The Lord of the Rings: Gollum studio shuttered as Daedalic restructures to focus on its publishing arm

Daedalic Entertainment has announced that it will be closing down its development studio and shifting its focus to its publishing arm.

News of the restructuring was first reported by the German gaming industry site. GamesWirtschaftwith the article stating that the Hamburg development studio would be shut down and 25 of the more than 90 employees would be affected.

Daedalic told the site that he would support his former employees by finding new opportunities within their network.

As part of the restructuring, a game based on The Lord of the Rings was cancelled. In the works since mid-2022 and scheduled for release in late 2024, Daedalic never officially announced the title that was in the works under the codename It’s Magic.

According to a database entry for the German Ministry of Economic Affairs (BMWK), which coordinates federal funding for computer games, the game featured a lush world “full of mythical creatures and magic”. Much like the developer’s poorly received The Lord of the Rings: Gollum, the codename It’s Magic would tell the game’s story from the perspective of a character that “hasn’t been told before”. The Lord of the Rings game would also feature “entirely new regions” with the fate of the game world influenced by player decisions.

Regarding the elephant in the room, in a statement to PolygonDaedalic addressed The Lord of the Rings: Gollum, stating that while the game didn’t “live up to expectations,” the company is “grateful for the opportunity and learning experience it gave us.”

Currently, the Gollum development team is working on another patch for the title. Daedalic also said that it has “eight promising releases” in the pipeline that will launch during the company’s current fiscal year.