Second Wave developer folds after missing wage payments and amassing $1.7M in debt

South Korean studio Challengers Games has closed down after amassing over 2.4 billion won ($1.73 million) in debt and failing to pay staff for months.

The Illang and Second Wave developer shared the news on its website and explained it has shuttered after months of production struggles and financial challenges that left it unable to pay or retain employees.

CEO and studio head, Koji Tamura, explained the studio's core projects failed to attract concrete publisher interest or win over players. Despite securing some investment, the studio quickly slipped into debt. By the time multiplayer hero shooter Second Wave was being beta tested in late 2023, Challengers already owed around 2 billion won.

At around the same time, the entire animation team and half of the studio's artists also departed, forcing the company to quickly plug the gap with new recruits. In early 2024, Challengers comprised around 70 developers–roughly half of which joined between November 2023 and January 2024.

Those aforementioned debts, retention and staff turnover struggles, production issues (the Second Wave beta, for instance, suffered from poor matchmaking, framerate drops, and load screen bugs), and sever costs for Illang (which was also broken at launch) left the company with projects in dire need of repair, empty coffers, and huge debts.

"By January 2024, the company had already run out of money, and our difficulties were compounded by the inability to generate sales for Illang while seeking additional investors," explained Tamura in a lengthy blog post.

"Publishers and investors who had supported Illang prior to its launch in 2024 also began to show minimal interest. At the February company meeting, I informed all employees that there was no balance in the bank account and that I might not be able to pay the last of the February salaries."

The company attempted one last hail mary by launching Second Wave in early access. Tamura admits to believing it was a "suicidal" tactic due to the state of the project, but pushed ahead regardless. In the months that followed, publishers cut ties with the studio, wages continued to go unpaid, and more employees departed. Eventually, Second Wave launched in early access on May 31. That version of the title was developed by a team of 20 people, with the studio losing around 60 employees between January and May 2024.

"By the end of April 2024, we were pushing development hard. So many things were added and developed, but we could not add anything to put into the live version. In the end, we grabbed what we could and did as much testing as we could. Neither the versus AI nor the training mode was ready or good enough to put in, but we had to try. There was no cash shop, no item shop. We managed to get it done by the end of May," said Tamura.

"We couldn’t pay for JIRA anymore, so we switched to tracking bugs on our Notion site. During this time, our 20 members tested, developed and tested, every single day. We did everything we could. Originally, Early Access was going to happen without any of the things we were fixing and adding, but we made it, and even then it wasn’t stable. We did our best."

A last ditch early access launch that missed the mark

Second Wave was inundated with overwhelmingly negative reviews shortly after it debuted, with Tamura admitting that sometimes "the game wouldn't even start."

"As the server issues stabilized to some degree, we began to discover even more problems. Issues where characters weren’t getting hit because of aiming changes, or issues where magic damage was doubling," he continued. "There were a lot of issues that wouldn’t normally go live if we were doing QA properly. But because there was no QA team, especially among our remaining 20 people, all these issues were seen and found by the players, and they were not very happy. I don’t blame them."

With nowhere else to go, development was scrapped and the studio disbanded. Challengers' accounts have been seized by four major insurance companies. It is also currently being investigated by the Ministry of Labor and Employment in South Korea.

"Since March 2024, all of our teams have been working without pay, hoping for a miracle. I wanted to make the game a success, but I apologize to everyone for not being able to do so. I also feel a heavy responsibility for the overdue wages," adds Tamura.

"I will find a way to pay everyone, but regardless of what happened and how we got here, I am not ashamed of this experience. I am proud to have created Second Wave, proud and honored to have worked with the team I had. I'm proud of all the feelings we had during the time we were creating Challengers Games and Second Wave. I'm proud that we at least tried. But now it is time for Challengers Games to acknowledge that it is no longer able to do business."

The studio will officially close today, June 24. Second Wave refunds will be issues via Steam, but Tamura believes a revival might one day be possible.

"It is incredibly difficult and sad, but what I want to say is that this is not the final chapter for Second Wave. It is possible that you will see it again in the near future. One way or another. We will start over and we will announce things when we are ready," Tamura added.

"For now, I wanted to give you all this message from us so that you know the situation and can prepare for the end of Second Wave before the servers suddenly stop. [...] We are truly sorry to absolutely everyone who has been there for us, rooting for us, supporting us. Thank you for believing in us and sorry for letting you down. This is not the final road for us, but it is the final chapter for Challengers Games Corp."