Telltale Games just underwent a massive layoff of approximately 250 employees reducing the company’s staff to 25 people to fulfill the company obligations. The company was well known for creating adventure games with riveting storytelling and quality art.
Telltale’s management did not seem to think employee retention was a necessary piece in the stable growth of a company. The Verge crafted a detailed account of the poor management practices which included overworking employees in a rush to get the next game on the shelves. Even The Walking Dead, the company’s most significant success story, succeeded in spite of poor management. The Verge reports:
Internally, multiple sources pointed to a specific locus for the success of The Walking Dead: lead developers Jake Rodkin and Sean Vanaman. Vanaman wrote several of the game’s episodic chapters, and Vanaman and Rodkin directed the first chapter and guided the overall first season together. If Telltale’s financial woes had one positive creative impact on The Walking Dead, it’s that the poor reception for Jurassic Park meant the studio had little time to slow or halt development. The game had to come out, which gave the Walking Dead creative team leverage to ignore or skirt around feedback from upper management that they vehemently disagreed with. Rodkin and Vanaman developed a reputation as personalities strong enough to challenge the founders on creative decisions, and pushed over and over again to create the game the way that they wanted, says a source familiar with the project. “They won, and it ended up being this huge success.”
The Verge noted the broader industry trend associated with the attrition talented personnel.
Telltale relied heavily on licensing big names. But following the release of TWD, Telltale focused entirely on this strategy going deeper with Game of Thrones, Minecraft, and Batman. Licensing is sure to sell games, but its not the best way to maximize profitability for it’s game studio. The cost of licensing IP ate away at the profit of games. Following TWD, Telltale had enough fans and industry recognition to prioritize its own IP creations instead of licensing. But instead of leveraging its own brand to create games with better profitability, Telltale continued to leverage other brands.
In contrast, consider Netflix. Netflix has, not entirely, shifted its focus from licensing to content creation. In retrospect, this move saved the company from what otherwise would have been an early destruction. Disney has already announced it is creating its own streaming platform. Without major licensing agreements, what need is their for Netflix? Little. That’s why they focused on content creation. Telltale’s woes would ave been avoided with a better strategy that leveraged its brand to produce original IP.
The other unsustainable piece of Telltale’s strategy was the churn rate of the studio’s games. Telltale withheld little ambition from its release schedule. As a result, the brand took a hit with the release of games that weren’t received as well, such as Minecraft: Story Mode. Guardians of the Galaxy was also given more praise by critics than users. And Batman reviews displayed a lot of performance issues. Telltale produced a ton of games in a short period of time. All of them since TWD were licensing deals. The only technical exception would be Poker Night 2 which was released around the same time, which means concurrent development.
Perhaps Telltale Games is the result of bad goals pushed by Silicon Valley. The company was venture backed and the investors had a large role to play in the company’s strategy. Perhaps things would have been different if the company had pursued an IPO to retain talent and focus on creating intellectual property. The success of Take-Two Interactive and Activision Blizzard mean suggest that Telltales Games would have been well received by Wall Street.
The demise of Telltale Games is nothing to celebrate. They were a small fish that produced quality games amidst larger competitors. Their downfall means a lot of people lost their jobs and without severance. However, as entrepreneurs, there is a lesson to be learned in regards to management and strategy.