Dontnod, the studio behind Life Is Strange, is facing significant challenges.

Dontnod, the studio behind the original Life Is Strange and more recent titles like Lost Records: Bloom and Rage and Aphelion, has acknowledged a troubling financial outlook in its latest statements. The company is increasingly doubtful about its ability to continue operations without external funding past January 2027.

In its recent financial report, Dontnod revealed that its revenue has plummeted by 50% year-over-year compared to the same timeframe last year. This decline is particularly stark when comparing the launch of Lost Records: Bloom and Rage with the subsequent release of Aphelion, indicating that sales for the latter have not met expectations. Although the Montreal team has secured additional investment for an unannounced narrative game based on a major Netflix property, the studio only generated €6.1 million in the first half of 2026, marking a significant 56% drop from the previous year.

As a result, the studio’s liquid assets have also diminished, prompting Dontnod to state that its “ability to continue operations depends partly on securing external financing to cover business operation and project development needs.” This situation raises serious concerns about the company’s viability beyond January 31, 2027.

While there is some investment tied to the Netflix project, the studio is contemplating a significant shift in its strategy, which could involve cutting up to 90 positions, although this decision is not yet finalized. The French teams are being directed to concentrate on a single project in hopes of attracting new funding. Despite Tencent’s investment in 2021, which granted them a 41.9% stake in Dontnod, the company has not received any immediate financial support to navigate its current challenges.

This leaves the veteran studio in a precarious position, with layoffs likely and the possibility of closure on the table. The coming months will be critical in determining whether Dontnod can secure the funding it needs to survive.