Warner Bros. shuts down three game studios, cancels Wonder Woman title

Warner Bros. Discovery Inc. is closing three video game studios and halting work on a highly anticipated Wonder Woman title in a bid to boost the profitability of its interactive entertainment business.

Monolith Productions, Player First Games and Warner Bros. Games San Diego are being shuttered, according to a memo to staff viewed by Bloomberg News.

The cuts reflect a refocusing of the games division on major franchises such as Harry Potter, “Mortal Kombat,” “Game of Thrones” and DC Comics, primarily Batman.

“The quality of too many of our new releases has really missed the mark,” JB Perrette, head of games and streaming for Warner Bros., wrote in the memo. “We need to make some substantial changes to our portfolio/team structure if we are to commit the necessary resources to get back to a ‘fewer but bigger franchises’ strategy.”

In a statement to Bloomberg, a spokesperson for Warner Bros. Games said the shutdowns were “not a reflection of these teams or the talent that consists within them.”

In January, Warner Bros. Discovery Inc. revealed that David Haddad, head of the struggling video game division, would be stepping down. To some who worked closely with the veteran executive, the news didn’t come as a surprise. Their only question was why it had taken so long.

Warner Bros. Games had just suffered through a dismal year, marked by a $200-million write-down in May on a painful flop, “Suicide Squad: Kill the Justice League,” followed a few months later by a $100-million write-down due to the failures of “Harry Potter: Quidditch Champions” and the fighting game “MultiVersus.”

Warner Bros. Chief Executive David Zaslav told investors in November that the company’s video game business was “substantially underperforming its potential.”

With access to a bounty of popular entertainment franchises such as Batman, “The Lord of the Rings” and “Game of Thrones,” Warner Bros.’ video game division should be able to compete with industry titans such as Take-Two Interactive Software Inc. and Electronic Arts Inc.

But Haddad’s tenure has left major gaps in its portfolio that will probably persist for the next year or two, according to people familiar with the business. The company had been counting on “Suicide Squad” and “MultiVersus” to generate revenue throughout this year, but instead has ended support for both games. In the wake of this miscalculation, Warner Bros. now has little to release in the stretch ahead, beyond a refreshed version of the 2023 hit “Hogwarts Legacy,” a Lego title and a few mobile games.

The Wonder Woman game, one of the company’s biggest bets in development, struggled to coalesce, according to people familiar with the project. Early last year, it was rebooted and switched directors. The game had already cost more than $100 million, said the people who asked not to be identified discussing nonpublic information, and was still years away from release.

Monolith, based in Kirkland, Wash., had been making video games since 1994 including cult classics such as “The Operative: No One Lives Forever” and “F.E.A.R.” In 2014, it received critical acclaim for “Middle-earth: Shadow of Mordor,” an action game set in the “Lord of the Rings” universe.

Player First Games was purchased by Warner Bros. last July, just before the release of its sole game, “MultiVersus.” Last month, Warner Bros. said it was shutting down that title after poor performance.

Schreier writes for Bloomberg.