After a year of laying off developers, Behaviour Interactive is bringing in some new ones. Dead in the light of day developer/publisher announced today which is acquiring Red Hook Studios, the company behind Darkest Dungeon AND Darkest Dungeon II.
It's incredibly rare for a game studio to announce an acquisition like this so soon after a year of layoffs and studio closures. So rare, in fact, that the only comparable example seems to be Activision Blizzard's founding of the Polish game studio Elsewhere in May 2024, while parent company Microsoft has cut jobs across the company.
The news may be bittersweet for many in the game development community. On the one hand, the Red Hook acquisition seems like a stroke of luck for both companies. On the other, many other developers have lost jobs (and an entire studio has been shut down) along the way.
In an interview with Game Developer, Red Hook Studios co-founders Tyler Sigman and Chris Bourassa, joined by Behaviour Interactive CEO Rémi Racine, explained why both parties pursued the transaction. For Red Hook, it was an opportunity for stability that would fuel bigger, more ambitious dreams, and according to Racine, it’s a move that helps Behaviour “de-risk” as it finalizes its current strategy shift.
Balancing Behaviour's Studio Closings and Layoffs with a New Acquisition
For Behaviour, it seems this was the culmination of a shift in its strategy, moving away from publishing games like Islands of Intuition and towards a future where it will focus exclusively on the horror genre.
This shift in strategy came with an internal restructuring, which led to layoffs earlier this year. Stephen Mulrooney, Behavior Interactive’s product and engineering manager, told Game Developer that during that process, the company determined it had “too many” employees to support the change, and that some of the affected workers didn’t have the skills to support the new direction.
As for the fate of Midwinter Entertainment, Racine repeated Behaviour’s explanation from last week, that “Project T,” the game Midwinter was working on, had no chance of success in today’s market. He said canceling the game meant there was no more work to be done for the studio as a whole. Midwinter workers have been offered transfer opportunities for corresponding roles in Behaviour’s Canadian offices.
Image via Behavior Interactive.
Some might ask, if Racine and Behavior management knew the Red Hook acquisition was imminent, why not keep that team to support Red Hook in the future? “The transaction is today, Midwinter is yesterday,” Racine responded, explaining that the timing of both decisions did not provide a window for the Midwinter team to begin supporting Red Hook developers. He said Behavior would have had to keep the studio running for a year or more without a dedicated project before any opportunity to bring the two teams together arose.
Behavior’s planned publishing shift has prompted the company to look for what Racine called “big horror IPs,” which is what brought her and the Red Hook Studios team together around March 2024. “We want to make horror games bigger,” Mulrooney said. She expressed enthusiasm for Red Hook Studios’ experience with Early Access development, which could indicate Behavior is planning to explore similar territory with its future games.
It's not just Behaviour that wants to push the boundaries and go further with the blood-soaked genre: Bourassa and Sigman told Game Developer that they wanted Behaviour's support to make Darkest Dungeon an even bigger franchise.
Red Hook Studios says acquisition provides 'stability' to studio's schedule
“It’s never nice to hear about people losing their jobs,” Bourassa said when asked how he and Sigman felt about seeing layoffs and closures as the deal moved forward. But it was the stability that so many of their colleagues lacked that drove them to pursue it anyway.
“We felt like this was an opportunity to build a solid foundation for a future title and provide stability,” Bourassa explained to Game Developer. He and Sigman seemed keen to stress that this wasn’t a “last resort” purchase for the company, with the latter co-founder telling us that the company wasn’t “actively shopping around” when Behaviour approached them earlier this year.
The two said it was a huge relief to tell their employees about the deal, as it was a rare moment when they couldn't be transparent with the Red Hook team about the company's future due to the regulatory restrictions that accompany acquisitions. They expressed frustration with how the video game industry's downturn over the past two years has devastated the studios they grew up with in the 2010s, Bourassa naming Armello developer League of Geeks as one of the peer studios that has have suffered the greatest impacts.
Red Hook has remained profitable during this time (“We feel fortunate to have threaded that needle,” Bourassa said.) But Sigman explained that being an independent studio has left him and his co-founder weighing options for what to do now that Darkest Dungeon II he was outside the door.
.jpg?width=700&auto=webp&quality=80&disable=upscale "Combat from Darkest Dungeon II. Four player characters stare down a group of monsters.")
Image via Red Hook Studios.
Agreeing to the deal would help narrow down those options and hopefully push the studio to pursue its most ambitious ideas. “What it does is it sets a clear path for the next X number of years,” he said. The pair weren’t eager to give up what those ambitions entailed, but when Bourassa brought up the idea of making Darkest Dungeon a “franchise as big as Dragon Age,” it helped put things into perspective.
What's next for Behaviour and Red Hook Studios?
While Red Hook Studios supports Darkest Dungeon II and begins preparing for its grand vision (with little to no interference from Behaviour, it seems. Sigman has said that the publisher “doesn’t want to change the way we make games”), what can developers expect from Behaviour?
The answer, of course, is horror games… and apparently the publishing of other horror games by outside developers. In fact, Mulrooney asked Game Developer readers who worked on horror games to contact the publisher to discuss future relationships.
Despite the cancellation of Project T (itself a horror-themed game, which left us wondering what made it so unsuitable for the publisher's new plans), Behaviour still has more Dead in the light of day spin-off projects in the works, and the company continues to see it as a foundation for its horror ambitions, with Darkest Dungeon now bolstering that foundation. “Having a second successful original title is enticing,” Racine said.
The CEO concluded our conversation with what may have been a message to business partners or employees as much as to our readers. He said that risk reduction was an important goal for both Behavior and Red Hook Studios and that “buying [Red Hook Studios] is reducing the risk for behavior.”
His explanation certainly adds context to what has happened to Behavior over the past year. It paints a picture of a studio that had a plan in place before the current downturn and only saw losses if it stuck to that strategy going forward.
This is in contrast to many other layoffs we have seen this year, where companies have seen their coffers empty due to drop in sales OR Cancelled projects from partners. Both Behavior and Red Hook appear to have maintained control of their destinies throughout this process, being proactive rather than reactive in a time of turmoil.
For many, the tragedy is that Behaviour chose to fire so many people along the way to further establish itself in the horror genre.