Game designers Arnt Jensen and Dino Patti created the company in 2006 to develop Limbo, which was released in 2010 to critical acclaim.

[2][3] After a year of Xbox 360 exclusivity, Playdead released ports of the game to PlayStation 3, Microsoft Windows, macOS, iOS and Android.

This led to a meeting between Jensen and Dino Patti, and they realized the project was larger than the two of them, so they reached out to investors and with the money they founded the entity "Playdead ApS".

[8][9][10] Considered a spiritual successor to Limbo, Inside has many of the same themes, including being a 2.5D platform game using a primarily monochrome palette.

[17] The rift led to Jensen submitting a resignation letter to Patti from his position as creative director, though intending to stay on as a company executive.

The letter had been misinterpreted by Patti as a full resignation from the company, and he subsequently removed Jensen's name from the Central Business Register for Playdead.