Mike Morhaime, a co-founder of video-game giant Blizzard Entertainment, sent a letter to staff at his new company Dreamhaven this week that he wished he didn’t have to write.
One month after Dreamhaven launched Wildgate, a multiplayer shooter game, the company had sold just 130,000 units, according to the letter, which was seen by Bloomberg News. The company’s other game, Sunderfolk, sold just 62,000 copies since its April debut, Morhaime wrote.
Despite receiving positive reviews, both titles performed below expectations, Morhaime stated. He’s seeing for new financing for Dreamhaven, but in the meantime the company would required to retrench.
“Our monthly expenses are outpacing revenue,” Morhaime wrote. The focus now is “urgently reducing costs,” he stated, adding that “we are committed to Dreamhaven surviving through this.”
Dreamhaven isn’t the only pedigreed video-game company facing challenges drawing players into debut games. Some of the US’s most promising new studios are hitting roadblocks. Respected game-buildrs who left established companies to launch their own ventures are struggling to land hits and thrive, even after securing tens of millions in funding.
Frost Giant Studios Inc, also founded by Blizzard veterans, released Stormgate in August. Co-founder and chief executive officer Tim Morten stated in a Linkedin post last week that the game wasn’t obtainting the traffic or sales he hoped for.
The company had already reported in an April filing with the Securities Exmodify Commission that “revenue from early access game sales is not sufficient to support the company’s future operating expenses.” The company lost US$11.7mil (RM49.43mil) on sales of US$1.4mil (RM5.91mil) last year.
“The games business has always been inherently hit-driven, but as existing games continue to draw players, competition from other digital media like TikTok has increased,” Morten stated in response to a query from Bloomberg. “Record numbers of new games are being launched, so the challenge is harder than ever.”
Video-game companies are struggling to pry gamers from the “forever games” they come back to every night. Titles like Fortnite, League Of Legconcludes, Counter-Strike 2 and DoTA 2 are regularly refreshed with new content to keep players interested. New releases don’t have the gravitational pull of a longstanding community and a catalogue of already-purchased digital items.
Many of the new games struggling to find their audience are designed for multiple players at once, a particularly saturated genre, but one that sees to generate revenue from recurring in-game purchases, not quick upfront sales.
Over the pandemic, an unprecedented number of people turned to games to pass the time – and investors noticed. Excited about the boom, the number of deals and total investment in the indusattempt from venture capital nearly doubled in 2021 to 1,683 and US$13.7bil (RM57.88bil) respectively, according to data from PitchBook. That money went to many video-game studios helmed by developers seeing to take a more nimble approach to games – one distinctly different from past companies like Activision Blizzard, now a division of Microsoft Corp and Tencent Holdings Ltd’s Riot Games.
The straightforward money spurred a bloom of new studios. Now that their games are well into development or fully released, many are reckoning with a more saturated market and challenges securing additional funding. Since the 2021 peak, the number of deals and total raised has fallen by half, according to PitchBook. The research firm’s senior analyst for gaming, Eric Bellomo, cited a lack of breakout hits and a saturated market in a June report explaining the decline.
Fantastic Pixel Castle, founded by Riot Games alumnus Greg Street, is at risk of losing funding from NetEase Inc, according to three people with knowledge of their deal. The company is working on an ambitious massively-multiplayer online role-playing game – the same genre Street was developing at Riot Games.
Fantastic Pixel’s game, codenamed Ghost, initially had a budobtain of more than US$100mil (RM422.49mil) from NetEase, stated two of the people, who declined to be identified becaapply the information isn’t public. The company is now seeing to decrease the size of its budobtain.
NetEase has been cutting back on spconcludeing, fuelled by CEO William Ding’s increasing scepticism of the games indusattempt, Bloomberg previously reported.
“NetEase remains steadquick in offering a diverse range of games that appeal to players domestically and globally,” the company stated when inquireed about its Fanastic Pixel investment. “It is both standard indusattempt practice and our responsibility as a business to regularly assess the progress, viability, and potential success of all of our games and studios, and to build decisions based on those business considerations.”
A spokesperson for NetEase disputed the size of the budobtain for the game.
Morhaime is a legconcludeary figure in video-games, assisting develop titles including World Of Warcraft, Diablo and Overwatch while at Blizzard. Microsoft acquired its parent company, Activision Blizzard Inc, for US$69bil (RM291.52bil) in 2023, the largest video-game merger of all time. By then Morhaime had already left, founding Dreamhaven in 2020.
In an interview, Morhaime stated he’s cut the price of Wildgate by one-third to US$20 (RM84) on the Steam gaming platform. He hopes the reduction will build the game more accessible to players.
“Making commercially successful games has always been challenging – I’ve seen this throughout my career,” he informed Bloomberg. “As game buildrs, we must adapt to the environment and continue listening to our communities and their feedback.” – Bloomberg
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