Behaviour Interactive CEO says Red Hook Studios acquisition helps both companies "reduce risk"

After a year of laying off developers, Behaviour Interactive is bringing some new ones into the fold. The Dead by Daylight developer/publisher announced today that it 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 feels like Activision Blizzard's establishment of the Polish game studio Elsewhere in May 2024 while parent company Microsoft axed jobs across the company.

The news may be bittersweet for plenty of the game development community. On the one hand, the Red Hook acquisition looks to be a coup for both companies. On the other hand, so many other developers lost work—and an entire studio was closed down—on the road here.

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 this transaction. For Red Hook, it was a chance for stability that would fuel bigger and loftier dreams, and according to Racine, it's a move that helps Behaviour "reduce risk" as it finalizes its ongoing strategy shift.

Related:Behaviour Interactive acquires Darkest Dungeon dev Red Hook Studios

Reconciling Behaviour's studio closures and layoffs with a new acquisition

For Behaviour, it seems this was the culmination of a shift in its strategy, taking it away from publishing games like Islands of Insight and into a future where it solely focuses on the horror genre.

That strategy shift came with internal restructuring, driving the layoffs that took place earlier in the year. Behaviour Interactive chief product and technical officer Stephen Mulrooney told Game Developer that during that process, the company determined that it had "too many" employees to support that shift and that some of the affected workers didn't have the skills needed to support the new direction.

As for the fate of Midwinter Entertainment, Racine repeated the explanation given by Behaviour last week, which was that "Project T," the game Midwinter was working on, didn't have a chance of succeeding in today's market. He said that canceling the game meant there was no other work for the studio as a whole to take on. Workers at Midwinter were offered relocation opportunities for matching roles at Behaviour's Canadian offices.

Image via Behaviour Interactive.

Some might wonder if Racine and Behaviour management knew the Red Hook acquisition was impending, why not hold on to this team to support Red Hook in the future. "The transaction is today, Midwinter is yesterday," Racine replied, explaining that the timing of both decisions didn't offer a window for the Midwinter team to start supporting developers at Red Hook. He said Behaviour 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 could have emerged.

Behaviour's planned publishing shift sent the company looking for what Racine called "great horror IPs," which is what brought it and the Red Hook Studios team together around March 2024. "We want to make horror gaming bigger," Mulrooney said. He expressed excitement about Red Hook Studios' experience with Early Access development, which may indicate Behaviour is planning to explore similar territory with its future games.

It's not just Behaviour that wants to go bigger and bolder with the blood-soaked genre—Bourassa and Sigman told Game Developer that they wanted Behaviour's backing to make Darkest Dungeon an even bigger franchise.

Red Hook Studios says acquisition provides "stability" for studio planning

"Hearing about people losing jobs is never pleasant," Bourassa said when we asked how he and Sigman felt watching the layoffs and closures take place as the deal proceeded. But it was the stability that so many of their peers lacked that made them pursue it anyway.

"We felt like this was a chance to build a strong runway for a future title, and provide stability," Bourassa explained to Game Developer. He and Sigman seemed eager to stress that this was not a purchase of "last resort" for the company, with the latter co-founder telling us that the company wasn't "actively shopping around" when Behaviour approached them earlier in the year.

The two said it was a huge relief to tell their employees about the deal, as it was a rare moment where they couldn't be transparent with the Red Hook team about the company's future thanks to regulatory restrictions that come with acquisitions. They expressed frustration at how the game industry contraction of the last two years has ravaged studios they grew alongside in the 2010s—Bourassa namedropped Armello developer League of Geeks as being one of the peer studios that has faced the greatest impacts.

Red Hook has stayed profitable during this time period ("We feel fortunate to have threaded that needle," said Bourassa). But Sigman explained being an independent studio left him and his co-founder weighing multiple options for what to do now that Darkest Dungeon II was out the door.

Image via Red Hook Studios.

Taking the deal would help narrow those options—and hopefully propel the studio to chase its most ambitious ideas. "What this does is set a clear path for the next X years," he said. The pair weren't eager to give up what those ambitions entailed, but when Bourassa raised the idea of making Darkest Dungeon a "franchise as big as Dragon Age," it helped put things in perspective.

What is the future for Behaviour and Red Hook Studios?

While Red Hook Studios supports Darkest Dungeon II and starts preparing for its grand vision (with little-to-no interference from Behaviour, apparently. Sigman said the publisher "doesn't want to change how we make games"), what can developers expect from Behaviour?

The answer is, of course, horror games...and apparently publishing even more horror games from external developers. In fact, Mulrooney pitched Game Developer readers working on horror games to reach out to the publisher to discuss future relationships.

Despite the canceling of Project T (itself a horror-themed game, leaving us wondering what exactly made it such an ill fit for the publisher's new plans), Behaviour still has other Dead by Daylight spinoff projects in the works, and the company still sees it as a foundation for its horror ambitions—with Darkest Dungeon now shoring up that base. "Having a second original successful title is appealing," said Racine.

The CEO closed our conversation with what may have been a message for business partners or employees as much as it was for our readers. He said that reducing risk was an important goal for both Behaviour and Red Hook Studios, and that "buying [Red Hook Studios] is reducing risk for Behaviour."

His explanation certainly adds context to what has been going on at Behaviour for the last year. It paints a picture of a studio that had embarked on one plan prior to the ongoing contraction, and only saw losses if it stuck with that strategy going forward.

That's a contrast to many other layoffs we saw this year, where companies watched their coffers empty out due to declining sales or projects canceled by partners. Behaviour and Red Hook both seem to have stayed in command of their fates through this process, being proactive instead of reactive in a time of turmoil.

For many, the tragedy then is that Behaviour chose to lay off so many on its path to planting a bigger flag in the horror genre.