Gaming companies in turmoil/going kaput etc

[WTF]

I figured it might not be a bad idea to have a catch-all thread for all the negative crap surrounding games companies with uncertain futures instead of smaller threads. And since we do have a company filing for bankruptcy this probably a good starter.

 

I know we have a studio deaths thread but that's when studios die. This is probably best for stories that are uncertain for a fair while - I mean we had THQ's long protracted death and this isn't going to be an uncommon trend.

 

So let's begin with the flavour of the day.

 

Index corporation - the shady company that bought Atlus Co ltd which is now defunct and only serves as a brand under Index.

What's been happening? For the past month or two Index has been under investigation for cooking up their books, hiding bad debt and well basically the management profiting while the company was going down the drain. They'd been delisted from the stock exchange back in May I believe pending investigation.

Right now they're filing for what's essentially equivalent to Chapter 11 bankruptcy proceedings in the US. They owe their creditors a lot of money and as such are now trying to find a buyer for Atlus or get Atlus to be spun-off into a different company with the aid of some bankrollers.

 

Of course this brings up a very interesting set of issues. People only look at the gaming side and say yes Nintendo should buy them or Sony should buy them for whatever platform loyalty they have but it's a crazy can of worms involving several rights issues, overlapping content from a few different IPs and so on.

So where do we stand.

Atlus is the only really profitable wing of Index i.e. their gaming division. Atlus USA is a very good publishing arm that publishes several games such as Rock of Ages, Demon's Souls, Daylight and so on.

Relationship with Nintendo: They were approached by Nintendo to co- develop a Fire Emblem game which became FE vs SMT. Intelligent Systems is working with them on this one. A lot of their SMT output the last gen has been on Nintendo consoles. As well as Trauma Centre, EO and such. However these while very profitable aren't something to write home about and definitely not really worth purchasing the company over. However the Persona games aren't on Nintendo systems because there's some interesting issues there.

Relationship with Sony: It's been a while since SMT games have come out on Sony platforms and this is because Atlus does like to work on older assets and the DS and 3DS really helps them out with this. They can hide the nature of the assets under good art. They have however consistently released Persona games on Sony consoles. They aren't exclusive but it makes sense for them to work with Sony on this. Sony Entertainment markets all Persona content in Japan - collectibles, Music, Animation, concerts - everything. While Persona isn't exclusive it works out best for them to release the titles on a Sony platform because the content ip outside of games is licensed (and some of it is even owned if memory serves me right) by SME.

Not even entertaining MS since they're not focussed on working with niche developers in Japan right now. let's put it this way. Owning exclusive rights to Persona or SMT will not move Xbone units in Japan and they'd prefer that. This isn't like D4 or other titles.

A first party purchase by either group is a pain because if Sony were to purchase it they'd probably have to pay Nintendo for whatever development expenses were lost in the transfer for FE vs SMT and I doubt Nintendo would just want to give in that easily and Nintendo would really not want to have deal with other Persona rights not being in their hands if they bought the whole company. They would both prefer if a third party bought them. However that said it isn't out of their realm to own shares in the company so that the Atlus brand works independantly and still churns out exclusives to both of them but that would be really weird for both of them to invest (So it's going to be one or the other here). Not to mention neither of them would have much use for Atlus USA since it's purely a publishing wing.

 

NBGI is another good possibility but then Bandai would like to own the entertainment rights to the SMT and Persona. That said there are plenty of Bandai owned IPs that have exclusivitiy to Sony platforms (or at least in the past) and they can work out some deal there. NBGI has a good portfolio with Bandai but Namco's portfolio is sort of narrowing.

Gung-Ho has a lot of money from Puzzle and Dragons and has been acquiring companies like Grasshopper Manufacture and such. They do not have a distribution wing in the states and they could keep portions of Atlus USA for that while getting rid of the rest.

Marvelous AQL is an interesting option because of their Hydra like nature. Plus it would bring Atlus and XSEED together which would be odd and entertaining.

NIS/NISA is too small to go through with this though they could benefit from this as well.

Tecmo-Koei is the other alternative.

I doubt SE/Capcom/Sega really want to do this right now. Sega is diversifying away from the console business and doesn't really want to invest too much into the handheld space. SE is focussing on iOS. Capcom could but I doubt they'd want to since they have a decent portfolio. Konami wouldn't be interested as they too want to keep a narrow games portfolio while focussing on their resort business.

That leaves us with the western pubs and devs. Of all of them, the most likely would be Koch Media in my view since they tend to buy smaller devs and this would be a good addition to their portfolio along with Volition and Techland.

Doubt if the others really want to purchase Atlus but we'll see.

[UnstableArk]

Quite an in-depth look, and something of concern. I agree with you in that being purchased by a third party will be more beneficial and less painful for everyone involved and wouldn't have to sacrifice platform exclusive projects. It'd be a damn shame if Persona 5 was a PS3 exclusive and then bought by Nintendo before completion.

 

Though, one question on my mind is what if there isn't a buyer? Will Atlus just dissolve and sell its assets? I'm unfamiliar with business law, so all you smart guys, give me a hand here.

[WTF]

Worst case scenario. All the staff of Atlus quits and forms spinoff companies. The ips are the only thing of worth with Atlus Japan and they get sold off to the highest bidders, which would also include resale rights of legacy titles (There would be a lot of interest in this as selling legacy titles is an easy thing and many have been ported already or their engines are viable for a quick port). Atlus USA would essentially be fucked. It's a huge distribution wing so unless some company is interested in continuing that they'd suffer the worst fate and unlike Japan they aren't developers to make spin-off studios.

However, and this is a big if, the current CEO of XSEED was the former CEO of Atlus USA and I can see them trying to take on some of the distribution wing if Marvelous AQL wants them to. They would take the translation staff for sure since XSEED is quite in need of more there.

 

I do think that Index was ready to split SMT and Persona already. A lot of the monsters/demons of SMT4 were redesigned and there's a much smaller overlap right now between SMT4 canon demons and the original SMT universe. I'm betting Persona 5 will also have redesigned monsters. I think Index knew where it was going when they were doing this. Not to mention a lot of staff from Atlus USA who'd been there for years like Aram Jabbari left. I think it's the same with Atlus Japan, some staff have been quiet for far too long.

I think they are probably trying to sell SMT to Nintendo and Persona to Sony as a split sale might bring them more money. However it's not ideal for the fans.

 

One thing is certain, the IPs under the Atlus brand will find a buyer. It is profitable. It's like we were certain Volition would find a buyer. I just hope it's all under one company and not too complicated.

[Mister Jack]

I feel like even with the rights issues that would have to be worked out, it would be in Sony's long term benefit to own Atlus.  Purely from a business perspective, if Demon's/Dark Souls became a Playstation exclusive franchise again, that would be a huge deal, let alone SMT and Persona.  It would suck for people who own Xboxes, but it would be good for Sony.  Do I think they'll do it?  Probably not.  I think the most likely scenario is what THQ did: selling off individual IPs to various companies.  In that case I would definitely expect Sony to buy Persona, I would not be surprised if Nintendo bought SMT, and Dark Souls would probably go to a third party like Ubi or Activision or something.

[FMW]

Atlus/Index doesn't have anything to do with the 'Souls' franchise anymore.  Atlus handled international distribution of Demon's Souls.  That's it.  The developer (From Software) is totally independent and both Dark Souls and Dark Souls II are published domestically and internationally by Namco Bandai.  The property is simply not for sale in any of these hypothetical transactions, Index has nothing to do with it.

 

SMT encompasses an awful lot of product.  Yeah you have SMT 1-4, but where do all the other sub-franchises land if there's a Persona/SMT split?  What happens to Devil Survivor, Devil Summoner, the SMT MMO, etc?  Are those all separate sales?  In Japan Persona is sold without the SMT title attached, but all these others are.  Does that make them part of the SMT pickup?

 

If the IP are sold to separate bidders, does that mean that those buyers would need to put together entirely separate transactions to try and secure any of the in development assets or human talent associated?  Or would IP be sold off as a bundle package along with the titles partially completed within them and the studios developing them?

 

Another detail maybe worth noting:  Nintendo are helping out with international distribution of SMT IV, and are doing the Korean localization themselves.  Between that, the large number of platform exclusives and the SMT X Fire Emblem co-development project, those two company's seem like they're in it deep right now.

Edited June 27, 2013 by Frosted Mini-Wheats

[WTF]

Demon's souls is an exclusive franchise. Dark Souls isn't. NBGI as frosted noted has international distribution rights for all future Dark Souls games. Atlus USA has distribution rights for Demon's souls alone and that too only in the US. We will see Demon's souls 2 but that's not something anyone's allowed to divulge as yet. I can't confirm if Miyazaki (director of Demon's Souls and Dark Souls (1 but not 2)) is working on it or not.

 

Actually all SMT titles carry the prefex Shin Megami Tensei. Soul Hackers, Devil survivor, DDS, Raidou Kuzanoha, vanilla SMT are all part of SMT.(they clearly possess the SMT branding even on the boxart) Persona is persona. The split is very clear and simple. All Persona titles are a spin-off and all the rest are SMT titles with the exception of Catherine which is a spinoff of Persona but is treated as a standalone product.

The division is clear there. Etrian Odyssey, Trauma Center and other weird little games like Princess Crown etc are the ones they'll try to offload in strange ways.

 

Okay now as for the IPs. No they will not sell each IP to separate bidders but rather club the SMT titles together, the Persona titles together and then comes the miscellaneous.

 

Nintendo are only helping out with the publishing and marketing of SMT 4 in Asia and Europe. Nintendo prefers to publish most titles on their own in Europe even it's from other devs who have publishers. Monster Hunter was published by Nintendo here in Europe. A bunch of Sega games and as always Level 5 games and even other Capcpom (yeah I like that typo XD) games were published by Nintendo. This isn't to do with helping the developer but rather a long term strategy wherein they know that if they published it in a region they can make sure they can rerelease the title within said region. If Atlus were that close to Nintendo they wouldn't have let NISA publish Soul Hackers in Europe. Nintendo chooses titles on a case by case basis and it's not a lot to do with the developers as much as it is to do with the product. SMT vs FE came about only because Nintendo wanted Atlus to work on a Fire Emblem game for them and Atlus asked if they could attach the SMT branding. It's co-developed. Nintendo isn't going to fund Atlus just because of that. They might become a 33% shareholder in an independent Atlus so that they would make exclusive games for them and also retain their autonomous state. But if that's the case Sony might try for that as well. Neither party wants to be involved entirely. Though there must be some rumblings on both sides if yosp made that morale support tweet.

 

Also Nintendo did not have the publishing rights for Devil Survivor in Europe. Here's a funny thing. Devil Survivor 2 the animation is actually licensed primarily by Sony Entertainment. I think music is also published by Sony Music. Both Sony and Nintendo are invested in Atlus and neither wants to buy them out because it's a complicated web. Sony has more reason to buy than Nintendo because the merchandise, music, animation and other things from Persona are actually fairly profitable for Sony (not Index!). Gameswise it is an even split. Mindsharewise SMT fans have no allegiance they bought them on whatever platform they came out on. Persona fans are affiliated to Sony which is why P4G had a ridiculous attach rate on the Vita which probably helped it in a way to go past the 360's LTD in Japan (that's not an achievement but it does show how abysmal the 360 is there and why MS will not be investing heavily there - I mean the Vita, a floundering handheld, that's been out for 16 months beat the 360's LTD).

[Waldorf and Statler]

Like I said in the status update, as long as they remain third party and the teams making SMT/Persona aren't reworked too much I'm cool with it.

[FMW]

Maybe we could be optimistic?  Maybe somebody will buy Atlus and review all their IP and say "This Persona and SMT and Etrian Odyssey stuff that's your bread and butter is good but... I just feel like there should be more TRAUMA CENTER in there.  Could you guys put a team together for that?"

 

It would take a phenomenally stupid buyer to make that call, since Trauma Team proved that even if a game in this franchise is profoundly excellent, the market just isn't there... but such buyers do exist.

 

COME ON SQUARE ENIX!  YOU KNOW YOU WANT THEM!

Edited June 27, 2013 by Frosted Mini-Wheats

[WTF]

No. I'd rather not let Toriyama and co have their hands on SMT/Persona. We can have some atrociously crap games that are very pretty but not much substance.

 

edited: Yes I want to be optimistic! I just don't want Square Enix to handle them considering where Square Enix holdings is right now.

Edited June 28, 2013 by WTF

[FMW]

Oh yes, I entirely agree with you.  Square Enix would do horrible horrible things to Atlus' RPG franchises.  Indeed, the two approaches to JRPG design are nearly antithetical.  They're just the only publisher I can think of who would maybe decide that Trauma Center is an IP worth investing another big game into.  I mean, Square Enix are making another DRAKENGAURD game for god's sake.

[WTF]

That's why I'm saying Gung Ho. Ragnarok isn't such a massive IP but they pushed investment into it (through acquire) and we all know that Grasshopper Manufacture's IPs are niche. They have money and are looking to expand. i feel like if they bought Atlus they'd just let them do their own thing. That's what they're doing with Grasshopper Manufacture so we just need a company like that.

 

Worse than SE would be Image Epoch, Compa and Idea Factory... then again they aren't rolling in the dough.

 

Another company that's sort of in trouble is Cave.

[Mister Jack]

I think I remember reading that cave intends to focus on mobile games from now on because they've been more profitable.

[WTF]

Not quite. I can't remember it exactly but they are downsizing a lot. I should look that up and post more. It was pretty much going to be a reduction in game development and more rereleases of old titles. A slow death.