By Cecilia D’Anastasio | Bloomberg
Mike Morhaime, a co-founder of video-game giant Blizzard Entertainment, sent a letter to staff at his new company Dreamhaven last 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. 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 said. He’s looking for new financing for Dreamhaven, but in the meantime the company would need to retrench.
“Our monthly expenses are outpacing revenue,” Morhaime wrote. The focus now is “urgently reducing costs,” he said, 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-makers 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 said in a Linkedin post last week that the game wasn’t getting the traffic or sales he hoped for.
The company had already reported in an April filing with the Securities Exchange Commission that “revenue from early access game sales is not sufficient to support the company’s future operating expenses.” The company lost $11.7 million on sales of $1.4 million 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 said 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 Legends, 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 catalog 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 looks to generate revenue from recurring in-game purchases, not quick upfront sales.
