Top 10 Times Video Game Companies ALMOST Went Bankrupt

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Top 10 Times Video Game Companies ALMOST Went Bankrupt

VOICE OVER: Callum Janes WRITTEN BY: Callum Janes
These came companies nearly went bankrupt, but we're grateful they avoided it! For this list, we'll be looking at instances where games developers and publishers neared the brink of financial collapse but recovered just in time to avoid filing for bankruptcy. Our countdown includes Sega, Insomniac Games, CD Projekt Red, Square, and more!
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These came companies nearly went bankrupt, but we're grateful they avoided it! For this list, we’ll be looking at instances where games developers and publishers neared the brink of financial collapse but recovered just in time to avoid filing for bankruptcy. Our countdown includes Sega, Insomniac Games, CD Projekt Red, Square, and more! What do you think of these stories? Are there any we missed? Let us know in the comments below!

#10: Bethesda Softworks


“Skyrim” is without a doubt one of the most iconic RPGs ever released, but that doesn’t mean “The Elder Scrolls” series was always a profitable one for CEO Todd Howard and company. Following that release of the massively ambitious and successful “The Elder Scrolls II: Daggerfall,” the company decided to follow up with two games based on the Daggerfall code. These games were “Battlespire” and “Redguard,” both bombed hard. This, coupled with a drastic downturn in sales of other games, forced the company to flirt with the idea of bankruptcy. Fortunately, Bethesda’s parent company “Media Technology” was bought out by “ZeniMax” in 1999, which caught the attention of Microsoft, who slated the release of Morrowind for upcoming consoles, saving the company.

#9: Insomniac Games


Insomniac Games have created so many classics. They have Spyro, Ratchet & Clank and have even killed it tackling Marvel’s famous wall-crawler: Spider-Man. But these significant strides only came after a very rocky launch of their first game. Ted Price, plus brothers Alex and Brian Hastings had all joined together to create a “Doom clone” called “Disruptor” for the “Panasonic 3DO console due to the inexpensive developer kit. Universal Interactive Studios picked it up, but it bombed massively due to the unpopularity of the console. The executive producer from Universal, Mark Cerny, suggested switching the release to the Playstation, which proved they had the talent to score a three-game contract, solidifying their future.

#8: CD Projekt RED


It’s hard to imagine the developers of “The Witcher” ever running low on cash, but it was through this same series that brought the company to near financial ruin. Upon the successful PC release of “The Witcher” in 2007, Atari commissioned a console port named “The Witcher: White Wolf”. The studio enlisted help from French Studio “Widescreen Games,” but it soon entered into development limbo, in part due to disagreements over resources with their new partner. The resulting costs, plus the financial crisis of 2007-08, nearly brought the company down, resulting in the game being canceled and pinning all hopes on “The Witcher 2: Assassins of Kings” to save them. Thankfully, it did.

#7: Starbreeze Studios


Starbreeze had recently seen great success after publishing Payday 2 but started getting hungry for more. They financed a licensing deal with Skybound Entertainment to create “Overkill’s The Walking Dead,” a concept met with much hype. The company had recently made many costly studio acquisitions, putting a lot of financial pressure on the game. Development delays and the resulting game were so bad that Skybound pulled their license, forcing the company to remove it from all storefronts. The company was forced to file for reconstruction, selling off its recently acquired assets. They began selling new content for Payday 2 that kept them afloat long enough to secure a publishing deal to finish Payday 3.

#6: Tecmo


Tecmo had already made a name in the game industry with releases such as Ninja Gaiden, Tecmo Bowl, and the Japanese only Tsuppari Ōzumō. Despite these iconic titles of the time, the company still had significant debt. They needed something fresh and exciting to pull them back from the brink. In steps graphic programmer Tomonobu Itagaki. He suggested the company take a shot on 3D fighters with a more “adult” twist. Their innovation in gameplay and focus on design was a hit, and the “Dead or Alive” series saved the company from financial ruin.

#5: Obsidian Entertainment


Once Bethesda Softworks acquired the rights to the “Fallout” series, the company was eager to capitalize on this popular new franchise. After the fantastic release of “Fallout 3”, the company decided to outsource the development of a spin-off called “Fallout: New Vegas”. Obsidian was a perfect choice, as several of its founders had worked on the series prior with previous employers. The resulting game was one of the best in the franchise, but Bethesda didn’t see it that way. Some essential bonuses were tied to the game’s “Metacritic score,” which landed 1 point below the required average. Now in a precarious situation, the company turned to Kickstarter to fund “Pillars of Eternity,” which broke funding records and saved the company.

#4: Activision


Activision had been toiling in the game industry long before it merged with Vivendi Games to form Activision Blizzard. But around the time of the great video game crash of 1983, the company wasn’t doing so well. In an attempt to survive, Activision morphed into Mediagenic to try and expand into other tech sectors such as business applications. By 1991, the company was reportedly over $60 million in debt and needed a miracle. Along came Bobby Kotick, who, with several other investors, bought Mediagenic for $500,000. He saw the potential in reviving Activision with its previous stellar reputation. Kotick became the company's CEO, refocusing efforts on video game development and saving the company from bankruptcy.

#3: Square


Square had constantly been staving off financial ruin for a surprising amount of time. It all started with Square’s release of 1986’s “Final Fantasy,” which was a last-ditch effort before the company closed down that ended up reinvigorating the company. After a financially disastrous collaboration with Sony to produce the feature film “Final Fantasy: The Spirit Within”, Square desperately needed quick cash. Sony bought up 18.6% of the company to prevent them from going under, staving off financial ruin long enough to release the massively successful Kingdom Hearts and Final Fantasy X, resulting in the company merging with Enix to become today’s “Square Enix.”

#2: Sega


You might know Sega for releasing games mostly featuring Sonic the Hedgehog, but the company was a lot more back in the day. Sega was the biggest competitor in console manufacturing to Nintendo, with their gaming technology being on the cutting edge. Unfortunately, their consoles like the Sega Saturn and Dreamcast sold poorly, eventually being completely overshadowed by “The Playstation.” So the president of Sega was faced with an unpopular decision. He decided to halt all hardware manufacturing and convert the company into purely a software developer. While he received significant pushback, it’s the main reason Sega is still around today.

#1: Nintendo


Nintendo is a gaming goliath, having been an active contender in the gaming and console world for as long as anyone can remember. But all it took was one lousy console to nearly take them down. Off the back of a flurry of successful consoles, the company released their least successful in 2012 - The Wii U. It flopped, resulting in restructuring and many executives taking major pay cuts to stay afloat. In addition, they reached several agreements for IPs to appear at amusement parks, released the NES Classic Edition, and released apps for smart devices, including Pokemon Go. This provided enough cash flow to develop the incredibly successful Nintendo Switch, saving the company without firing a soul.
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