IndustryGamers - Informing the Games Industry

Modern Warfare 2 Royalties Not Paid to Infinity Ward?

Posted March 2, 2010 by James Brightman

Update 2: The folks at G4tv who have been closely monitoring the Infinity Ward situation have discovered that Activision Blizzard boss Bobby Kotick (not to be confused with Darth Vader) will be meeting with Infinity Ward today to discuss the studio's future and the apparent departure of studio heads Vince Zampella and Jason West.

Update: The folks at Joystiq spoke to two of our favorite game analysts: Wedbush Morgan's Michael Pachter and EEDAR's Jesse Divnich. Both seemed to agree that unpaid royalties are more like unpaid bonuses, and it's not that surprising. 

"I couldn't speak to what the royalty agreement between Activision and Infinity Ward is. If royalties haven't been paid out yet, I wouldn't consider that too alarming. The game has only been out for a little over 90 days. Additionally, it is common to see royalty agreements based upon factors such as hitting release date, review scores (a.k.a. 'Metacritic Clauses') or revenue milestones. I think if you just replace the word 'royalties' with 'bonus' it should make some more sense," noted Divnich.

Pachter added, "I don't know the nature of [Infinity Ward's] contract, but my bonus is paid after year-end (in February), and theirs is likely the same. The idea that they haven't been paid 'yet' is not all that surprising. The year just closed, and the final SEC documents were filed yesterday. IW sold itself to Activision back in 2004, Activision owns the [Call of Duty] IP, and the guys leaving were employees under some kind of contract. Activision appears to believe that they have breached this contract, and may or may not be justified in withholding bonuses."

Original story:

Call of Duty: Modern Warfare 2 set the industry on fire when it launched last fall, setting a new entertainment record. The game went on to become 2009's biggest global seller and it eclipsed an incredible $1 billion in sales. Interestingly, following up on the disruption at Infinity Ward today, Binge Gamer has learned from numerous sources that the developer has yet to be paid any royalties for the blockbuster game that has made publisher Activision Blizzard so stinking rich.

"To clarify, everyone who spoke with me mentioned this. Whether or not IW and Activision had an agreement in place for royalty payments is unknown at this time. It’s just curious that everyone brought this up," stated reporter James Walker.

The article also says that Infinity Ward may have been looking to secure a deal with another "rival publisher," even though Activision purchased the studio back in 2003. Although Electronic Arts would be the first to come to mind, sources indicated that it wasn't EA. Either way, if talks with another publisher did occur, we can see why Activision would be citing a "breach of contract."

We have a feeling this is only going to get much uglier before it's all settled.

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.