The video game Borderlands 3 was an enormous gross sales success when it launched last autumn, according to its publisher, 2K, which described it as “a billion-dollar global brand.”
That’s why it was surprising to employees at Gearbox, the developer of the game, when the studio’s CEO, Randy Pitchford, told them yesterday that they might not receive the significant royalty bonuses they expected.
Employees at the studio will get small bonus cheques, but nothing close to the tens of 1000’s and even hundreds of 1000’s that many had expected.
This account is based on conversations with six people close to Gearbox, all talking anonymously because they weren’t authorised to talk about what happened.
Some said it was crushing news that has upended their financial plans for the future.
To make up for that, the studio provides something unique: profit-sharing. Royalties from the entire developer’s video games are split 60/40, with 60% going back into the company whereas 40% is distributed to employees within the form of quarterly bonuses.
This system has been in place since Gearbox’s inception, and when the company has massive hits, it may be lucrative.
Since then, however, Gearbox has been struggling, failing to find a lot financial success with flops like Aliens: Colonial Marines (2013) and Battleborn (2016). As a result, quarterly bonuses have been smaller in recent years. In 2020, that was supposed to change. The extra years they’d been with the corporate, the larger the check.
This vision of financial success helped Gearbox’s builders get by way of many long nights and weekends working on the game.
Then, in a meeting yesterday, Gearbox boss Randy Pitchford advised employees that Borderlands 3 bonus cheques would be significantly decrease than they hoped, according to three people who have been present.
He stated the game had been more expensive than expected, the company had grown significantly larger than it had been in the past, and that their gross sales projections had been off-base.
The game had sold very well – “We expect lifetime unit gross sales to be a report for the series,” said Strauss Zelnick, CEO of 2K parent firm Take-Two, on an earnings call in February – but it price method too much to make.
In addition, earlier than Gearbox may obtain any royalties from publisher 2K, Borderlands 3 must recoup not simply the game’s entire budget of around $95 million (£77 million) but also the budget for the entire downloadable content material, for a sum nearer to $140 million (£113 million), thanks to a contract that the 2 companies had signed.
Pitchford additionally advised Gearbox builders that in the event that they weren’t pleased with the royalty system, they have been welcome to stop, in keeping with those that have been within the assembly.
He didn’t attribute the diminished bonuses to the coronavirus pandemic, which has led to financial uncertainty and pay cuts in lots of different fields.
He did say that he hoped to get more cash to staff as an advance from 2K on future royalties.
Last year, former Gearbox lawyer Wade Callender became entangled in an ugly set of lawsuits with the studio.
He alleged that Pitchford had taken a $12 million (£9.7 million) bonus in 2016, when development began on Borderlands 3.