What Would Matt Do

That’s a flippant way to say that their are big problems at Flagship Studios. The confirmed part is this:

Gamasutra has received confirmation from a Flagship Studios representative that the Hellgate: London developer has seen significant staff cuts.

This morning, Gamasutra obtained information from a source close to the company indicating that staff at both the Flagship development team as well as online services subsidiary Ping0 were let go. Both companies operate out of the same building.

Flagship declined to go into further detail about the layoffs, beyond stating that there was truth to the reports.

The unconfirmed part reported on a Korean blog and translated both in that last article and at Shacknews is that their creditors may be taking back Hellgate and Mythos to back up loans that Flagship took out on the respective IPs. OUCH.

According to the report, HanbitSoft said it that it intends to take full control of the property, adding that its own in-house development team will be able to "properly manage and develop Hellgate: London into a good game with proper content."

Moreover, HanbitSoft’s legal team reportedly told Voodoo Extreme that Flagship had offered up its Mythos (PC) intellectual property as collateral for a loan from the publisher to maintain operations. As revealed last March, Flagship pledged Hellgate: London for a loan from lender Comerica Bank.

"Flagship Studios does not currently own the intellectual properties to either game, which are held in separate companies subject to the security interests of lenders," said HanbitSoft’s lawyers. "HanbitSoft hopes to work with Comerica and some of the team at Flagship to see if there is a way to continue to generate content to keep Hellgate online in Asia and to finish the development of Mythos."

It’s not clear IF HanbitSoft can do that, per their agreements or if this is really happening. Flagship has officialy denied it:

Flagship Studios responded to the reports, dismissing the story as "an outright lie."

"We have no idea where they are getting their information from and have asked legal counsel to pursue the issue," Flagship said. "We are mystified by HanbitSoft’s conclusions and any attempt to take over the IP will be met with a strong and swift response… We are outraged that Hanbitsoft would attempt to completely tarnish the reputation of its most vital developer."

I don’t know if I’ve ever heard of a company losing control of its IPs like this. I’m hoping that Flagship is right and this is all a power play or a sham or something mistranslated.

Whatever it is, I hope everyone that is going through hardship at Flagship lands on their feet and is all right. I can’t say I was a huge fan of the five minutes I played of Hellgate, but I don’t like to see this sort of thing happen to any company.

What Would Matt Do: Hope for the best.

Update: I saw on Lum’s that he link to this with more news on it.

Update: Hanbitsoft’s lawyers got in touch:

Please understand that the facts are (1) HanbitSoft is an exclusive licensee of both Hellgate and Mythos in Asia, with rights to sublicense the games; (2) in addition, HanbitSoft is a secured creditor who has been pledged the Mythos (but not the Hellgate) intellectual property as collateral for a loan; (3) Comerica, another secured lender, has been pledged the Hellgate intellectual property as its collateral for a loan; (4) Flagship Studios does not currently own the intellectual properties to either game, which are held in separate companies subject to the security interests of lenders, and Flagship Studios’ interest in those companies is also pledged to its lenders; (5) it is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open, but HanbitSoft hopes to work with Comerica and some of the team at Flagship to see if there is a way to continue to generate content to keep Hellgate online in Asia and to finish the development of Mythos.

Note point five: "would have allowed it to keep its doors open."

Update #2: Subscription options have been removed from account areas, as has the ability to unsubscribe. On the forums, the lock-happy mods have yet to touch a fifty-seven page complaints thread that has spiralled out of control since the news regarding redundancies was released.

Update #3: The staff that still have a job have gone home for the weekend. However, we’ve been contacted by an ex-Flagship developer who has suggested that the studio is on the brink of closure and has no financial capital to fight Hanbitsoft’s legal challenge.

That doesn’t sound good at all. That’s a rough way to go down. My best wishes go out to everyone this affects.