Update: Starbreeze has released their own statement on the matter, explaining that the game is expected to be "removed from new purchases" on Steam, and that Starbreeze is trying to resolve the issue with Skybound so it can finish and release Season 2 of the game.
"We are deeply sorry for the issues this may cause anyone who has bought the game looking forward to the resolution of Season 2 and are working urgently to attempt to resolve the issue. Please keep an eye on the official OTWD channels for further news," said Mikael Nermark, Starbreeze's acting CEO. We'll keep you updated.
Original story: As we put it, Overkill's The Walking Dead was "a shambling mess" when it came out for PC late last year, a situation that appeared to take a turn from bad to worse earlier this month when the planned console versions were shelved indefinitely. Now it's gone from worse to even more worse, as Skybound Entertainment, the owner of the comic and the company that rescued Telltale's The Walking Dead, announced in no uncertain terms that it's not happy with Starbreeze, and has canceled its contract for the game.
"As of today, we have terminated our contract with Starbreeze Studios and will discontinue all efforts on Overkill's The Walking Dead," Skybound said. "Our creators and their stories are the core of Skybound, and since 2014 we have worked hard to expand the world of The Walking Dead into an exceptional Co-op Action FPS. We did our best to work with Starbreeze and resolve many issues that we saw with the game, but ultimately Overkill's The Walking Dead did not meet our standards nor is it the quality that we were promised."
"We are exceedingly sorry to our fans and share their disappointment in the game. We remain dedicated to providing our fans with the most premium quality content we can offer, and will continue to look for alternative video game options for the IP."
It's not clear how this will impact the development of future patches—the most recent came out a couple weeks ago—but it's another blow that Starbreeze can ill afford. The company recently made moves to restructure in order to avoid bankruptcy while simultaneously dealing with allegations of insider trading, and earlier this month it sold the publishing rights to System Shock 3 back to developer OtherSide Entertainment.
Unsurprisingly given all that, it also sounds like the studio has been dealing with morale problems for awhile: In January, a developer on Overkill's The Walking Dead said that everyone working on the game "knew it was going to tank," and that "no matter how much you polish a turd, it's still a turd."
I've reached out to Starbreeze for comment and will update if I receive a reply.