NOTE:  This was originally an entry I wrote for the corporate blog of the startup company I run with a friend.  I'm posting it here because I wanted to share my thoughts with the gaming community, not to try to plug my company which is just a local firm anyway.  Our company name is mentioned but I am not linking to our site.  You can find us on your own if you want.

As you can already see, this will be a long post and is my first attempt at a business essay of sorts.

When Dan and I first decided to start the company, we made an unequivocal commitment to operating with the utmost honesty and integrity, the inspiration for which largely came from our experiences at other employers.  Some of our competition as well as the general business environment in which we operate test this often.  We are offered "business is war" and "you have to do what you must to succeed" as advice with disturbing frequency from those with far more business cache than us.  However, our resolve has always been that if operating as we do results in slower growth or even failure, we will have attained our status with a clear conscience.  While we understand that there are a growing number of businesspeople who are willing to fill the moral and ethical gray area in which we refuse to tread, we prefer to use the examples they set as inspiration for how we should avoid behaving, rather than idolizing their success as many do.  This essay cites a recent example from an industry and pastime that Dan and I are great enthusiasts of, video games.

If you aren't into gaming and in particular, haven't followed the hobby going back a number of years, you probably haven't heard of Tim Schafer.  He's a designer who holds a legendary status among many for his contributions to a number of ingenious and more importantly, hilarious adventure games for LucasArts, the video game division of the George Lucas empire.  In the late 90s, adventure games began a decline in popularity and LucasArts largely abandoned the genre.  In 2000, Schafer left to form his own studio called Double Fine Productions.  Their first title was called Psychonauts and came out in 2005.  While not an adventure game in the traditional sense, it still retained the quirky humour and brilliantly imaginative world design that Schafer was known for and despite some gameplay flaws, is still hailed by many (myself included) as a great creative achievement.  It was originally to be published by Microsoft Game Studios but was dropped by them and ultimately, the game was released by a small publisher whose experience with big budget titles was limited to say the least.  Despite receiving rave reviews across the board, Psychonauts received almost no marketing help and was ultimately a sales flop.  Despite this setback, Double Fine still had enough resources to start work on an even more ambitious project, Brutal Legend.

This new game is as creatively and financially daring as Psychonauts was and is shaping up to have an equally tumultuous time getting to market.  The title was originally to be published by Sierra Entertainment, a now disbanded imprint of top five publisher Vivendi Games.  In 2008, Vivendi merged with Activision, the number two publisher in the world to form the mega publisher Activision Blizzard.  The new company immediately took first place from Electronic Arts who were the undisputed top dogs for many years.  Activision owns some of the most recognised and successful video game series in the world including Guitar Hero, Call of Duty, Tony Hawk, World of Warcraft, plus the rights to games based on a number of big movie licenses, all of which sell millions of units per year.  Their ability to make large sums of money is simply undeniable.  However, the company has also quickly earned a reputation for not fostering creativity or new ideas and pushing out many sequels to the same franchises, usually on a yearly basis.  CEO Bobby Kotick has gone on record saying that his goal was to foster franchises that could only be "exploited" on a yearly basis.  To his credit, this is a strategy that has worked very well for them.  This will be where my credit to him ends.

Shortly after the creation of Activision Blizzard, the company quickly and unceremoniously cut loose a number of titles and entire studios that didn't fit Kotick's vision.  The majority found homes at other publishers fairly quickly and have either been released already or will be soon.  Brutal Legend went without any word for a while though and the gaming community became concerned that no one would be willing to take a risk on Schafer's new and unusual idea.  However, last December gamers were both shocked and elated to hear that former first place publisher Electronic Arts--who themselves were not known for taking risks--had partnered with Double Fine to release the game.  Since then, EA has thrown a sizable amount of their marketing muscle behind the game, making its release in October a major event and stirring up lots of excitement for it.  Things finally seemed to be going right for Tim Schafer and his team at Double Fine.  A few months later though, the air began to sour once again.

This past February, Activision began grumbling that though they had dropped Brutal Legend and left it in limbo, they in fact still been "in negotiations" for it and that as a result, Double Fine's deal with EA was invalid.  Everyone involved dismissed this as little more than posturing, with an EA spokesperson going so far as to publicly equate the situation to "a husband abandoning his family and then suing after his wife meets a better looking guy."  This was also unusual behaviour for the rival company but gamers around the world applauded their tough stance.  Nothing more was heard for months and most assumed the issue had fizzled.  That all changed this past week.  On the last day of E3 (the yearly video game industry trade show), it was revealed in the press that Activision had filed suit against Double Fine Productions, claiming that they were not legally permitted to give publishing rights to Electronic Arts and that Activision still has the rights to release the game, which they claim to have invested almost $15 million dollars in.  Tim Schafer responded with his usual brand of humour but no more has been heard on the issue since.

Now that you've heard the story, you may wonder why I chose to use it as the basis for an essay on shoddy business practices.  Some of you may be siding with Activision, thinking Double Fine jumped the gun handing their publishing rights to someone else.  After all, if Activision supposedly put so much money into the project, one would expect them to fight to protect that investment.  To someone who doesn't follow this industry or these games as people like us do, that's an easy conclusion to reach.  However, most of us on the enthusiast side have recognised several key tells that give us reason to believe that this is a case of sour grapes and Activision trying to exact revenge for what was ultimately a short sighted decision on their part.

Firstly, the new Activision Blizzard cut loose Brutal Legend back in July 2008, almost a year ago.  Yet, they claim to have been "in negotiations" during this whole period of time, in which they coordinated the sale of a number of other high profile titles and indeed, entire development studios.  Double Fine is a small, independent company who is self-funding Brutal Legend--a very rare thing in today's video game industry--despite already having one title fail to be a sales hit in an industry where one miss is usually enough to sink a developer.  How long were they expected to sit and wait?  In this period, they must have known that Double Fine was courting other publishers or at the very least, would have found out when a new deal was announced.  They had ample opportunity to stop a new deal from happening before now but didn't do so.

Secondly, due to Sierra not heavily promoting Brutal Legend before the Vivendi/Activision merger, few outside the enthusiast gamer community knew about it.  With the budget for most "AAA" games now exceeding $30 million, appealing only to enthusiasts simply isn't enough to succeed.  After EA acquired the publishing rights, they began a heavy marketing campaign which has quickly driven up mainstream awareness and excitement for the game.  It is reasonable to assume that upon seeing this reaction, Activision may have had second thoughts on whether losing Brutal Legend was a good thing for their business and maybe saw potential for it to become the type of mega franchise they aim for.

Lastly, you will notice from the lawsuit announcement that Activision chose to go after Double Fine and not EA, the company that is supposedly publishing a game they have no claim to.  This is perhaps the most telling indication of their true intentions.  EA and Activision are both massive companies with armies of lawyers.  Entities like these don't sign agreements they aren't certain of.  If EA signed on Brutal Legend, they would have done their due diligence and been certain who owned what rights to it.  To claim that a legal mishap of this nature took place is disingenuous at best, ludicrous at worst.  Also, it would only make sense to name them as a party in a lawsuit over the publishing rights since they are publicly claiming to be the rightful publisher.  However, Double Fine is the small company who is likely low on cash since they are so far into development of Brutal Legend and they don't have the aforementioned legion of litigators that EA has.  Mounting a legal fight against Activision will undoubtedly be difficult for them and even if they manage to do so, it will drain away from the profits they hope to see from the game's release.  I am not sure if the US civil system would permit EA to enter the fight with them but if not, this could be a very precarious situation for Double Fine.

To me, Activision Blizzard's motivations are crystal clear.  They dumped a title they didn't think they could turn into a yearly series, a rival picked it up, poured money into it and generated a ton of buzz for it.  Then after it turns out Activision may have made a bad call, they are saying "if we can't have it, no one can."  An equivalent in our industry would be a bigger competitor giving us a service call because they were too busy to handle it, us finding out after that it was for a massive client who wanted to spend thousands of dollars and then the competitor demanding months later that we give the client back to them along with all the money we'd already billed them.  It is petty, manipulative, anti-competitive and unethical.  Yet, not only does the business community at large tolerate this kind of behaviour, Activision Blizzard would likely have been faulted for not taking this course of action, regardless of how weak their case seems to be.  Meanwhile, a small company who has only ever wanted to release a quality product is facing a David vs. Goliath situation when they are perhaps at their most vulnerable. In my opinion, this is just unquestionably wrong and is another example of a large corporation feeling they don't have to accept the consequences of their decisions.  One would think that in light of the huge number of corporate scandals the world has seen in recent years, that fewer executives would cling to the erroneous mindset that being big means you don't have to be accountable.  Yet it seems that as the number and scope of the corruption increases, so does the belief that such actions are the right thing to do, simply because they are "in the best interests of shareholders."  

There are several possible outcomes to this scenario and obviously, I am hoping that Double Fine is able to fight Activision Blizzard and emerge victorious.  I want Brutal Legend to succeed so that a great designer can keep making the games he wants to make and that I want to play.  I will buy the game day one no matter whose name is on it but it will sadden me if I see the Activision moniker on the package.  I follow the video game industry closely and hear about questionable business decisions all the time but this one in particular struck a chord with me and reminded me of exactly why Dan and I committed to taking honesty and integrity so seriously.  We talked about this concept when we were planning the business and have both agreed that should either of us start to fall off the path of honest business as Activision Blizzard seems to have, that we have passed our period of being valuable to the vision we created for Digital Lifeline.  Of course, our company exists to make money, as every company does and I don't think Bobby Kotick is necessarily a bad person, just an executive who thinks he is serving his shareholders.  My problem is that a great many would see that as all the justification he needs in order to sleep well at night.  With respect to those who hold a much higher business standing than I, just because it is best for your shareholders doesn't might it the right thing to do.

Activision Blizzard was already making tons of money and continues to so why can't they just be content with that and accept the lessons learned from letting Brutal Legend get away?  Why do they have to put a small and dedicated team in front of a perilous situation rather than just admitting they screwed up and wishing them luck?  Is what few extra cents per share Brutal Legend could have brought their stock price really worth the good will they are losing from enthusiast gamers and the potential livelihoods of the dozens of staff at Double Fine?  To me, the answer to this is clear but the more I see this kind of thing, the more I realise that my opinion may be the minority one.

When we started Digital Lifeline, we weren't naive about the business world.  We knew we were walking into an arena where more people played dirty than not and where trying to be an example of how to succeed while being honest was an uphill battle to say the least.  When I read stories like this though, I realise for the first time just what kind of people and tactics we may face in the future and I have to say that it both scares and saddens me more than a little bit.  I do remain confident that we will be able to lead by example and that as we continue to grow, we and those who share our corporate values will be able to raise the bar for the more established players.  Maybe one day, actions like Activision Blizzard's will be met with scorn rather than applause.  I look forward to that day.

NOTE:  This was originally an entry I wrote for the corporate blog of the startup company I run with a friend.  I'm posting it here because I wanted to share my thoughts with the gaming community, not to try to plug my company which is just a local firm anyway.  Our company name is mentioned but I am not linking to our site.  You can find us on your own if you want.

As you can already see, this will be a long post and is my first attempt at a business essay of sorts.

When Dan and I first decided to start the company, we made an unequivocal commitment to operating with the utmost honesty and integrity, the inspiration for which largely came from our experiences at other employers.  Some of our competition as well as the general business environment in which we operate test this often.  We are offered "business is war" and "you have to do what you must to succeed" as advice with disturbing frequency from those with far more business cache than us.  However, our resolve has always been that if operating as we do results in slower growth or even failure, we will have attained our status with a clear conscience.  While we understand that there are a growing number of businesspeople who are willing to fill the moral and ethical gray area in which we refuse to tread, we prefer to use the examples they set as inspiration for how we should avoid behaving, rather than idolizing their success as many do.  This essay cites a recent example from an industry and pastime that Dan and I are great enthusiasts of, video games.

If you aren't into gaming and in particular, haven't followed the hobby going back a number of years, you probably haven't heard of Tim Schafer.  He's a designer who holds a legendary status among many for his contributions to a number of ingenious and more importantly, hilarious adventure games for LucasArts, the video game division of the George Lucas empire.  In the late 90s, adventure games began a decline in popularity and LucasArts largely abandoned the genre.  In 2000, Schafer left to form his own studio called Double Fine Productions.  Their first title was called Psychonauts and came out in 2005.  While not an adventure game in the traditional sense, it still retained the quirky humour and brilliantly imaginative world design that Schafer was known for and despite some gameplay flaws, is still hailed by many (myself included) as a great creative achievement.  It was originally to be published by Microsoft Game Studios but was dropped by them and ultimately, the game was released by a small publisher whose experience with big budget titles was limited to say the least.  Despite receiving rave reviews across the board, Psychonauts received almost no marketing help and was ultimately a sales flop.  Despite this setback, Double Fine still had enough resources to start work on an even more ambitious project, Brutal Legend.

This new game is as creatively and financially daring as Psychonauts was and is shaping up to have an equally tumultuous time getting to market.  The title was originally to be published by Sierra Entertainment, a now disbanded imprint of top five publisher Vivendi Games.  In 2008, Vivendi merged with Activision, the number two publisher in the world to form the mega publisher Activision Blizzard.  The new company immediately took first place from Electronic Arts who were the undisputed top dogs for many years.  Activision owns some of the most recognised and successful video game series in the world including Guitar Hero, Call of Duty, Tony Hawk, World of Warcraft, plus the rights to games based on a number of big movie licenses, all of which sell millions of units per year.  Their ability to make large sums of money is simply undeniable.  However, the company has also quickly earned a reputation for not fostering creativity or new ideas and pushing out many sequels to the same franchises, usually on a yearly basis.  CEO Bobby Kotick has gone on record saying that his goal was to foster franchises that could only be "exploited" on a yearly basis.  To his credit, this is a strategy that has worked very well for them.  This will be where my credit to him ends.

Shortly after the creation of Activision Blizzard, the company quickly and unceremoniously cut loose a number of titles and entire studios that didn't fit Kotick's vision.  The majority found homes at other publishers fairly quickly and have either been released already or will be soon.  Brutal Legend went without any word for a while though and the gaming community became concerned that no one would be willing to take a risk on Schafer's new and unusual idea.  However, last December gamers were both shocked and elated to hear that former first place publisher Electronic Arts--who themselves were not known for taking risks--had partnered with Double Fine to release the game.  Since then, EA has thrown a sizable amount of their marketing muscle behind the game, making its release in October a major event and stirring up lots of excitement for it.  Things finally seemed to be going right for Tim Schafer and his team at Double Fine.  A few months later though, the air began to sour once again.

This past February, Activision began grumbling that though they had dropped Brutal Legend and left it in limbo, they in fact still been "in negotiations" for it and that as a result, Double Fine's deal with EA was invalid.  Everyone involved dismissed this as little more than posturing, with an EA spokesperson going so far as to publicly equate the situation to "a husband abandoning his family and then suing after his wife meets a better looking guy."  This was also unusual behaviour for the rival company but gamers around the world applauded their tough stance.  Nothing more was heard for months and most assumed the issue had fizzled.  That all changed this past week.  On the last day of E3 (the yearly video game industry trade show), it was revealed in the press that Activision had filed suit against Double Fine Productions, claiming that they were not legally permitted to give publishing rights to Electronic Arts and that Activision still has the rights to release the game, which they claim to have invested almost $15 million dollars in.  Tim Schafer responded with his usual brand of humour but no more has been heard on the issue since.

Now that you've heard the story, you may wonder why I chose to use it as the basis for an essay on shoddy business practices.  Some of you may be siding with Activision, thinking Double Fine jumped the gun handing their publishing rights to someone else.  After all, if Activision supposedly put so much money into the project, one would expect them to fight to protect that investment.  To someone who doesn't follow this industry or these games as people like us do, that's an easy conclusion to reach.  However, most of us on the enthusiast side have recognised several key tells that give us reason to believe that this is a case of sour grapes and Activision trying to exact revenge for what was ultimately a short sighted decision on their part.

Firstly, the new Activision Blizzard cut loose Brutal Legend back in July 2008, almost a year ago.  Yet, they claim to have been "in negotiations" during this whole period of time, in which they coordinated the sale of a number of other high profile titles and indeed, entire development studios.  Double Fine is a small, independent company who is self-funding Brutal Legend--a very rare thing in today's video game industry--despite already having one title fail to be a sales hit in an industry where one miss is usually enough to sink a developer.  How long were they expected to sit and wait?  In this period, they must have known that Double Fine was courting other publishers or at the very least, would have found out when a new deal was announced.  They had ample opportunity to stop a new deal from happening before now but didn't do so.

Secondly, due to Sierra not heavily promoting Brutal Legend before the Vivendi/Activision merger, few outside the enthusiast gamer community knew about it.  With the budget for most "AAA" games now exceeding $30 million, appealing only to enthusiasts simply isn't enough to succeed.  After EA acquired the publishing rights, they began a heavy marketing campaign which has quickly driven up mainstream awareness and excitement for the game.  It is reasonable to assume that upon seeing this reaction, Activision may have had second thoughts on whether losing Brutal Legend was a good thing for their business and maybe saw potential for it to become the type of mega franchise they aim for.

Lastly, you will notice from the lawsuit announcement that Activision chose to go after Double Fine and not EA, the company that is supposedly publishing a game they have no claim to.  This is perhaps the most telling indication of their true intentions.  EA and Activision are both massive companies with armies of lawyers.  Entities like these don't sign agreements they aren't certain of.  If EA signed on Brutal Legend, they would have done their due diligence and been certain who owned what rights to it.  To claim that a legal mishap of this nature took place is disingenuous at best, ludicrous at worst.  Also, it would only make sense to name them as a party in a lawsuit over the publishing rights since they are publicly claiming to be the rightful publisher.  However, Double Fine is the small company who is likely low on cash since they are so far into development of Brutal Legend and they don't have the aforementioned legion of litigators that EA has.  Mounting a legal fight against Activision will undoubtedly be difficult for them and even if they manage to do so, it will drain away from the profits they hope to see from the game's release.  I am not sure if the US civil system would permit EA to enter the fight with them but if not, this could be a very precarious situation for Double Fine.

To me, Activision Blizzard's motivations are crystal clear.  They dumped a title they didn't think they could turn into a yearly series, a rival picked it up, poured money into it and generated a ton of buzz for it.  Then after it turns out Activision may have made a bad call, they are saying "if we can't have it, no one can."  An equivalent in our industry would be a bigger competitor giving us a service call because they were too busy to handle it, us finding out after that it was for a massive client who wanted to spend thousands of dollars and then the competitor demanding months later that we give the client back to them along with all the money we'd already billed them.  It is petty, manipulative, anti-competitive and unethical.  Yet, not only does the business community at large tolerate this kind of behaviour, Activision Blizzard would likely have been faulted for not taking this course of action, regardless of how weak their case seems to be.  Meanwhile, a small company who has only ever wanted to release a quality product is facing a David vs. Goliath situation when they are perhaps at their most vulnerable. In my opinion, this is just unquestionably wrong and is another example of a large corporation feeling they don't have to accept the consequences of their decisions.  One would think that in light of the huge number of corporate scandals the world has seen in recent years, that fewer executives would cling to the erroneous mindset that being big means you don't have to be accountable.  Yet it seems that as the number and scope of the corruption increases, so does the belief that such actions are the right thing to do, simply because they are "in the best interests of shareholders."  

There are several possible outcomes to this scenario and obviously, I am hoping that Double Fine is able to fight Activision Blizzard and emerge victorious.  I want Brutal Legend to succeed so that a great designer can keep making the games he wants to make and that I want to play.  I will buy the game day one no matter whose name is on it but it will sadden me if I see the Activision moniker on the package.  I follow the video game industry closely and hear about questionable business decisions all the time but this one in particular struck a chord with me and reminded me of exactly why Dan and I committed to taking honesty and integrity so seriously.  We talked about this concept when we were planning the business and have both agreed that should either of us start to fall off the path of honest business as Activision Blizzard seems to have, that we have passed our period of being valuable to the vision we created for Digital Lifeline.  Of course, our company exists to make money, as every company does and I don't think Bobby Kotick is necessarily a bad person, just an executive who thinks he is serving his shareholders.  My problem is that a great many would see that as all the justification he needs in order to sleep well at night.  With respect to those who hold a much higher business standing than I, just because it is best for your shareholders doesn't might it the right thing to do.

Activision Blizzard was already making tons of money and continues to so why can't they just be content with that and accept the lessons learned from letting Brutal Legend get away?  Why do they have to put a small and dedicated team in front of a perilous situation rather than just admitting they screwed up and wishing them luck?  Is what few extra cents per share Brutal Legend could have brought their stock price really worth the good will they are losing from enthusiast gamers and the potential livelihoods of the dozens of staff at Double Fine?  To me, the answer to this is clear but the more I see this kind of thing, the more I realise that my opinion may be the minority one.

When we started Digital Lifeline, we weren't naive about the business world.  We knew we were walking into an arena where more people played dirty than not and where trying to be an example of how to succeed while being honest was an uphill battle to say the least.  When I read stories like this though, I realise for the first time just what kind of people and tactics we may face in the future and I have to say that it both scares and saddens me more than a little bit.  I do remain confident that we will be able to lead by example and that as we continue to grow, we and those who share our corporate values will be able to raise the bar for the more established players.  Maybe one day, actions like Activision Blizzard's will be met with scorn rather than applause.  I look forward to that day.