Developer Level-5 In Trouble; Should they try to sell?

Yesterday we got multiple reports that the company Level-5, famous for games like Dark Cloud, Ni No Kuni, and Yokai Watch had faced major layoffs. The report went as far as saying that their NA operations had basically shut down and that Level-5 most likely won’t release games outside of Japan in the future.

This comes as sad news for fans since they’ve created a lot of beloved games. And it’s also worrisome since we know they are, or at least were working on a sequel to Ni No Kuni II.

A lot of things have gone wrong for them, however, for example, how bad some of their localizations have been, to the ridiculous acquisition of comcept (Mighty No. 9) and bad sequels to great games. (Ni No Kuni and Yokai Watch, popular IPs that got ran into the ground)

Interestingly enough, Level-5 sadly doesn’t seem to do much better in Japan either. Their earnings have gone down to an all-time low three years in a row. It’s exceedingly looking like a disaster for the company.

Rumors also have it that Level-5 has burnt a lot of their bridges, for example by having a lot of debt and ruining multiple partnerships. They were tight with Nintendo for a long time but eventually burned their bridges by spanning out to multiple consoles for Yokai Watch and pursuing the phone market on their own.

Even Bandai Namco seems to be pretty burned by them, which isn’t weird considering that they ran Ni No Kuni II straight into the ground, along with the movie. A risk that didn’t pay off for the publisher, sadly.

The question begs. What’s next?

Well, the way I see it we’re either looking at a scenario where the heads of the studio decided to continue as they currently are, which means they’re too stubborn to sell or get partners. This would mean that we’ll most likely see Level-5 become a full-time mobile gaming developer in my eyes. Since Ni No Kuni III isn’t outright canceled yet, we might see that be their “final” chance. However, if either of these pursuits fails I wouldn’t be surprised if we see the developer file for bankruptcy.

However, is there a chance they might try to sell the company? I’d say that they most likely should, and could do so – the question is what the heads of the studio want to do. They’ve so far created an image of being quite stubborn about stuff, and I believe that might be what eventually kills the studio.

But if they do decide to sell, who would be the best suitors? Honestly, it’s hard to say. Level-5 is a shell of its former self, the PlayStation fans who yearn for a JRPG, or a sequel to Dark Cloud will most likely not get the same Level-5 making it. The same goes for Nintendo fans that want to see more from Yokai Watch, or even Bandai Namco fans that loved Ni No Kuni.

However, with a change of management and some new staff on the team, I wouldn’t be surprised if there was a chance that the economic stability would save them. This is where I’d say that Bandai Namco or perhaps on some of the chance, Sony, would be the best suitors.

The fact is that I don’t think Nintendo sees any values in neither them nor their IPs. I think Bandai Namco can use them as a good in-house JRPG developer – and the same goes for Sony. A lot of fans of the PlayStation platform want an in-house JRPG development team, and Level-5 can bring that for a very cheap price with some good IPs along the way.

However, I do believe Sony will act the same way as Nintendo does in my example above, simply not seeing the value for Level-5 or their IPs. Which leaves Bandai Namco, or some entirely another publisher on the market.

We’ll eventually see what happens, but for now, we’ll have to hope for the best for the affected the developers and wish that Level-5 will once again return to its former glory.

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