"Some, not all of our employees were given notices," said CEO Dan Irish. "We're entering a reorganization phase.... We are trying to move forward in a manner that reflects today's realities." Initial reports suggested Threewave had shut down entirely.

Threewave's output since releasing Threewave CTF for Quake 3 has been contracted content for others' games, including work on Ghostbusters, Doom 3: Resurrection of Evil and Army of Two, though several projects of its own were once on the cards.

Threewave expanded from 10 staff to 43 between January and October of 2006 as it licensed Valve's Source Engine for several projects, the first of which was described as "a first-person action title that extends Source's advanced physics system to open new gameplay dynamics, as well as provide a unique opportunity for sponsors to reach gamers in the first-person shooter genre."

In-game advertising was then a large focus for Threewave as a way to lower development costs and liberate developers. "We've created a huge opportunity I think for smaller developers to be able to create... whatever content that they want without being strictly beholden to a publisher," Irish told Shacknews in a 2006 interview.

Irish then explained that should 'sponsored content' not work out, "We're not giving up on our fundamental bread and butter, which is multiplayer content development... We'll always have that work, between now and the end of time. Publishers will always need that work. The first person shooter market isn't going anywhere, it's only growing. If we're excellent at developing multiplayer content, we'll always have opportunities."