then decided to found his own studio and began crafting his own game engine. He actively recruited staff among his acquaintances and the studio was established in 1998 in Härnösand, Sweden. Högdahl serving as the company's head and tech lead, was responsible for creating a new game engine for future games, and looking for publishers willing to help publish its games. At that time, the company had only about five employees, and had created a prototype for a video game and pitched it to publishers at E3 1998. Gremlin Interactive agreed to publish the game, and the deal was finalized in late 1998. The company grew to have roughly eleven staff members. The game was a first-person action role-playing game named Sorcery. With a high fantasy setting, the game featured 3D visuals and its gameplay was similar to that of Diablo and Quake. However, Gremlin Interactive was acquired by Infogrames in 2000 and the partnership with Starbreeze dissolved, resulting in the game's cancellation. O3 Games was founded by Lars Johansson, who also was active in the demoscene. Its first game was The Outforce, a real-time strategy space game that was released in 2000 and subsequently became a success for the company. O3 needed to expand so that it could continue video game development. After Sorcery cancellation, Starbreeze ran into financial difficulties. Unable to support itself financially, Starbreeze needed to merge with another developer to continue in business. The two companies discussed a merger in Uppsala and merged shortly afterwards, retaining the name Starbreeze Studios. Post-merger (2002–2009) After the merger, the company began working on Enclave, a medieval fantasy, multiplayer-only video game inspired by Team Fortress. The game also became the company's first project with international appeal, enabling Starbreeze to partner with various publishers including Swing Entertainment, Conspiracy Entertainment, and Vivendi. However, Swing Entertainment faced bankruptcy at that time, and decided to turn the game into a single-player action-adventure video game with the goal of sending it to market as soon as possible. The game was released in 2002, and Starbreeze had to lay off staff after its release. Enclave II was also in development. The sequel was said to feature a more elaborate story, 28 different maps, 10 playable characters, and an improved fighting system. However, these features were axed when Starbreeze got into legal troubles with the publisher, resulting in the game's cancellation. Another game, Knights of the Temple: