Avalanche Studios lays off 77 employees

The financial crisis isn’t making life easy for game developers. We’ve earlier talked about how the low dollar makes game development difficult for developers outside of the US. Now, when the economy has taken its toll, the situation has, for many, gotten much worse than anyone could anticipate. Avalanche Studios (currently working on Just Cause 2) are now in rough weather since they’ve also lost two major publishing deals, one in February and one last week.

“We have given notice that it’s our intention to lay off 77 people,” said CEO Christofer Sundberg, speaking to GamesIndustry. “We lost the first deal in February but we could survive that one because we had a shortage of staff in other projects and we decided to put together a team to work on a original IP that we had in development. But the team that were working on a project that was terminated last week – there were about 67 people on that team.”

The two deals were worth about $34 million and when speaking to Swedish newspaper SvD, Sundberg revealed that the world’s economical situation played a major role in the breakups. “One publisher became very conservative with their portfolio and decided to put their efforts on IP games for kids. The other publisher is broke – they’ve simply got no money left.”

But regardless, Avalanche Studios are still looking optimistically on the future. Sundberg explains why there’s still positive aspects of being a smaller studio. “I’m very positive that we’ll get back on our feet again. But will we become a 160 employee studio again? I’m not sure. It just sort of became that way. I love working with these people but I hate growing because it becomes very industrialized and very impersonal. We started this company based on a passion to create games, not to run a huge business.”

With lots of focus on Just Cause 2, the promising sandbox game has a good chance of improving the imperfections of its prequel and giving us a game with fewer bugs, more purpose and better gameplay.