Daedalic Entertainment shuts down in-house game development

In a statement to Polygon, Daedalic said that Lord of the Rings: Gollum failed to "live up to the expectations" and while it will continue working on updates for Gollum but has halted work on another Lord of the Rings game.

"Daedalic Entertainment has made the decision to close its development department, with full focus now on our publishing business. Eight promising releases will be launching in this financial year alone," the statement reads.

Even though The Lord of the Rings: Gollum did not live up to the expectations we had for the game, we are very grateful for the opportunity and the learning experience it brought us.

The statement adds, "Currently, we are working on another patch for The Lord of the Rings: Gollum. A follow-up project in The Lord of the Rings universe that has already been started will be discontinued. The Federal Ministry for Economic Affairs and Climate Protection, as the body responsible for the federal funding, was informed of this some time ago."

The publisher will continue to support employees affected by the closing of the internal development studio. Daedalic plans to place former employees elsewhere in its "network."

Daedalic did not announce the second Lord of the Rings title it was working on. However, the project was already started when the publisher decided to close down the studio. What we know is that the game will "transport the player into a lush world full of mythical creatures and magic." Similar to Gollum, the untitled game promised to tell "a story from a character's perspective that has never been told before."

The Lord of the Rings: Gollum had a disastrous launch with players reporting frequent crashes. The game became one of the worst-rated games of 2023 on Metacritic and OpenCritic.

It isn't a surprise that Daedalic decided to restructure its business operations in the wake of the commercial failure of The Lord of the Rings: Gollum. It only takes one disastrous title to take down a smaller studio. Hopefully, the publisher gets back on its feet and re-establishes itself as a developer in the future.