What Happened To Telltale Games? Here’s Why The Popular Studio Shut Down

Executive Summary:

Telltale Games was an American video game development studio that primarily published adventure games via an episodic format.

Telltale had to shut down because it ran out of money and failed to secure the necessary funding to keep the company afloat.

Founded in 2004, the company managed to raise over $54 million in funding but ultimately went bankrupt in 2018.

What Was Telltale Games?

Telltale Games was an American video game development studio that primarily published adventure games using an episodic format.

The majority of titles that it released were based on established intellectual property (IP), such as Sam & Max, Wallace & Gromit, The Walking Dead, Game of Thrones, or Batman.

Each release had a season that normally contained around five episodes. New episodes within a season were made available around every two to three months.

Decisions that were made in one episode later carried over to the next one, which ultimately affected how the story ended.

Games were developed using Telltale Tool, a game engine that was created by the company itself (led by Kevin Bruner, one of the studio’s co-founders).

Players could either purchase individual episodes or season bundles. The games were made available on a variety of platforms, such as Steam or Telltale’s own website.

Lastly, the games could be played on nearly every device, ranging from PCs to Nintendo Switch or the PlayStation 4.

Telltale ultimately went bankrupt in October 2018. How it came to be, the successes it celebrated, as well as the reasons that led to its demise will be covered in the next two chapters.

What Happened To Telltale Games?

Telltale Games, formerly headquartered in San Rafael, California, was founded in 2004 by Kevin Bruner, Dan Connors, and Troy Molander.

The trio met when they joined LucasArts in the mid-1990s. Connors joined as a quality assurance supervisor and eventually became a producer. Bruner worked as a lead programmer while Molander managed the Technical Art Department.

Throughout the years, their paths would cross multiple times. For example, Bruner and Molander worked on a game called Grim Fandango while Connors and Bruner helped with the release of Sam & Max: Freelance Police.

And it was the Sam & Max franchise that ultimately inspired them to launch Telltale Games. In the 1980s and 1990s, LucasArt released critically acclaimed and beloved titles like Monkey Island, becoming one of the leaders in the adventure games genre.

However, as time passed (and technology advanced), more and more players moved to graphically more sophisticated titles, such as first-person shooters like Call of Duty. Reality eventually caught up with LucasArts, forcing them to focus on its Star Wars titles while halting development on its adventure games.

Despite a change in consumer preferences, Bruner, Connors, and Molander still felt that there was plenty of stories left to be told. The love for storytelling also became the inspiration of the studio’s name.

It took more almost a decade until that vision was fully realized. In July 2004, they incorporated Telltale Incorporated, the business behind the studio. Even though the founders had just come from working on critically acclaimed titles like Grim Fandango, resource constraints didn’t allow them to release episodic games right from the get-go.  

Months later, in February 2005, they finally released their first game called Telltale Texas Hold’em. Plyers could pick one of four characters and participate in a fictional poker tournament held in Las Vegas.

The studio’s second game, Bone: Out from Boneville, moved a little closer to the episodic vision the founders held. Unfortunately, the game, which was based on the Bone comic series by Jeff Smith and released in September 2005, received very average reviews. As a result, Telltale only bothered to release one more episode in April 2006, which did manage to garner better reviews.  

Around the same time, Telltale also began to work together with Ubisoft on releasing CSI games which would see players solve different murder cases. All four games, released in a span of four years, received mixed reviews.

Despite the company’s lackluster start, its founders remained committed to the vision. In February 2006, they were able to raise a seed round of $825,000 to ramp up work on the firm’s most important title to that date: Sam & Max.

The founders had publicly expressed interest in reviving the franchise right after starting the company. That vision finally came into fruition in October 2006 with the release of Sam & Max Save the World.

Sam & Max was the first game that was distributed in an episodic format with a total of six episodes being released over the course of seven months. Also, critics and players alike were taking a liking to the game. As a result, Telltale was able to raise a second round of funding in June 2007, netting them $6 million from Granite Ventures and IDG Ventures SF.

Telltale doubled down on its initial success by releasing a second, five-episode-strong, season of Sam & Max in November 2007. With every new release, Telltale was also able to negotiate distribution deals with better-known franchises.

On top of that, console developers also became increasingly interested in working together with the company. While its initial games were all released for PCs, Telltale was eventually able to release its game on consoles such as the PlayStation 3, Xbox 360, and Nintendo’s Wii.

By May 2009, Telltale had managed to sell over one million episodes of gaming content – all within a span of five years. Between 2009 and 2011, the studio released several critically acclaimed adventure games.

Apart from releasing another Sam & Max season in 2010 (dubbed The Devil’s Playhouse), Telltale was able to revive yet another beloved franchise. In July 2009, it released Tales of Monkey Island, a series that had been popularized by LucasArt but was ultimately shut down in the late 1990s.

Not only did critics love the game but it became the studio’s biggest seller up until that point. The success of Monkey Island, as well as Sam & Max, enabled Telltale to move into even better known and grimmer franchises.

First, in December 2010, Telltale released five episodes of Back to the Future: The Game, which even had Michael J. Fox and Christopher Lloyd return as beloved characters Marty McFly as well as Doc Brown.

The success of Back to the Future allowed Telltale to raise another funding round in June 2011, which saw mostly existing investors pour in another $7 million into the business. The funding came right in time before the release of its most anticipated title to that date: Jurassic Park.

While critically not beloved, the game did lead to decent commercial success due to the franchise’s notoriety. Not everything about the release went as planned, though.

Right after the game was introduced in November 2011, investigations by Gamespot revealed that two members of the Jurassic Park development team posted perfect review scores for their own title on the well-known review site Metacritic. The gaming community retaliated by issuing one-star votes, which significantly brought down the game’s rating.

Despite the public backlash against the company, its biggest successes were yet to be celebrated – and would already materialize a year after. In April 2012, after much suspense, Telltale released the five-episode-strong The Walking Dead game.

The game became both a reputational as well as a financial success for the company. The Walking Dead was awarded “Game of the Year”, “Best Adapted Video Game”, and “Best Downloadable Game” at the 2012 Spike Video Game Awards, amongst others. By January 2013, Telltale had managed to sell over 8.5 million individual episodes, which equated to $40 million in revenue. When it announced season two in October 2013, it had managed to distribute over 21 million episodes.

Needless to say, the launch of The Walking Dead game propelled Telltale to never-seen-before heights. Instead of approaching franchises, IP holders now went directly to the company to have them create story-based games on their behalf.

But first, Telltale unveiled the first episode of another critically acclaimed title, named The Wolf Among Us, in October 2013. A month later, it announced that it would also develop a serialized game for both Borderlands as well as Game of Thrones.

It capped 2013 off with the launch of the launch of season two of The Walking Dead, which just like its predecessor, became a commercial hit. The company, much like LucasArt in the 1980s, became synonymous with the genre that it helped to rejuvenate.

The commercial success of its titles also allowed the company to ramp up hiring, which in turn led to the creation of even more games. By the end of 2014, a year in which it released episodes for The Wolf Among Us, The Walking Dead: Season Two, Tales from the Borderlands, as well as Game of Thrones, it managed to grow its staff to over 200 people.

Its continuous success allowed the team to raise yet another round of funding. This time investors, which included Hollywood studio Lionsgate (the movie studio behind “The Hunger Games”, amongst many others) poured in a whopping $40 million into Telltale.

However, not everything was always going according to plan. In January 2015, a month before the investment was announced, long-time CEO and co-founder Dan Connors disclosed that he would be stepping down from his role and handing the keys to his fellow founder Kevin Bruner. Connors would still remain at the company as a strategic advisor, though.

Despite the change in leadership, Telltale continued to grow at breakneck speed. The company continued to churn out new titles, such as Minecraft: Story Mode, in October 2015. Apart from adding the Minecraft franchise, Telltale also released titles for Batman (August 2016), the third season of The Walking Dead (December 2016), as well as Guardians of the Galaxy: The Telltale Series (April 2017).

Cracks in the firm’s otherwise clean image would soon compound, though. In March 2017, a month before the release of the Guardians of the Galaxy game, CEO Bruner stepped down from his role and handed the keys once again to Connors.

Connors intentions, however, were to only remain in the position until a replacement was found. That replacement became former Zynga executive Peter Hawley who assumed the role in September.

His first business decision was to cut 90 jobs, equal to 25 percent of Telltale’s workforce, to streamline the organization. Telltale had simply taken on too many projects at a time, which led to inefficiencies that often resulted in buggy releases (more on that in the next chapter).

An investigative report by The Verge would later shine some additional light on the firm’s struggles, which involved frequently overworked developers (also known as crunch), an inefficient game engine, and a work culture characterized by fear and abuse, amplified through its former CEO Bruner.

The firm’s struggles became even more evident when, in May 2018, it announced that it would postpone the launch of The Wolf Among Us 2. Even a partnership announcement with Netflix, which would see Telltale developing a Stranger Things game, couldn’t stop its demise.

That same month the partnership was announced (June), reports emerged that co-founder and ousted CEO Bruner (the board had campaigned for his removal) was suing the company he helped to start. Bruner alleged that Telltale refused to hand out certain information and stopped all means of communication as he was preparing to load off the shares he still held.

Despite launching the first episode of the fourth and last season of The Walking Dead, interest in the company could not be rejuvenated. As a result, in September, Telltale announced that it would lay off all but 20 staff members (who continued working on its Netflix project for the time being), discontinue development of future games (such as the remaining The Walking Dead episodes), and shut down the company completely.

The closure of the company sent shockwaves across the entire gaming industry and led to a wide outcry against the company. Telltale had allegedly given its employees all but 30 minutes to leave the building and fired them without notice or severance pay. A former employee even sued the company for violating labor laws.

To make matters worse, the company had even hired new people days before its closure, with many of them moving to San Francisco. As it turned out, the management team failed to raise the necessary funding to keep the company going. AMC (which runs The Walking Dead TV show) and South Korean developer Smilegate backed out of funding talks at the last minute.

Weeks later, the company pulled The Walking Dead: The Final Season as well as its other titles from digital stores. On top of that, it laid off the remaining staff that stayed on to fulfill various contractual obligations.

While the closure of the company was tragic for many, in particular its former employees, some of Telltale’s titles luckily survived its demise. In October, the defunct company reached an agreement with Skybound Games, which acquired the rights to its Walking Dead properties.

The third episode of The Walking Dead’s final season was released in January 2019 while the last one followed in March. Skybound also released a Collector’s Packs in the coming months, which contained all four seasons.

In the meantime, Telltale gets to live on through LCG Entertainment, a holding company that acquired many of its assets and IP in December 2018. The company is led by CEO Jamie Ottilie who previously founded another game studio called Galaxy Pest Control.

As a result of the takeover, multiple classic Telltale games, such as Wallace & Gromit or Tales from the Borderlands, returned to digital storefronts across the web. The new Telltale studio is also believed to be working on the second season of The Wolf Among Us. The game is set to release in 2023 after a trailer was dropped in February 2022.

Telltale became one of the many unfortunate examples of how tough it is to build a lasting company or product in the world of gaming (just look at the millions that Epic Games burned on Paragon). However, there were clear signs as to why it ended up failing – which we’ll cover in the next chapter.

Why Did Telltale Shut Down?

Telltale had to shut down because it ran out of money and failed to secure the necessary funding to keep the company afloat.

While this serves as a simple and straightforward explanation, there are multiple factors that led to that point.

For once, Telltale failed to innovate itself as well as the games it was developing. For most of its existence, the company simply relied on the same storytelling format.

Ironically enough, The Walking Dead, undeniably its biggest accomplishment, also became a detriment to the company.

Its success allowed Telltale to work together with companies like HBO (Game of Thrones) or Marvel (Guardians of the Galaxy). As a result, it couldn’t just experiment on new game formats since these partnerships came with a certain set of expectations to continue on a proven path.

By 2013, the gaming industry also entered a new era with the release of the PlayStation 4 and Xbox One, which led to games with much better graphics. Established players also began catching up. Releases like God of War or The Last of Us not only offered better graphics and gameplay but also had enticing stories to tell.

As a result, the company found itself in a competitive conundrum. On the one hand, it was competing against established studios with much greater manpower that were churning out visually sophisticated titles. On the other hand, smaller studios, which were much leaner in man count, were also releasing competitive and similarly-looking games.

Furthermore, Telltale’s engine, which was developed in-house (led by Bruner), wasn’t able to keep up with these visual requirements. In June 2018, reports emerged that Telltale was trying to replace its own engine with Unity. Unfortunately, by that point, it was simply too late.

The propriety engine effectively slowed down the development of games. Simple tasks would often take much longer than needed. For instance, its engine didn’t possess a physics system. That meant if someone wanted to create a scene with running characters, they simply had to design that by hand.

Characters, as a result, would often look stiff and lifeless. On top of that, its games were frequently accompanied by a series of bugs, which at times, made them almost unplayable. A 2015 article by Kotaku summarized the many bugs that came with each of Telltale’s releases.

However, a lagging technical prowess wasn’t the only reason for its lackluster releases. When Bruner took over as CEO, many former employees stated that its working culture became a lot more stressful and toxic.

He would often micromanage employees and call them out right in front of their colleagues. Additionally, he repeatedly threw away many of the submissions his employees made, requiring them to redo almost everything.

This would often lead to developer crunch, which meant that employees had to work 100-hour weeks just to finish deadlines. Given that Telltale was committed to multiple projects at any given time, employees would often burn out.

Burner’s management style also led to the departure of Sean Vanaman and Jake Rodkin, the project leads and co-creators of The Walking Dead game. They departed from the company after the first season commenced due to repeated clashes with Bruner, which according to many, left a huge creative void.

While key executives left Telltale, it also began to hire new employees left and right. During its peak, the company was employing close to 400 people. The hiring spree was likely a result of the growth demands its investors posed.

Unfortunately, they not only led to a loss of identity but also caused the firm’s burn rate to go up tremendously. And once some of its later titles didn’t sell as well as expected, it started to severely diminish Telltale’s run rate.

With still close to 250 employees under payroll, after cutting 90 jobs in November 2017, Telltale was essentially forced to raise another round of funding. Unfortunately, that funding round ultimately fell through, which culminated in the closure of the studio people grew to love.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.