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Old 11-02-2014, 07:54 PM   #13

ScrewingUpMyRide's Avatar
Re: Prey 2 Officially canceled!
Rapture, do you understand how hostile acquisitions work? Do you understand what milestone abuse is?

Bethesda disputes Milestones - reasonable or not - and withholds payment while Zenimax, the parent company, offers to loan money while the issues are being sorted, saying it's just an administrative issue that is bound to get resolved, then after several milestones aren't met and the money "lent" becomes too important, it offers to buy the company as a solution.

The companies have done it several times already. Given their documented history, there is no reason to grant them the benefit of the doubt: this is a planned, predatory practice.

If you're giving me money and it looks like I'm failing, and you don't want to give me more money because you don't trust that I can complete the project, why are you trying to buy out my studio?

That's the six million dollar question: if this really was a case of Human Head dropping the ball, ******* up development and ruining Bethesda's investment, why did Bethesda want to pour more money into acquiring the entire studio/team in addition to the product?

The fact is, Human Head were doing such a good job that Bethesda pretended they were doing a shit job so they could gain the financial leverage needed to acquire the entire studio.

I'll try to explain it as best I can. I'm sure there's a proper phrase for it in consumer advocacy environments, but I just call it milestone abuse.

In a traditional publisher-developer relationship in the video games industry, the publisher usually pays the developer through a number of milestones. Here's an example.

> Milestone 1: Exit pre-production with a final design plan
> Milestone 2: Finish X number of levels and audio/graphical assets
> Milestone 3: Have a "vertical slice" demo (showing all core features)
> Milestone 4: Establish a pipeline with the quality assurance testers

Stuff like that.

This system is technically great since it keeps the developer accountable. They only get paid if they keep working and showing progress. I WISH they'd have something like this for Kickstarter.

The problem with milestone abuse is when the milestone criteria isn't shown to the public (due to corporate confidentiality and all of that). Since it's kept behind closed doors, people who actually give a shit can't make sure that the publisher isn't trying to exploit the developer by exploiting loopholes in the contract.

Since most studios can only afford to work on one major project at a time, they need the milestone payments in order to stay afloat. However, if the publisher wants to intentionally bankrupt the developer so that they can purchase their IPs and employee contracts (hostile acquisition), then the publisher just has to ride it out and see who runs out of money first. Since the publisher is almost always wealthier, they just have to play a waiting game and arbitrarily fail the milestones.

> Yeah, you set up a quality assurance pipeline but we don't think it's good enough. No, we don't have to explain why. You think anyone out there's going to look through this contract?

> Yeah, you exited pre-production, but we still count those 10 meetings you did afterwards as part of it. Actually, you deserve less money than we gave. Maybe you should be happy that we're just withholding payment and not suing you.

> You call this a vertical slice? We didn't finish focus testing yet! We still might want more features! Oh, we didn't tell you? That's not our problem.

Once the developer gets desperate enough and they almost reach bankruptcy, the publisher is in a good position to force a buy-out. Since whether or not they did anything legally wrong is really, really complicated and the developer no longer has any money to hire a legal team that can rival a publisher's, most of these end in hostile acquisitions.

The bigger problem here is that you could have very easily achieved the same result by suing Human Head for "not fulfilling the terms of their contract" (and not have to pay a single cent more), but Bethesda never pursued that because they'd have no legal case. If this was presented before an external court that doesn't care about video games, they'd see that Human Head adequately fulfilled all the portions of their contract.

A lawsuit would have been literally cheaper if that was the case. If Bethesda didn't have a documented history of abusing companies in such a way, its people would be granted the same latitude.

BETHESDA OWNS PREY. Human Head fails to complete the project, you take what they've got so far and dump it in some other studio's lap to finish.

The reason you break contract with Human Head is you feel like you're throwing good money after bad; if I pay you, you still won't finish this project, so I'll stop paying you and pay someone else to finish it instead.

Again, your assessment would be a fair evaluation if:

a) Bethesda/Zenimax didn't try to acquire the company at the same time it was denying it payment.

b) Bethesda/Zenimax didn't have a recorded history of acquiring companies that way.

With those two elements, that behavior from the company becomes terribly suspicious at best.
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