The Chinese Room has been going through it. The award-winning UK studio—known for working on titles such as Still Wakes the Deep, Dear Esther, and Everybody’s Gone to the Rapture—divested from Tencent-owned parent company Sumo Group in July in a bid to secure its future.
It was a decision that resulted in the studio becoming a born-again indie and one that should enable it to continue creating original titles. The downside, as has so often been the case recently, came in the form of layoffs. It’s unclear how many people were made redundant as a result of that management buyout (MBO), but some employees won’t be around to witness the dawn of the new era.
How, though, did The Chinese Room arrive here around seven years after it was acquired by Sumo in a deal reportedly worth £2.2 million ($3 million)? And, perhaps even more importantly, where does the esteemed UK studio go from here? We sought answers to both of those questions and more at Gamescom 2025, where we sat down with studio director Ed Daly.
During a candid conversation, Daly suggests the writing was on the wall for The Chinese Room at Sumo Group towards the end. For instance, he explains the development team was happy with Still Wakes the Deep, which he says performed “pretty well” and managed to win over critics. Yet, despite those perceived wins, he claims Sumo wasn’t necessarily happy with the returns being generated by original projects.
“Given that, you can maybe see that at some point, Tencent or Sumo would decide ‘we can’t keep investing’ [in original products]. I think Tencent would love to have a great new hit IP, but achieving that via Sumo maybe wasn’t happening,” says Daly.
Daly confirms The Chinese Room had planned to work on two more original projects that would have been funded by Sumo. Yet, when its parent company announced it would be focusing exclusively on work-for-hire projects, the Brighton-based studio had to search for a future beyond the shadow of that corporate umbrella.
At that point, Daly explains The Chinese Room had two options: The first was to seek out another conglomerate that might be interested in acquiring the studio. The second was to pursue an MBO and become independent.
Daly didn’t completely rule out the prospect of another acquisition at first, but says there was trepidation as to whether a prospective new owner would have allowed The Chinese Room to continue building original titles, or would instead position the company as a dedicated support studio.
“Maybe [the acquisition option] would have worked, but the alternative opened up,” he says. “We thought ‘there’s a business plan we can produce that means we can fund the company’ and it became a no-brainer. There is something to be said for the so-called security that comes of being part of a larger business, but the moment it seemed that we could actually [complete the MBO] it became really compelling for the studio to give that a go. Like I said, we had these two projects that we were really excited about. They were in the pre-production stage and we were really determined to make sure we see these games through and get them made.”
“There is no other business plan in town other than one in which we reduce our costs”
Who, though, remains to wrangle those mystery titles into existence? Daly explains The Chinese Room currently comprises 55 employees and confirms the studio was “bigger” before the MBO. He explains it’s difficult to discuss how many people were laid off because there is nuance involved. For instance, he notes that some people transferred to other divisions within Sumo before The Chinese Room bolted for the exit. So, while they’re no longer with the studio, they are still employed.
Even so, he says it was “disappointing to have to lose people” but claims there was no other way for the company to successfully execute a buyout. “There is no other business plan in town other than one in which we reduce our costs,” he explains. “But it was good that some roles were offered to people at Sumo—for them to transfer to other studios—to reduce the impact of that.”
With the dust beginning to settle, Daly is hoping The Chinese Room can use the MBO and the opportunity it presents to reset. The indie landscape—and wider game industry—has changed dramatically since the studio was last independent in 2018. The COVID-19 pandemic has been and subsided, bringing with it rampant investment that has since dried up after that particular bubble burst with aplomb. Now, in a world where companies big and small are struggling to secure financing and conglomerates seem intent on swallowing all in their path, Daly suggests the only way forward is to manage expectations with pinpoint precision.
“Life is easier if budgets are large because you can take your time, play around, and make some mistakes. That approach no longer feels sustainable,” he continues. “So, for our new games we’re essentially funding them ourselves at the moment, but we will be looking for partners to help us with that at some point. Beyond that, and maybe it seems like this has always been the case to an extent, but we need to pick our battles, manage scope, and avoid spending too much too quickly before we’re ready. I think everyone has become more cost-conscious, which I don’t think is a bad thing.”
Independence also brings more agility. Daly says having fewer stakeholders means The Chinese Room is able to make decisions more quickly, which can help save money. The studio is also committed to building on previous successes rather than starting from scratch each time it kickstarts a new project. For many companies that will be par for the course, but those are the marginal gains that could make the difference for an indie outfit attempting to bring original experiences to market.
The fact that studio bosses like Daly are now openly talking about the need to scope more efficiently and pragmatically is perhaps the most significant shift.
“It feels like, three or four years ago, we were almost under pressure to talk up budgets for games to be taken seriously. So, sometimes we almost had the inverse problem where we had to figure out how to make a game that costs $10 million to $20 million,” he continues. “At the moment, lots of people will be dealing with budgets in the low-single-millions to create double-A projects or whatever you want to call them. It’s a big change.”
The Chinese Room doesn’t want to spend more than three years bringing a game to market
When asked whether those tightening pursestrings might actually do some good in the long run, Daly seems optimistic. “I think it has got be healthy if games are viable and make a profit and recoup their cost. It’s not going to work if everybody’s expectations are being dashed left, right, and center. That isn’t sustainable,” he adds.
“You know, tools are better. It’s becoming a little bit easier to build certain games. We’re all-in with Unreal and that’s helpful. I don’t think it takes away from the creative opportunity to do something original and different even if budgets are half what they were three or four years ago, but we just need to make sure we’re not being wasteful.”
With that philosophy in mind, Daly explains The Chinese Room is keen to cap production cycles at around three years for the foreseeable future. There’s also the question as to whether the studio can be more proactive in ensuring its titles have greater permanence.
“Everything we’ve done in the past, we just built the game, shipped it, and then moved on. We’re never going to make a live service game, but we’re looking at how we can [ensure longevity]. There’s early access. There’s a model that’s more DLC oriented—or kind of an episodic model. We’re interested in how we can get the new game out there maybe at a smaller initial scope, because spending three, four, five years [making a game] is not super appealing at the moment.”
Creatively, Daly explains The Chinese Room remains focused on building character-driven experiences that take place in deeply-researched, authentic worlds. “There’ll certainly be an emphasis on narrative and world building,” he says, before noting that both of the studio’s original projects are currently in pre-production.
Notably, Daly emphasizes the studio wants its next original titles to be more “mechanically rich” than their predecessors and offer more scope in terms of player agency. Given Daly mentioned the ideal production timeframe for those projects is no more than three years, we ask where he wants The Chinese Room to be when 2028 rolls around.
“I think [the ideal scenario] is to have launched that next game and for it to demonstrate the way we’ve evolved our creative strategy,” he says. “I think it would be great to know that everyone in the team also feels secure about the future and to be able to focus without the distraction of ‘where is the next deal going to come from?’ Over the past year or so there have been a few distractions around the business, and it’d be nice to not have those.”
Game Developer attended Gamescom 2025 via the Gamescom Media Ambassador Program, which covered flights and accommodation.