Life is Strange studio Don’t Nod says it may have to lay off 90 staff, warns it may not last beyond January

Life is Strange developer Don’t Nod Entertainment says it may have to lay off up to 90 staff as it adopts a new business plan, but warns closure is still possible soon.

Founded in 2008, the French studio is known for creating the Life is Strange franchise, which is now handled by other studios, as well as adventure game Lost Records and sci-fi action adventure game Aphelion.

In a financial new update on its business performance for the first half of 2026, Don’t Nod stated that its board of directors had voted to approve a new business model which is being implemented in an attempt to make the studio sustainable, but that it may lead to the loss of up to 90 staff.

“Despite the measures already undertaken as part of its performance plan and the cost-cutting actions implemented, these efforts alone are not sufficient to restore Don’t Nod’s competitiveness on a sustainable basis,” a statement reads.

“Against this backdrop, the profound changes in the economic conditions of the video game industry and its financing, combined with the deterioration of Don’t Nod’s key financial indicators, are significantly affecting its competitiveness. The Company therefore believes it is necessary to adapt its business model.

“With this in mind, Don’t Not is refocusing its operations in France around a single production line, bringing together the expertise required to launch new projects before the completion of current productions. This organizational initiative is intended to maintain a continuous pipeline of projects and support the Company’s long-term growth.

“It aims to strengthen the Group’s operational efficiency by enabling a more efficient allocation of resources, clarifying responsibilities, and focusing expertise more intensely on priority projects.

“In this context, the transformation project currently under consideration could lead to a workforce adjustment in France that may involve the reduction of up to 90 positions.”

Don’t Nod says there is “material uncertainty” about it surviving past January

In June, auditors warned that Don’t Nod would run out of funding later this year unless new investment was secured.

Don’t Nod sold a minority stake of the company to Tencent in 2020, which granted the conglomerate a seat on its board.

However, the auditors informed Don’t Nod that Tencent does not intend to inject more money into the business in the short term, nor fund the games it currently has in development.

The studio’s new financial update addresses this, stating that if it doesn’t manage to secure new funding soon it may not survive past the start of next year.

“Consolidated gross cash at the end of June 2026 amounted to €9.8 million and €8.0 million at the end of July 2026, compared to €15.4 million at the end of 2025,” it explained.

“Given the available cash and the cash flow forecast, the company’s ability to continue operations depends partly on securing external financing to cover business operation and project development needs.

“This represents material uncertainty regarding the company’s ability to continue as a going concern beyond January 31, 2027.”

In a statement, Don’t Nod CEO and chairman Oskar Guilbert said: “This first half of the year confirms the major challenges facing our industry. In a market where financing is more selective and revenues are more uncertain, we must adapt our business model with clarity and responsibility.

“The measures being considered today are difficult – we fully appreciate what they may mean for the employees affected and are ensuring that the necessary support measures are put in place. This plan is, however, essential to ensuring the Company’s continued operations.”