Telltale Games sudden lay off of almost all of its employees (274 to be exact) came as quite the blow to employees who received almost no notice, no severance, and less than a week’s worth of health care. This came just two days after two potential investors walked away from funding talks. Both AMC and Smilegate were in discussions with Telltale as investors. This is a deal that management had been working on to essentially save the company. On Thursday, Telltale had a meeting with employees to say that negotiations with AMC were going well, and that management expected to confirm the funding within a few weeks. In fact, it was painted as a done deal. But then, one of the two companies decided to back out. Followed by the other company backing out as well.
What we don’t know is why both companies decided to back out of the deal on the same day. In addition, Lionsgate also decided to write off the funding that they had already invested in Telltale. Was it Smilegate – a massive Korean developer of online and mobile games who decided to back out? Or was it AMC who has a stable of massively original properties that decided to cut ties?
An interesting factor to all of this is that while AMC retains the rights to The Walking Dead television shows and can license games based on it, the Telltale Walking Dead game has been based on Robert Kirkman’s comic books through an unrelated deal made with Skyboard Games. AMC does have two mobile games based on The Walking Dead television show and has shown an interest in expanding its investment in gaming. All of that said, AMC has declined to provide comment on this particular matter.
The worst part of all of this is that with these two companies backing out, it inevitably led to the closure of Telltale. That said, Telltale didn’t really handle it all that well. They told employees that they would be paid compensation up until last Friday and that they had to evacuate the building in 30 minutes. Email was immediately shut down and no further severance was provided. Telltale Games had reportedly been going through internal turmoil with employee complaints of a toxic work environment, long hours, and confused management. Many employees inside the company were aware the studio had major financial trouble as well, and that it could close one day, but the worst that was expected in the immediate future was another round of layoffs.
The remaining staff at Telltale are now working to finish up the port of “Minecraft: Story Mode” for Netflix. They’ve said that they are courting potential partners to get the remaining two episodes of The Walking Dead: The Final Season finalized. Some fans had prepaid for the entire season, so this is something they need to be able to deliver on, or it’s going to get even worse for them. And now, former employees are filing lawsuits saying that Telltale violated state and federal labor laws with the mass layoff and didn’t give proper notice.
Cofounder and former CEO Kevin Bruner also sued Telltale seeking financial damages says that he’s still shocked over the sudden closure.