Infinity Ward vs. Activision: Facts and Commentary

As many of you know, there has been a bit of a debacle between the head honchos of Infinity Ward, Jason West and Vince Zampella, and Activision. Long story short, Infinity Ward is suing Activision for the hefty sum of $36 million in damages for unpaid royalties. The cause of the problem, on paper, is West and Zampella were "insubordinate" and breached their contract with Activision.

How did the former heads of Infinity Ward breach their contract? Unfortunately, but understandably, the contracts in question were not attached to the Complaint and are unlikely to be released to the public. However, West/Zampella refer to a series of contracts between themselves and Activision in the Complaint. Keep in mind that the terms of these alleged contracts were not between Activision and Infinity Ward, which was a wholly-owned subsidiary of Activision, and that the Complaint sets forth merely allegations and not actual evidence.

The first employment contract was for a three-year term, which began in 2003 after Activision purchased Infinity Ward. This initial contract gave Activision the option to extend it for two more one-year successive terms and Activision picked up this option. By doing so, West/Zampella were still under contract through October 2008. After the successful release of Call of Duty: Modern Warfare in 2007, Activision allegedly wanted to extend the contracts of West/Zampella in order to create a sequel. Factually, that's where things began to get murky.

Apparently, West/Zampella did not wish to extend their employment contracts with Activision, but ultimately did so based on a Memorandum of Understanding between the parties dated March 31, 2008. Because this document was not attached to the Complaint, it is unclear as to whether it incorporated the terms of the previous contract in 2003 (most likely) or whether it was an actual contract at all. As alleged, this Memorandum extended West/Zampella's employment until October 2011, but Infinity Ward was required to produce Modern Warfare's sequel by November 15, 2009. In return, West/Zampella would receive complete control over the Modern Warfare brand (post Vietnam-era forward) and Infinity Ward, would receive royalties and other forms of compensation in addition to their original contract, and would be allowed to develop new intellectual property at Infinity Ward.

So what went wrong? Well, we all know that Modern Warfare 2 was released prior to the alleged deadline in the Memorandum of Understanding (November 10, 2009, to be specific), so West/Zampella held up their end of the bargain on that issue, if true. And generally speaking, if West/Zampella had violated their contract at some point prior to the release of Modern Warfare 2 and Activision took no action, Activision would have likely waived its right to terminate on those grounds. However, such conduct could have affected the enforceability of the Memorandum of Understanding...provided it was enforceable in the first place. Without access to the actual employment contracts, we can only speculate.

From an internal memo disclosing Activision's intent to search for documentation from Infinity Ward, Electronic Arts was the only company specifically listed, triggering speculation that West/Zampella were looking to bring their expertise to a competitor in some capacity. If such evidence exists, one would think that it would support Activision's position, but again, without the employment contracts, we would be speculating. However, the employment contracts must have contained a "trade secret" clause of some kind and more than likely also contained a "covenant not to compete" clause. As such, improper contact with a competitor would be a breach of contract and a terminable offense.

Notwithstanding this, what we do know is that Activision loves Call of Duty, and has released one title annually. According to a source for Kotaku, Infinity Ward is not a company dedicated to one game per year, but rather it works on a game for a two-year cycle before releasing it. On its face, this schedule hurts Activision's bottom-line since the titles are sales monsters.

We also know, based upon their own words in the Complaint, that West/Zampella did not want the Call of Duty franchise to become watered-down and did not want Infinity Ward to focus all of its energies on future installments. For that reason, West/Zampella likely expressed an interest in creating a new intellectual property at or near the completion of Modern Warfare 2 and this probably went over like a lead balloon with Activision.

Coincidentally, as of the contract termination and firing of West/Zampella, Activision quickly tapped the newly formed studio, Sledgehammer Games, headed up by the creators behind Dead Space, to create the latest Call of Duty title with a target release date of 2011. Activision was clearly not caught flat-footed in this dispute, which tends to support the notion that it had a plan in place. Either that, or the company is excellent at damage control.

Sadly, the lawsuit's consequences may not be limited to just the two companies. While the demand for $36 million clearly is the big headline, West/Zampella have also filed a count for Declaratory Relief stating that they are entitled to control over the Modern Warfare brand. Their lawyers' next step will probably be a motion for temporary/permanent injunction, which could halt development on all Modern Warfare-related titles. Unless there is a quick settlement regarding this issue, an injunction could be put in place for months.

Unclear in all this is whether the upcoming Map Pack, which was already in the works prior to the firings, is in jeopardy. West/Zampella may have already signed off on this content prior to their dismissals, but if not, an injunction would prevent Activision from releasing any "Call of Duty game set in the post-Vietnam era, the near future or the distant future... without the written consent of Jason West and Vince Zampella." It is unknown whether a "map pack" is considered a "game" as defined in the contract. If the dispute does prevent Activision and Infinity Ward from releasing the "map pack," Microsoft may have a cause of action for a breach of contract, since the first map pack was scheduled for a timed-exclusive release on Xbox 360. That is, if the contract between Xbox and Activision does not contain an exception for non-performance that would apply to this scenario.

Activision has yet to answer West/Zampella's complaint. It should make for very interesting reading and keep on the lookout for possible counter-claims against Infinity Ward's former heads. The counter-claims will likely set out the specific reasoning for Activision's actions to date.

While all of the above may be interesting to the game industry or those who like Court TV, what does this mean for gamers and Infinity Ward going forward? Infinity Ward's community manager, Robert Bowling (aka fourzerotwo) has left the company. Part of the success of Modern Warfare 2 was Infinity Ward's ability to maintain the game with new patches that affected gameplay exploits and cheating. Bowling's role as a go-between the gaming community and the company has been invaluable to that end.  With his departure, I fear the company may end up becoming a shadow of its former self.

Obviously, both companies and gamers alike would like to avoid such problems and for this to conclude happily. Is this just merely a case of Activision yanking the rug out from West/Zampella because they couldn't meet Activision's desires? From an outsider's standpoint, if a company fires the CEOs of a company who made a game that sold $1 billion of product (and don't forget those night vision goggles!), that seems like a very bad move.

Creative control of a game is one of the most important parts of a video game. Do I think it should remain in the hands on the developer? Absolutely; they're the ones making the game after all. I would rather play a game that brings a fresh and new experience to me other than a previous game with different skins, and I am willing to wait two years for that to happen. As the publisher, a list of possible inclusions isn't unreasonable, provided the development team are capable of meeting it. I understand that as a developer, a company must meet some requirements of the publisher, though it shouldn't be a back and forth power struggle. Technical abilities versus a list of do's is something that needs to be looked at by both publisher and developer alike, if that doesn't happen... Well, you can get situations like this.

It's my belief that people in the game creation business should be in to bring fun to people. Making money is nice, but if you're committed to making great products for people to enjoy, gamers pay for them. That's the the short story for Modern Warfare 1 and it's no different for Modern Warfare 2. Gamers paid for a great experience and that's what they were delivered. I don't feel Activision's actions here have little merit. If they want to make money, they can release another Guitar Hero, DJ Hero, or another sequel a franchise that's done well for them. I chide Activision's actions wholeheartedly and can only hope that West/Zampella find the restitution they very much deserve for creating one of most socially impacting entertainment juggernaut franchises ever in Modern Warfare.

Source: Kotaku, Joystiq, Daily Informer

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