Topic: Games Industry Death Watch 2010-present

[broodwars]

::brings out the gas can::

The other shoe has now dropped. 

I've obtained a copy of a lawsuit filed this morning in the Los   Angeles Superior Court by 38 plaintiffs, calling themselves the   "Infinity Ward Employee Group," against Activision. The Infinity Ward   Employee Group (whom I'll refer to as IWEG throughout the rest of this   story) alleges breach of contract, breach of the implied covenant of   good faith and fair dealing, violation of California labor code and   more. The group is after a large amount of unpaid royalties.

"Activision owes my clients approximately $75 million to $125 million   dollars," said Bruce Isaacs, one of the IWEG's attorneys at Wyman &   Isaacs LLP, over the phone this afternoon. "Activision has withheld   most of the money to force many of my people to stay, some against their   will, so that they would finish the delivery of Modern Warfare 3.   That is not what they wanted to do. Many of them. My clients' entitled   to their money. Activision has no right to withhold their money -- our   money."

The IWEG contains "a significant portion of the members of the   creative team" who "designed, developed and delivered" Call   of Duty: Modern Warfare 2   to Activision. According to the lawsuit, $28 million has been   delivered to Infinity Ward employees for bonuses related to Modern   Warfare 2, but the suit alleges at least $54 million is still due   from 2009 profits alone.

They want more than $54 million, however. The IWEG is looking "to   recover between $75 million and $125 million, if not more, in   compensatory damages." That number's derived from:

• Unpaid bonuses from 2009 and 2010 sales generated by Modern   Warfare 2 -- fourth quarter 2009 and first quarter 2010,   specifically.
• Bonuses "due and owing to them" past first quarter 2010.
• "Bonus/royalty/profit participation" related to   "technology/engine" royalties, "other special performance bonuses,"   "other studio bonuses" or "any other bonus/royalty/profit   participation."'
• Lost value on "restricted stock units" that Activision   "promised" would vest (read: own it in your own name and purchase it   from Activision) when Modern Warfare 2 sales eclipsed Modern   Warfare 1, which "has long ago occurred."
• Money owed as it relates to Modern Warfare 2 "sister   games, including but not limited to" the oft-mentioned Modern   Warfare 3, "if Modern Warfare 3 is ultimately delivered   and marketed."
• Interest rates related to the above sums of money.

  The lawsuit focuses on royalties generated for Modern Warfare 2   following release and the agreement between Infinity Ward employees and   Activision for receiving the subsequent bonuses. The IWEG contends the   only condition for becoming eligible for said bonuses was delivering Modern   Warfare 2 in time for the game's intended November 10, 2009   launch. Modern Warfare 2 did launch as scheduled on November 10   last year, generating $1.1 billion in 2009.

Modern Warfare 3 has been mentioned during the legal   back-and-forth between ex-Infinity Ward leadership Vince Zampella and   Jason West and Activision, and it's brought up again here, too.

The IWEG alleges Activision has "improperly withheld this   specifically identifiable sum of money from the members of IWEG in order   to force them to keep working for Activision so that Activision could   receive delivery of Modern Warfare 3." The suit alleges   Activision "made a calculated, purposeful and malicious decision" to   withhold proper bonuses "in an attempt to force employees of Infinity   Ward to continue to work at a job that many of them did not want just so   Activision could force them to complete the development, production and   delivery of Modern Warfare 3."

The legal language gets harsher, too.

"In short," reads the lawsuit, "Activision withheld the property of   the IWEG in an attempt to keep the employees hostage so that Activision   could reap the benefit of the completion of Modern Warfare 3."
What does the IWEG want in return? "At least in the additional amount   of $75 million to $500 million as an award for punitive damages,"   continues the lawsuit, citing a number calculated from the blockbuster   sales of Modern Warfare 2 and "Activision's net worth."

The IWEG also believes Activision violated California Labor Code   during their alleged failure of payment.
"Activision has a duty to pay all of the members of the IWEG all of   the money they are owed [...] within 72 hours of the termination of   their employment," reads the lawsuit. "Activision, however, has failed   to do so."

source: http://g4tv.com/thefeed/blog/post/704273/UPDATE-38-Infinity-Ward-Employees-File-Lawsuit-Against-Activision-Over-Royalties-Alleges-Devs-Held-Hostage.html

Hmm....I'm wary of the allegation that Activision used these bonus payments to "keep the employees hostage [against their will]", but if these allegations are accurate (and they're specific enough to be very plausible) I'm definitely on the side of the Infinity Ward employees now on this matter.

Considering all these lawsuits (which even if Activision wins will be very costly in legal fees), I'm wondering how the shareholders are going to take this at the next stockholders' meeting.  It seems to me that Activision is going to lose a lot more money now than if they had just paid all this money they promised in the first place, and Infinity Ward would probably in much better shape and well on their way to making Modern Warfare 3 by now.  As it is, Activision will probably have to close the studio and consolidate the remaining employees in a major restructuring while dealing with all these lawsuits, and meanwhile Modern Warfare 3 still isn't being worked on.

[noname2200]

It would be up to West and Zampella to prove anything. If they also refused to to do their jobs (they were employees of Activision Blizzard, NOT members of a independent company), then Activision had just cause to fire them and maybe not pay any bonuses. It doesn't matter if they were told they could work on a non-Call of Duty game, Activision was their boss and got to decide what games they and Infinity Ward would work on.

Not actually true: employment contracts bind the employer just as much as they do the employee, and if the alleged contract existed and stated that West and Zampella had freedom to make another IP, Activision could not order them to continue making a CoD game without breaching the contract. Of course, just because one side breached, doesn't mean the other side automatically gets everything it was promised. I'd love to learn the details on this case (and not just the allegations made in complaints and PR statements: are the complaints even verified?  )

[noname2200]

It seems to me that Activision is going to lose a lot more money now than if they had just paid all this money they promised in the first place, and Infinity Ward would probably in much better shape and well on their way to making Modern Warfare 3 by now.  As it is, Activision will probably have to close the studio and consolidate the remaining employees in a major restructuring while dealing with all these lawsuits, and meanwhile Modern Warfare 3 still isn't being worked on.

Assuming that IW's allegations are true, paying the bonuses would not have led to MW3 anyways, and IW's heads would have been able to shut down that spigot at any time.

I think that's part of why I'm so skeptical that the alleged contract contains the terms that IW says it does: agreeing to those terms essentially shuts down the CoD milking machine, and I don't see Bobby letting that happen.

[ThePerm]

the employee contract depends on whether or not the employee were with the company before the company was bought by Activision

[broodwars]

Assuming that IW's allegations are true, paying the bonuses would not have led to MW3 anyways, and IW's heads would have been able to shut down that spigot at any time.

I think that's part of why I'm so skeptical that the alleged contract contains the terms that IW says it does: agreeing to those terms essentially shuts down the CoD milking machine, and I don't see Bobby letting that happen.

No, I think the two founders would have left anyway (even if they hadn't been fired), but they are the only ones who had control over the Modern Warfare IP at Infinity Ward.  The rest would have to work on whatever Activision assigned them, which obviously would have been Modern Warfare 3.  Now, as usually happens Infinity Ward would likely have had some employees quit to join Respawn, but if Activision is laying on the promised cash and keeping Infinity Ward a pleasant place to work at, perhaps they could have lessened the bleeding and kept it a working studio.  Instead, Activision chose to make it a hostile workplace, and as a result we seem to be getting a new report every day of more employees leaving Infinity Ward for ventures elsewhere and meanwhile it's a dead studio that can't possibly be working on anything right now.  If these allegations are true, it's just not smart business on Activision's part, as if they learned nothing from EA's internal relations problems from years prior.

[SixthAngel]

I think that's part of why I'm so skeptical that the alleged contract contains the terms that IW says it does: agreeing to those terms essentially shuts down the CoD milking machine, and I don't see Bobby letting that happen.

It doesn't shut down the  CoD machine, only the Modern Warfare machine.  Remember that these agreements were made a long time ago when this team had brought boack CoD and only the the first MW was a success so it wasn't really a franchise yet.  They might not have wanted to make yearly MW installments as well at the time since the different CoD would essentially cannablize each other.

Activision (I'll leave Blizzard out since it is supposedly seperate in many ways) is a different company now.  Guitar Hero just crashed, DJ Hero never took off, Tony Hawk's new game was crap.  CoD is their only big money maker right now and I doubt the other CoD games will be able to pull in MW numbers.  Its importance to the company just skyrocketed.

No, I think the two founders would have left anyway (even if they hadn't been fired),

I'm not sure.  If they were paid the money promised and allowed to make a new IP as promised I don't see why they would have wanted to leave and all the evidence of them leaving that we have involves them being treated like crap.  There could be other circumstances of course, there are a lot of reasons want to work at your own company after all, and getting millions of dollars so you have the chance is certainly up there.

[noname2200]

the employee contract depends on whether or not the employee were with the company before the company was bought by Activision

Probably not true, since most employment contracts contain a clause which states that the employee contract is assignable. Even if these contracts lacked such a term, there was apparently a contract extension after the first Modern Warfare, so the point is moot.

No,  I think the two founders would have left anyway (even if they hadn't  been fired), but they are the only ones who had control over the Modern  Warfare IP at Infinity Ward.  The rest would have to work on whatever  Activision assigned them, which obviously would have been Modern  Warfare 3. 

 
  That's the contradiction I'm talking about: IF the old IW chiefs had  retained "creative control" of all CoD games from the Vietnam War and  onwards, development of MW3 would have required at the very least their  consent to proceed. Activision could not have assigned their team to  make MW3 without materially breaching the contract.

It  doesn't shut down the  CoD machine, only the Modern Warfare machine.   Remember that these agreements were made a long time ago when this  team had brought boack CoD and only the the first MW was a success so  it wasn't really a franchise yet.  They might not have wanted to make  yearly MW installments as well at the time since the different CoD  would essentially cannablize each other.

My last statement was ambiguous: what I meant was that, if West and Zampella are being truthful and they had a valid contract with the terms they are alleging, the CoD series could only have contained pre-Vietnam War era games without first requiring West and Zampella's consent. In my mind, that means more WWII, and possibly Korean War, games. I don't think the series would last anywhere near as long if it limits itself to those terms.

 
 

[KDR_11k]

Don't forget World of Warcraft, that can keep Activision alive pretty much indefinitely and then there's future boosts like Starcraft 2.

This whole situation is amusing to watch, both sides bickering at each other and calling the others liars. Since almost EVERY lawsuit involving companies involved counter-suits, I wouldn't be shocked if Activision Blizzard counter-sues.

They already filed a counter-suit for the first suit brought by West and Zampella. Apparently you have to file a counter-suit within X days of a suit or you lose any ability to sue over it so you can expect Activision to file a counter-suit on everything.

You must have forgotten all of the stuff EA did. They had to pay their software engineers $14.9 million and graphic artists $15.6 million because they were classifying them as salaried employees (meaning they make the same amount of money regardless of how much or little they work) so they could force them to work 60+ hour weeks without overtime. Besides the money, they also had to re-classify around 440 employees as hourly employees as hourly employees so they could make overtime. To me, forcing employees to routinely work 60-70 hour weeks with no overtime and being forced  to pay over $30 million in settlement is worse than any of the allegations against Activision Blizzard. Go look back at some of the articles (the settlements were in 2006).

That's standard practice in the games industry, I've heard of cases (Sierra, I think?) where employees were forced to falsify their timesheets (a felony) to hide their overtime. EA is the big publicized case but you can assume that practically every developer did that back then.

[BlackNMild2k1]

Word from the Lawyerz;

"In a lawsuit where Activision is refusing to produce a witness to substantiate its claims, today's new lawsuit by 38 Infinity Ward employees makes clear that Activision's accusations against Jason and Vince are completely false, Schwartz said in a statement given to IGN. " It's great to see the other Infinity Ward people sticking up for themselves. Hopefully Activision will realize that the time has come to live up to its promises."

http://ps3.ign.com/articles/108/1086448p1.html

[SixthAngel]

Word from the Lawyerz;

Ubisoft's new game made by ex IW emplyees.

[Stratos]

Imagine Party: Lawyerz

[BlackNMild2k1]

Activision boss quits

No, not THAT Activision boss...

CEO and president of Activision Publishing, Mike Griffith, has resigned from both positions.

Griffith will, however, continue to serve as vice chairman of Activision Blizzard, which will see him take an active part in board and internal strategy meetings.

An official statement from Activision says that the move will see an annual salary of $250,000 for Griffith's plus discretionary bonuses.

And there we have our first Golden Parachute....

anyone wanna place a bet on how long it takes for Kotick to deploy his?

[TJ Spyke]

They already filed a counter-suit for the first suit brought by West and Zampella. Apparently you have to file a counter-suit within X days of a suit or you lose any ability to sue over it so you can expect Activision to file a counter-suit on everything.

I'm not sure on that. Maybe they changed the law or the type of suit, but there have been cases where companies waited months to countersue.

BlackNMild, what are you talking about? He didn't leave the company, just resigned as CEO. He is still with the company as vice chairman of the board of directors. This has happened before (and not just at video game companies), someone resign from one position but staying with the company.

And why would Kotick leave? As KDR stated, World of Warcraft alone is huge, bringing them over $100 million a month. The company isn't in trouble, even if they somehow lose the suit (which I doubt).

[BlackNMild2k1]

Umm he resigned from a CEO position to go sit on a board, that is his stepping down from a place of direct command and getting that comfy corner office in that other building.... away from the employees. They gave him the easy way out with a fat paycheck.

I imagine it as the polite way to pull someone out of the day to day decision making without embarrassing him or your company and making the transition as painless as possible.
They moved him out of the way. That is a golden parachute.

Just like Kutaragi getting that corner office after having to resign from head of bankrupting. He eventually moved on (I think), but they basically put him out to pasture with a comfy desk and a fat paycheck.


edit: Remember that Kotick already cashed out a bunch of his stock near the end of last year. I think he's ready and waiting on his Golden Parachute too.

[TJ Spyke]

Kutaragi became "honorary chairman", Griffith is still a member of the board of directors and that still involves regular work. As I said, this kind of thing happened a lot (even in healthy companies with no scandal).

As for Kotick, did you ever think he just wanted to make a huge profit? The stock was at about $1 a share when he originally bought them in 2000, it was up to $12 when he sold the shares. He still owns about 1.4 million shares (about $16.8 million worth) of Activision Blizzard stock.

[BlackNMild2k1]

I don't see why you refuse to accept it for what it looks like. Griffith stepped down voluntarily after probably being nudged by all the other board members. They wanted to move him out of the line of fire and golden parachuted him to safer grounds. Now he's secure, in the boardroom, away from Kotick (who will likely be falling on the sword for this should it turn out as ugly as it looks like it could) and with a very healthy paycheck too.

Should they can Griffith later for events happening today, they can do it quietly behind the scenes.

With everything that's been revealed about this case so far, I hope IW wins BIG, Kotick takes most of the public lashing and the corporate black eye and next generation Activision shows that they learned their lesson (Like EA did last gen) and turn a new leaf (like EA this gen). Some other Giant MegaCorp. Inc. can take the role of bad guy and we repeat the process all over again.

[vudu]

Before you two start going at each other's throats again, I'd like to remind everyone to please be civil.

[TJ Spyke]

BlackNMild, please stop speculating on what you think happened. I am trying to stick with facts, not guess what happened. You don't know why Griffith stepped down. It isn't a big deal anyways, it would be like if the head of Rare left. He was only the head of Activision Publishing, not Activision Blizzard.

I hope Activision wins the suit and shuts up those whiners. For once I hope Pachter is right (he is predicting that Activision will shut down Infinity Ward after they finish the next map pack DLC).

[BlackNMild2k1]

It's more than a coincidence that he "quit" his high ranked position to take something less involved during the middle of a PR disaster that could cost the company over $100million to 1/2 a Billion dollars. Lets not be naive.

I'm going with the story as it has been released so far (you know the facts of the case<as released by court documents> that you so conveniently seem to ignore.... and not just on this topic) to put 1 + 1 together to get 2.

It would be an incredible coincidence for the CEO and Head of Publishing who had direct contact & influence with IW on a daily basis to have stepped down the day after it becomes public that 40% of IW is now suing the company for deals having to do with publishing. Let me count the ways that this could not be related to each other.....
.....
.....
.....
I couldn't think of one..... could you?


edit:
and 4 more people left IW today

4 more people leave Infinity Ward today. Near 50%   of dev staff. ETA till IW closure?  Activision earnings report in a   week.

http://twitter.com/georgeb3dr

[ThePerm]

the stamper brothers left rare a while ago

[TJ Spyke]

Where do you get $500 million from? Even if they somehow lose the suit, they would not lose anywhere near that much. As for why he left, maybe he didn't want to deal with the stress of this moronic lawsuit.

Perm, duh. I know that. I didn't say founder of the company, I said head of the company. The founders of Activision left the company years ago.

[Peachylala]

the stamper brothers left rare a while ago

That was when nobody cared about Rare anymore though. IW is becoming another story altogether (abit a very headache inducing one).

[BlackNMild2k1]

Where do you get $500 million from? Even if they somehow lose the suit, they would not lose anywhere near that much. As for why he left, maybe he didn't want to deal with the stress of this moronic lawsuit.

Do you ever read the articles....? that is where I'm getting all this info from.
basically it says they are suing for up to 500 million for everything including punitive damages. it helps up be on the same page info-wise when you read what's in the articles. I mean I even bolded it and made the title of the article LARGE so that you couldn't miss it.

I'll do some bolding this time so that the important parts aren't missed.

Modern Warfare Developers Seek Half a Billion in Activision Suit

A group of nearly 40 past and present Infinity Ward developers have banded together to file suit against the publishers of Modern Warfare 2 for half a billion dollars, alleging breach of contract and unpaid royalties, according to court documents obtained by G4 TV.com.

The Infinity Ward Employee Group's suit, which lists 38 plaintiffs including some currently employed by Activision at the Infinity Ward studio, is seeking as much as half a billion in unpaid bonuses, royalties, profit sharing and future profits from games such as Modern Warfare 3 and punitive damages.

The suit alleges, according to G4 TV, that the payments were withheld to prevent employees from quitting Activision.

"In short, Activision withheld the property of the IWEG in an attempt to keep the employees hostage so that Activision could reap the benefit of the completion of Modern Warfare 3, " according to the suit.

Reached for comment Tuesday afternoon, an Activision spokesperson refuted the allegations:

"Activision believes the action is without merit," the spokesperson said. "Activision retains the discretion to determine the amount and the schedule of bonus payments for MW2 and has acted consistent with its rights and the law at all times. We look forward to getting judicial confirmation that our position is right."

And I think we all know they won't likely get that much, but we also know that you go in asking for the moon and the stars but hope you just get more than you probably would've gotten if you didn't ask for more.

And he "quit" for obvious reasons. Don't ignore the pink elephant standing on your foot.

[ThePerm]

the stamper brothers left rare a while ago and nobody cared

That was when nobody cared about Rare anymore though. IW is becoming another story altogether (abit a very headache inducing one).

FIXED, they were under MS game studios, but the Stamper Brothers were in charge of all projects. Nobody cared that much because Rare was a shell of a company, but you knew things had to suck in the company when the creative force left. If there are no money hats around I see no reason to leave. Either MS was pissing them off, or they found a better deal, or their retired. That was in 2007..wonder if they've returned to ship?

[D_Average]

Speaking of Rare, I was always curious.  Did any of the major leaders from the team that developed Donkey Kong Country move on to do better things with another company?  Whoever worked on that project really nailed it.