Telltale's initial successes were on games using intellectual properties with small but dedicated fan bases, including Sam & Max, Wallace & Gromit, Homestar Runner, and Bone.

Telltale continued to expand with new licensing deals for episodic adventure games over the next few years, including for Minecraft, Game of Thrones, Guardians of the Galaxy, and Batman, but the rate of production created a "crunch time" culture behind the scenes, leaving poor company morale, little room for creativity to veer from the formula set by The Walking Dead or improvements on the Telltale Tool.

In the midst of releasing The Walking Dead: The Final Season, the company was forced to initiate a "majority studio closure" after their last investor had pulled out of funding.

Telltale announced on September 21, 2018, that it had let go of all but 25 of its staff as part of this closure, with the remaining skeleton crew completing specific obligations, such as finishing the Minecraft: Story Mode project porting to Netflix.

Many assets were later acquired by LCG Entertainment, which revived the Telltale Games name as part of its business in August 2019, retaining many of the company's previous licenses and offering former staff freelance positions.

[1] Bruner, Connors and Molander were not among the layoffs, but felt that the change of direction at LucasArts was not favorable, and departed the company later that year to found Telltale Games July 2004.

[3][4] The name "Telltale" was selected by Bruner as the three envisioned themselves creating more adventure games but de-emphasizing puzzle elements in favor of narrative aspects, telling a tale to the user.

[7] The studio created a second season for Sam & Max, and found additional niche intellectual property areas, including Wallace & Gromit and Homestar Runner, to continue the episodic adventure game format.

In June 2010, Telltale announced that they had secured licenses with NBC Universal to develop two episodic series based on Back to the Future and Jurassic Park.

[12] Part of this was attributed to Back to the Future: The Game, which Steve Allison, the senior vice-president (VP) of marketing, called in 2011 their "most successful franchise to date".

[12] Their The Walking Dead video game presented an alteration of Telltale's approach, as rather than a traditional adventure game where players would need to solve puzzles, The Walking Dead was more focused on providing a cinematic experience but presenting choices to the player, either through dialog trees or through quick time events, that would create "determinants" that would feed into latter parts of the episode and into future episodes; one example would be deciding which of one of two characters to save from a zombie attack at the spur of the moment.

[25] This led to original chief executive officer (CEO) Dan Connors resigning and being replaced by co-founder Kevin Bruner, who was also the firm's president.

[25] With Bruner's placement as CEO in January 2015, Telltale said it was developing a game based on its own intellectual property as a result of this leadership change.

[1] However, this approach to development had created a perpetual state of "crunch time" within Telltale, according to several current and former staff speaking to USgamer, The Verge, and Variety in 2017.

This limited the amount of time that the creators and developers could spend on content in order to maintain a consistent flow of episodes to consumers but impacted the quality of games.

[20] The anonymous QC tester stated that their department was nearly always under crunch time, working from 48 to 60 hours a week on testing at least two-game series across multiple platforms simultaneously, and were understaffed, leading to some of the quality control issues as well.

[32][31] According to narrative designer Emily Grace Buck, management would frequently demand rewrites of materials, with most games having between 60 and 90 percent of the content reworked after executive review.

This rush created some of the apparent "bugs" in the Telltale Tool which Buck stated were more often a result of the inability to smooth out hastily reworked animations as well as perpetuating the crunch time culture within the company.

[40] According to Variety, there had been suggestions of teaming with Netflix for collaboration shortly after Stranger Things first aired in mid-2016, but Telltale's management at the time, including Bruner, rejected the idea.

[42][43] A core team of about 25 employees remained to "fulfill the company's obligations to its board and partners", which includes completing the Minecraft: Story Mode interactive media project for Netflix.

[42] Melissa Hutchison, the voice actor for Clementine in The Walking Dead games, said that the news came in the middle of a recording session which they had to immediately end.

[50] On September 24, the former staff were allowed to return to the office within a three-hour timeframe to gather any belongings they did not manage to collect in the 30 minutes following the majority closure decision.

[58] While some fans of the series were happy about the news, others, including Cory Barlog, suggested that Telltale should prioritize finding ways to pay the let-go developers over finishing the game.

Partners in the new Telltale include publisher Athlon Games, which will handle distribution, and financial contributors Chris Kingsley, Lyle Hall and Tobias Sjögren.

[12] In a September 2017 interview, Job Stauffer called Telltale's role as "an interactive TV network and a studio", able to produce content across a wide range of genres on a regular basis.

[20] Until 2016, Telltale Tool did not have a physics engine, meaning that if a scene required an object to fall, this had to be animated by hand, taking time from other more productive activities.

The article concluded that Telltale's support forums "paint a portrait of a publisher that is constantly releasing buggy and even outright broken games", seemingly lacking the resources to fix or even monitor most of them.

[94] The updated Telltale Tool provided direct support for DirectX 11 features, including physics-based models, texture mapping and blending, and dynamic lighting and shadows.

[99][100] Dontnod Entertainment found the episodic approach to storytelling to be an ideal way to present Life Is Strange, and it has allowed them to release supplementary stories within the series in smaller pieces.

Adam Hines, a writer for Telltale, co-founded Night School Studio in 2014, subsequently releasing Oxenfree which heavily used a "walk and talk" mechanic as part of its gameplay.