Legendary Blizzard co-founder Mike Morhaime, who helped create “World of Warcraft” and “Overwatch,” now faces a survival battle at Dreamhaven after “Wildgate” and “Sunderfolk” sold far fewer copies than expected, according to Bloomberg.
Wildgate and Sunderfolk Miss the Mark
Dreamhaven launched its multiplayer shooter, “Wildgate,” in July, but sales reached only 130,000 units, despite positive reviews, Bloomberg reported. The company’s earlier release, “Sunderfolk,” fared even worse, selling just 62,000 copies since April, according to the report.
In a letter to staff, Morhaime admitted Dreamhaven’s “monthly expenses are outpacing revenue,” stressing the need to “urgently reduce costs” while insisting “we are committed to Dreamhaven surviving through this.”
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To attract players, Morhaime slashed the price of “Wildgate” by one-third, cutting it to $20 on Steam. He told Bloomberg that “making commercially successful games has always been challenging” and that studios must “adapt to the environment and continue listening to our communities and their feedback.”
“Forever Games” Dominate While Startups Struggle
New studios like Dreamhaven face big competition from entrenched “forever games” such as “Fortnite,” “League of Legends,” “Counter-Strike 2,” and “DoTA 2.” These titles refresh constantly with new content, keeping players engaged while locking them into ecosystems filled with digital items, Bloomberg reported.
Frost Giant Studios, also founded by Blizzard veterans, is another example of a troubled company in the industry. Its real-time strategy title “Stormgate” has struggled to gain traction. Frost Giant Studios CEO Tim Morten said in a LinkedIn post that the game was not reaching expected traffic or sales. The company disclosed in an annual report filed in April with the Securities and Exchange Commission that revenue from early access sales was not enough to cover operating expenses, with losses of $11.7 million on just $1.4 million in sales.
“The games business has always been inherently hit-driven, but as existing games continue to draw players, competition from other digital media like TikTok has increased.” Morten told Bloomberg. “Record numbers of new games are being launched, so the challenge is harder than ever.”
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Venture Capital Retreats After Pandemic Boom
During the pandemic, gaming investment surged as people turned to digital entertainment. Venture deals jumped to 1,683 in 2021, totaling $13.7 billion, according to PitchBook data.
Since then, momentum has cooled. By Aug. 21, there had been only 396 deals, half the 2021 level. Bloomberg reported that PitchBook analyst Eric Bellomo cited the lack of breakout hits and a saturated market as reasons for the sharp decline.
One major studio under pressure is Fantastic Pixel Castle, founded by former Riot Games executive Greg Street. Sources said that the company is at risk of losing funding from NetEase NTES, according to Bloomberg. The game, code-named “Ghost,” was initially backed with more than $100 million, but NetEase has been cutting costs as CEO William Ding becomes more cautious about gaming investment.
NetEase told Bloomberg that it remains committed to offering a broad range of titles and regularly reviews game progress to make business decisions. A spokesperson disputed the reported budget size.
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A Legendary Career Meets a New Challenge
Morhaime co-founded Blizzard in 1991 and was instrumental in shaping titles including “World of Warcraft,” “Diablo,” and “Overwatch.” Microsoft MSFT acquired Activision Blizzard for $69 billion in 2023, the largest gaming merger ever.
He left years earlier, founding Dreamhaven in 2020, Bloomberg reported. The company now faces the challenge of cutting costs and adapting strategy in a saturated market that has already pushed other well-funded startups to the brink, according to the report.
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