Daedalic Entertainment, a studio rooted in Hamburg, has halted its internal game development and will concentrate exclusively on publishing activities moving forward. This strategic pivot follows a disappointing performance in a key release that had drawn significant attention in the games press and among players alike.
The decision centers on the reception of the adventure stealth title The Lord of the Rings: Gollum. Early feedback and overall reception were sharply negative, prompting the leadership to rethink the company’s project pipeline and the balance between in house development and external collaborations. The outcome is a conscious move away from completed in house production in the Hamburg studio. The company framed the shift as a bold new chapter in its long history, acknowledging the difficulty of the transition while signaling a renewed focus on publishing and partnerships rather than internal development projects.
As part of this reorientation, Daedalic pointed to the survival simulator Surviving Deponia as an example. The project will now be published by Daedalic, but it will be developed by a third party, AtomicTorch. This arrangement illustrates the broader strategy to leverage external studios for production while Daedalic takes on publishing responsibilities, distribution, and support across markets including North America and Europe.
The move also involved staffing adjustments. Daedalic confirmed a layoff affecting 25 employees out of a workforce of more than 90. The company stated its intent to treat departing staff with respect and to assist them in finding new opportunities in the industry, underscoring a commitment to people even as business directions change.
In related news, a separate project titled It’s Magic, which had been under development since mid-2022 and carried a codename associated with a major fantasy property, was cancelled. The decision reflected a broader reassessment of creative risks and resource allocation during a period of organizational transition for Daedalic.
Industry observers have noted that the timing and nature of these changes tie into ongoing debates about the future of licensed properties and the role of well-known franchises in independent game development. The reception to a new Gollum-focused title has already intensified scrutiny over licensing choices and storytelling approaches in the genre, highlighting the delicate balance between fan expectations and creative innovation. Daedalic’s strategy, prioritizing publishing and external development partners, positions the studio to curate a broader catalog while minimizing the risks associated with in house production. This approach may influence the company’s relationships with developers and publishers in North America, as well as partnerships with studios across Canada and the United States for regional distribution and marketing support. Citations from company representatives and industry coverage corroborate these details and provide context for the strategic shift.