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Skybound Games has terminated its contract with Starbreeze Studios, the studio behind Overkill’s The Walking Dead, stating the FPS zombie game based on Robert Kirkman’s The Walking Dead "did not meet our standards nor is it the quality that we were promised".

"Our creators and their stories are the core of Skybound, and since 2014 we have worked hard to expand the world of ‘The Walking Dead’ into an exceptional co-op action FPS," Skybound said in an official statement. "We did our best to work with Starbreeze and resolve many issues that we saw with the game, but ultimately Overkill’s The Walking Dead did not meet our standards nor is it the quality that we were promised.

"We are exceedingly sorry to our fans and share their disappointment in the game. We remain dedicated to providing our fans with the most premium quality content we can offer, and will continue to look for alternative video game options for the IP."

After the "disappointing" launch of Overkill’s The Walking Dead, Starbreeze’s board of directors announced it was reviewing operations costs and implementing a program "to reduce costs and sharpen focus on core business". The plan initiated a cost-cutting program, which included scaling back both internal and external development and was expected "to generate significant cost savings during the full year 2019 compared to 2018".

The developer confirmed initial sales revenues from Overkill’s The Walking Dead were "lower than forecasted", but attributed the revenue issues to "the share of sales in low-price countries, such as China and Russia, [being] significantly higher than expected".

"This is disappointing, of course, but we have a base to work with in regards to the number of games sold," Starbreeze chairman Michael Hjorth said at the time. "We have a pulse of concurrent players, which is essential to future performance within the framework of our Games as a Service concept. The team is working at full capacity to deliver improvements to the game and new content, and Season 2 will be starting soon."

Now, it seems, plans to develop further seasons are on hold, and Overkill’s The Walking Dead is expected to be removed from Steam shortly.

"We are deeply sorry for the issues this may cause anyone who has bought the game looking forward to the resolution of Season 2 and are working urgently to attempt to resolve the issue," said acting Starbreeze CEO, Mikael Nermark. "Please keep an eye on the official OTWD channels for further news."

Starbreeze filed for reconstruction with the Stockholm District Court following a "shortage of liquidity" that requires the company to "negotiate a long-term financial solution". Starbreeze’s headquarters were then raided by police following reports of insider trading, leading to at least one arrest and the seizure of equipment, including computers and documents.