For a game studio that makes a popular series about criminals pulling heists, the last thing you’d expect is for them to get busted by the police for pulling a heist of their own. But that’s exactly what happened with Starbreeze Studios, makers of the popular Payday series and recently the curators of a first-person shooter Walking Dead title – the studio is being investigated by Swedish authorities with allegations of insider trading, and the studio may have to be closed down eventually.

According to reports by Swedish news channel Di, Starbreeze’s offices were raided by Swedish police this week. One staff member was arrested, computer equipment was seized, and the office has been shut down until further notice. The staffer was arrested under suspicion of insider trading – the trading of public company stocks by people, usually employees, with access to that company’s private info – which is a criminal offence in Sweden.

The arrest and seizure follows a slew of bad news from the company that sent them into bankruptcy in less than a month. On 6 November 2018, the studio delivered their interim report for the 2018 financial third quarter, the same day of the release of The Walking Dead, a first-person shooter based on the comic books by Robert Kirkman.

“Today’s the day of our biggest release since Payday 2 more than five years ago,” Starbreeze CEO Bo Andersson said. “Overkill’s The Walking Dead is an important release for Starbreeze and is obviously our main focus right now. The game is the first we are releasing of the eight major games we have invested in to establish Starbreeze as a major and successful game company that is in it for the long haul.”

The announcement of further expansion in their lineup was seemingly done to bolster the company’s stock price, which had been in decline since the announcement of The Walking Dead several months prior at E3 2018, losing almost half its value by dropping from $1.88 to $1.10. Two weeks later, the company admitted that sales of The Walking Dead weren’t doing all that well, and they were looking to cut costs to keep development going. The studio even put out a press release to this effect. But it wasn’t the sales of the game that was problematic, it was royalty payments that the company expected from 505 Games (the developers behind Brothers: A Tale of Two Sons), that were causing some mild panic. The payment of $10 million wasn’t going to be recorded for the company’s fourth financial quarter, and would instead be reflected in their 2019 financial first quarter.

A week later, Starbreeze announced that the studio was filing for bankruptcy, or more specifically “reconstruction”, and was replacing its CEO. “The decision is based on a shortage of liquidity and deemed to be a necessary step to give the Company the time needed to negotiate a long-term financial solution and implement changes in the organisation and operations. The financial targets for Q4 2018 and 2020 no longer applies,” the company said.

The announcement of the company’s reconstruction means that several projects have been put on hold. These include Payday 3 and System Shock 3, a sequel to System Shock 2 that would accompany a grounds-up rework of the first two games because Starbreeze had acquired the rights to the series. Also affected were in-development titles such as Payday Crime War (mobile), Geminose (codename for a Switch title), Project Crossfire (codename), Storm (codename), Psychonauts 2, 10 Crowns, Elementerra, and Hero (codename).  This also necessitated a scaling back of the plans for DLC for The Walking Dead, which the company had announced on 6 November.

Also of note is that on 30 November 2018, the company made changes to its shares that it had for sale to the public. The company decreased its availability of Class A shares by 61,154 shares, and converted those into Class B shares. Class A shares have more voting power in shareholder decisions and board decisions, which means that the company took out a significant amount of voting power in order to retain their autonomy.

We’ll keep following this developing story. It’s a quick devolution into a death spiral, but no-one will ever top THQ’s three week-long deconstruction.

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