Daedalic Entertainment will no longer develop video games in-house after the failed launch of The Lord of the Rings: Gollum. Nacon’s subsidiary plans to focus exclusively on publishing.

Daedalic Entertainment lays off 25 people and quits in-house development following Gollum's failure

Over the weekend, German outlet Games Wirtschaft reported that Daedalic Entertainment will stop developing games at its Hamburg-based studio. In an internal statement, the company cited a “difficult turning point” as the reason behind this decision.

Following the failure of Gollum, Daedalic laid off 25 of the more than 90 employees, with management saying that “we value each and every member of our team and it is important to us that the transition goes as smoothly as possible.”

From now on, the company will only focus on its publishing business. Its portfolio already includes titles like Inkulinati, Shadow Tactics, Unrailed, and Iratus: Lord of the Dead. Overall, Daedalic plans to launch eight games in the current financial year, including Surviving Deponia from AtomicTorch Studio.

Launched on May 25, The Lord of the Rings: Gollum received mostly negative reviews from critics, with an average Metascore of 34-39/100. The game currently has a 34% rating on Steam based on 307 reviews. According to SteamDB, it only peaked at 758 concurrent players — one of the worst results in Daedalic’s history.

Daedalic told Polygon over the weekend that Gollum “did not live up to the expectations we had for the game.” As a result, the German company also canceled another The Lord of the Rings project that has been in the making since mid-2022.

Founded in 2007, Daedalic Entertainment is best known for the Deponia series. Last year, it was acquired by French publisher Nacon for €53 million.

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