour weeks and engineers and programmers who would end up sleeping in the office. "We had producers coming in and getting people working until 2am in the morning and saying, we'll see you at 9am in the morning," one person said.

One person told me they fainted after a three-day stretch in which they didn't have time to eat because of their workload. Others have told me they fell ill because of stress sparked by mismanagement. "The only thing they could suggest was, go to the psychiatrist," one person said. Starbreeze provided staff with private healthcare - one of the positive aspects of working there praised by those Eurogamer spoke with - and some were able to use it to obtain 10 free sessions with a psychiatrist. Based on my conversations with Starbreeze staff, this option proved popular.

For The Walking Dead team, crunch permeated 2018. Early in the year, The Walking Dead's producers realised the game looked likely to miss its launch window. So staff were asked to put more hours in to prevent it from slipping.

"Most of the problems we had in production, whatever the problem was, the answer was always, we have to work more," said one person. "So of course, we started asking the team."

However, this early 2018 effort to convince people to work longer hours didn't have the desired effect. As staff rapidly lost faith in The Walking Dead project, production realised a development sprint was the only way to get the game out the door in time. So it looked for other ways to encourage staff to put in extra hours. Vacation days were offered in return for overtime, and then, when that failed to convince enough people to crunch, Starbreeze sweetened the deal and added the option to "cash out" vacation days for money after the project wrapped up at the end of 2018.

"They put way more pressure on the team," one person involved with production said. "Bo was onsite way more often. We were finally admitting we were late. We never talked about, 'we have to fix this problem.' Never. That was never part of the discussion. All the leads were asked to make people stay to work more. Evenings and weekends. That was the deal."

"They said, if you have work remaining, even if you are going to be done by the end of the week, we want it done by the end of Monday so we can give you more work," said a developer. "Get this done, get it out the door so we can give you more stuff to do, which kills morale completely."

"People were getting one day off per week, they were working shitloads of overtime for months on end, and production was trying to screw them at every single turn," one person said. "It was ridiculous."

After multiple delays, a game engine switch and months of crunch, Overkill's The Walking Dead launched on Steam on 6th November 2018. It did not go down well.

"It's amazing we even managed to pull off something you are able to install on a PC in a single year," one developer told Eurogamer. "We really tried to fix stuff as much as we could."

"This is why the game feels so alpha," another said. "It's because it is. It's a year-and-a-half in. It's a beta game because we made it in a year-and-a-half."

"Everyone knew it was going to tank," said another. "All of us, we put our blood, sweat and tears - and our fucking livers and pancreases - everything into that game, and no matter how much we would push to do it as best we could, it got shat on. No matter how much you polish a turd, it's still a turd. It was never going to get any better than where it was. It was always hacked. Everything that was done there was - let's hack it and put it together. There wasn't much hope for most people, and what little hope there was was dead by the end of it."

Overkill's The Walking Dead flopped hard. Players rejected it, calling it a boring, broken mess. "The artwork is solid, but the design is bad," said one person who worked on it. "It's very repeat, repeat, repeat. It feels like Payday all over again, and I don't think the community wanted that. They wanted something fresh. It's super glitchy."

The Walking Dead failed to impress players, but it was a sales disaster for Starbreeze. Management had hoped it would sell millions of copies. At launch it sold under 100,000, Eurogamer understands. Millions of dollars spent on game engines, development and marketing had gone down the drain, but, crucially, the revenue The Walking Dead was supposed to provide - the money needed to keep the company going - simply wasn't there. Starbreeze's share price took a tumble - and it kept on tumbling.

Bo Andersson, ex-CEO of Starbreeze.

"Dear hardworking Starbreeze crew," begins the company-wide email - obtained by Eurogamer - that Bo Andersson sent to staff the day after he was fired.

"Goodbyes are hard - Game over however means - try again. My good bye Im sure is nothing special.

"Yesterday I was fired by the board as your CEO."

Those who've worked with Bo Andersson describe him as a would-be rockstar who shot for the stars but crashed and burned. He spearheaded the company's foray into virtual reality, signed off on investments into published games such as Raid: World War 2 and greenlit deals with Hollywood companies for titles based on The Walking Dead and John Wick. He also secured investments and loans from Scandinavian banks, Taiwanese electronics companies and Korean publishers as Starbreeze played the dangerous stock market game.

"Bo, he was like this bro, macho guy," one person who worked with him said. "He was a visionary. He had so many ideas, and they sounded cool when he said them, but they were these really big dreams of super triple-A console games that would maybe take between three to five years to develop with a huge team. You could tell the guy had a lot of ambition."

"He's confident and he's charismatic," another said. "He would talk for ages with you about what he wants to do and how he wants to do it and why it's cool. When you're talking to him about that sort of stuff, it is difficult to disagree. But he was also very centred around the business. It always felt he was pushing way too hard and way too fast."

"He was very optimistic about a lot of things he definitely shouldn't have been," said another.

Andersson also had a stringent attitude to work, and in promotional videos would proudly discuss the fact he had a bed in his office. One Starbreeze source told me Bo once came into the office on a Sunday and seemed shocked to find hardly anyone was working. "But it's great," Andersson said in one video dated May 2017. "We get to create amazing things here at Starbreeze and it's something we all live and die for."

"It was very easy to drink his Kool-Aid," a source said. "He was very confident, very charismatic. He's got this swagger about him. And he would tell you all this stuff about how awesome things are and how awesome the tech is. The problem is, there was never any substance behind any of it."

Payday 2 has had a rough time on consoles, and doubt has been cast on the future of the console version of Overkill's The Walking Dead.

In the email to staff sent the day after he was fired, Bo explains what had happened, from his perspective.

"In short the stock price is too low due to less sales as our board put it - than expected and too high costs then we could carry. Not sexy and as CEO that is my fault not matter what I tried or did.

"I don't have a crystal ball - but I do have the balls to have a vision and the will to create the future - now lots of should haves & woulds haves pop up - to that I say. Go build your own company Good luck to you.

"We all know the name of this game and this is at OVERKILL level difficulty. You were there with me , side by side- some of you for over 10 years.

"PAYDAY - wow! We turned that from an ok game to a super hit of the decade. IT is an AMAZING achievement,

"I decided that I will build an amazing games again - will you ?

"I will miss a lot of you - friends and colleagues. Being the CEO and sometimes producer/designer makes you go from one corporate stiff meeting to a super creative exciting one day per day. Its a true roller coaster.

"The one thing that is amazing is to see your devs grow and mature into seasoned veterans - some of you are like sons and daughters to me - you make me so proud. I spent more time caring for you than my own children."

Andersson then goes on to namecheck a number of people before suggesting he regrets not being able to spend as much time with development staff as he'd have liked because he was "doing stock uplists corporate governances and that great stuff instead".

"Pushing hardware such as StarVR, Presenz and 3D engines been exciting and challenging - too early for the global trend but boy the VR Headset is amazing - and who else built a VR park in Dubai - bravo," Bo continues.

"I know ppl say that it was stupid now - but you guys did it and if the trend would have caught up in time - we all be heroes. Its about entertainment YES!. You landed on the moon - not too many ppl done that."

And then, a paragraph that pretty much everyone I've spoken with for this feature has expressed shock and disappointment about.

"Personally though I lost all my money, my family in divorce and my kids custody through the toil over the last 2-3 years working 100 hour weeks for Starbreeze and keeping you devs paid and in the game. With less and less developers willing to put in the extra care in a product it clearly limits the possible result of enough quality in time. This is a new era and I did not leave the old one and adapt in time - my fault. Its ok - its new times."

"He's really pushing the blame on everyone else but him," one person who worked on The Walking Dead said. "It's a ridiculous thing to write."

The email continues, with Bo going on to promise his next game will be different, "and it will not be pleasing and chasing stockholders pleasure at each quarter".

"Its for the gamers - if you are a developer that cares about that, you will make miracles - if not well - you will just make money 10 to 5. Thats all cool and chill too - its the new black

"All in all it was such an exciting ride. We made digital miracles together.

"I learnt, suffered and grew. However in the end the corporate side broke my soul and stamina. - my dear board and I disagreed on direction and Im out.

"PAYDAY 3 - my passion, my dream project. - will, most likely not involve me and I leave that in your capable hands.

"However - we sure ended it in an epic way though - thank you. PAYDAY team you rule!

"I will heal - see my kids for the first time in 4 months and then make enough cash to start over and then who knows - I might write a Book about it all...

"To all you devs, veterans and fantastic support crews It was a honor and life of adventure to be your captain....

"Now Nermark [interim CEO] will take the wheel and he is as you know a solid good guy. Give him your effort, trust and you will get through this."

Bo then asks staff to give his mother, who works at Starbreeze's Stockholm headquarters as office manager (and, according to staff, was a sort of human resources person, too), a hug, before delivering the final line:

"Maybe we do this again..... (I will....in space - my STORM is coming.)"

Two days after Starbreeze announced Andersson's departure, Swedish authorities raided the company's Stockholm office as part of an investigation into insider trading. Two people were arrested as part of the investigation.

Eurogamer has obtained a follow-up email sent by Bo's mother titled "Bo is back from custody". In it she says "it's been very lonely days inside" for her son, "but now he is out in the cold weather again and can read for the first time."

Storm is the codename for a game that's been coming "for 10 years", one person said, an idea that originated from the Grin days. Apparently it's supposed to be a Payday in space kind of game.

"Storm is coming, but everyone was like, bullshit. If Bo does continue on and try to set up another studio, this is the title he would work on."

On 11th October 2018, Starbreeze announced chief financial officer Sebastian Ahlskog had decided to leave the company.

On 6th November 2018, Starbreeze released Overkill's The Walking Dead on Steam. The same day, it issued a quarterly report showing a loss of SEK 102m (£8.8m), but management stressed the next quarter would show a positive result.

On 9th November, StarVR was delisted from the Taipei Exchange. Its $3200 VR headset still hasn't come out, and majority owner Acer is trying to sell or shutdown the company.

On 15th November, Bo Andersson sold shares in Starbreeze worth SEK 18.6m (£1.6m). This was, according to the Swedish business press, because the shares were mortgaged and the bank involved, Carnegie, forced their sale.

A week later, on 23rd November, Starbreeze issued a profit warning. Sales of The Walking Dead were worse than expected and the company needed to cut costs. All previous financial goals were scrapped. Starbreeze's shares fell again, to the point where Bo Andersson sold them for double their value.

On 3rd December, Starbreeze filed for reconstruction in the Stockholm District Court and, in the same breath, announced Bo Andersson had left his post as CEO. The shares went into free-fall.

On 5th December, Swedish authorities raided Starbreeze's Stockholm office as part of an investigation into insider trading. Two people were arrested as part of the investigation. Staff at the studio who witnessed heavies remove computers were stunned, I'm told. (Bo Andersson has since been cleared of wrongdoing as the investigation has shifted focus onto Carnegie, the bank that forced him to sell his shares.)

Starbreeze has 19 subsidiaries. Administrators are looking to sell off much of the non-game development business.

Starbreeze's dramatic financial crisis obviously has a lot to do with the failure of Overkill's The Walking Dead. But it also has a lot to do with the massive investments made by the company outside of its core business that failed to pay off. These investments, in virtual reality, in costly studios abroad and in expensive technology, caused running costs to balloon. StarVR bled money, and the high-end VR headset it had partnered with Acer to build still hasn't come out. Raid: World War 2 was such a flop, Starbreeze was forced to raise $30m in a share sale to keep the company going until The Walking Dead came out. Then, when The Walking Dead flopped, Starbreeze simply didn't have any money to keep the lights on. Now, administrators are deciding its fate.

Based on my conversations with staff, most were unaware of just how severe Starbreeze's financial difficulties really were, or how crucial The Walking Dead was to its survival. As one source put it to me: "If they knew we needed this to sell five million copies to save the company, I'm pretty sure a lot of people would have left way before thinking, this is not going to happen."

But many knew something was amiss with Starbreeze - and had been for some time. "The amount of money being spent sometimes didn't add up," one person said.

"We figured, they've got the money from Crossfire, they supposedly have got all this money from Payday 2. They must be saving it so they can make Payday 3. And then it was quite a big thing of, holy shit, they are really doing this badly."

"People were constantly talking about how Payday was basically paying for the whole studio. Essentially that's accurate," another person said. "But nobody knew how fast the money was being drained. We could see the news - how Acer bought shares back for StarVR and stuff like that - when you see these reports you're like, oh shit, this is bad stuff. But no-one knows how fast it is."

According to Starbreeze's administrator, the company debt amounts to SEK 400m (£34m). This relates to four loans: two from bank Nordea, which lent Starbreeze SEK 190m in 2017, one from Smilegate Holdings, which has a loan valued at SEK 215m from when it commissioned Starbreeze to develop a co-op Crossfire game, and another worth SEK 75m owed to Acer from the failed virtual reality venture.

Whether either creditor will ever get their money back remains to be seen. I've heard THQ Nordic mentioned as a potential buyer of Starbreeze, but any deal would involve paying the debt off. Perhaps more likely is an IP firesale, with the likes of Smilegate potentially interested in Payday. But would a buyer keep on Starbreeze staff and set them to work on Payday 3?

In December last year, the administrator made a decision on salary guarantee for the companies' 263 employees. I understand Starbreeze management is currently asking the team for feedback - both good and bad and with no blaming - as part of a production post-mortem. I also understand Starbreeze made good on the overtime "cash out" option following the release of The Walking Dead. But staff are continuing to work as normal more in hope than expectation, and this salary guarantee won't last forever. "The current mood is not good," one person said. "Sombre," is how another described it. "A lot of people are looking for ways out now. Everyone's worrying about it going under."

Starbreeze has already delayed the release of Overkill's The Walking Dead on console (I've heard it may never come out), and while it continues to release update videos for The Walking Dead, it doesn't sound like many are listening. According to SteamCharts, the game had an average of just 662 concurrent players over the last 30 days.

Starbreeze, then, has gone from Sweden's golden child status to living on life support. Starbreeze was the cool kid on the stock market block, so cool, in fact, that the Prince of Sweden bought up shares (he sold them all in 2017).

In truth, the studio hasn't had a hit since 2013's Payday 2. Since then, a string of costly failures and mismanagement has put Starbreeze on the brink of collapse. If it does go under, it'll leave hundreds out of work. If it manages to stay alive, well, there's a long list of creditors hoping for a unlikely pay day.

Nobody I spoke with for this feature wants to see Starbreeze go under. Despite all the difficulties at the studio, some have told me they consider it to be a good company in a great location that had a wonderful sense of camaraderie and character. But creditors are not known for their sentiment. If Starbreeze does go down, the stark, worrying reality is around 200 people who live in or near the costly city of Stockholm will lose their jobs.

And what of Bo Andersson? After Grin collapsed into bankruptcy, he has left Starbreeze facing a similar fate. "He has disappeared from the face of the earth," one person who knows him said.

Eurogamer contacted Starbreeze for comment on the various issues raised in this article. The company declined our interview request, but did respond to an emailed list of questions with a statement from Mikael Nermark, acting CEO of Starbreeze. It is reproduced in full, below.

"Coming into a CEO role at the phase that Starbreeze currently is in is never easy, I'm humble before the task at hand and will work my hardest to get our feet back on the ground as soon as possible. As the company currently is in reconstruction, the future is indeed uncertain, but myself and the rest of the management team are working very hard to stabilise and bring the company back to its core; games development.

"We recognise that there have been bumps in the road and that our development process may at times have seemed disorganised to our employees. That is one of my main goals to improve as we move forward. We're in a phase where we focus on moving us ahead as a company, but will very soon shift our focus more inwards, on improving our processes, communication and to provide a clearer framework for everyone to work within.

"Just to address some considerations specifically;

"On OTWD; the core team, producers and others, worked hard and often late during the last year of production. Our goal was not to have a mandatory crunch, but when needed, specific people were asked, if they were willing and able, to finalise a feature or commit on a strictly situational level. To be absolutely clear - the whole team has a very high work ethic and we all worked hard together.

"On the technology switch; this did absolutely affect the timeline for OTWD. It was a business decision that came late - but also a necessity and something the producers tried to mitigate as best possible.

"I personally greatly appreciate and respect all the hard work all of our employees have put into all of our projects. We will work diligently at making sure everyone is given room to create great games according to their expertise - with clear goals set on an individual level aligned with our future overall strategy."

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