The staff from Flagship Studios has been severely cut, potentially due to the company's closure and the loss of the Hellgate franchise to its Korean publisher in a potentially lengthy legal battle.
A source close to the Hellgate: London development team gave Gamasutra word that large numbers of staff from Flagship and its online subsidiary Ping0 were recently released. For its part, Flagship did not give details as to the extent of the axing, but it did validate the rumors.
These personnel problems have reappeared a month after a frustrated staffer blogged about internal turbulence at the studio. Flagship was quick to respond, "Both our studios are currently fully staffed, with our San Francisco studio working on ongoing content for Hellgate: London.... All our Directors and Founders are still working at Flagship, and all of them are working on Hellgate: London or Mythos. The team size for Hellgate is as big now as when we shipped."
According to IGN's Voodoo Extreme, Flagship Community Manager Taylor Balbi revealed that the company will soon be shutting down. Three of the studio's executive were able to dip into their own pockets to pay another month's salary to all employees.
Korean games distributor and Hellgate half-owner HanbitSoft offered to invest in Flagship. Their American lawyers stated, "It is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open."
HanbitSoft claims to be the controller of the Hellgate and Mythos series. Using an in-house team, the Korean company expects to "properly manage and develop Hellgate: London into a good game with proper content."
Flagship refuted, "We have no idea where they are getting their information from and have asked legal counsel to pursue the issue. We are mystified by Hanbitsoft's conclusions and any attempt to take over the IP will be met with a strong and swift response. ... We are outraged that Hanbitsoft would attempt to completely tarnish the reputation of its most vital developer. Hanbitsoft's new management clearly does not understand the terms of its relationship with Flagship."
Legal representation for HanbitSoft sent a five-point explanation of its ownership over Hellgate:
Please understand that the facts are (1) HanbitSoft is an exclusive licensee of both Hellgate and Mythos in Asia, with rights to sublicense the games; (2) in addition, HanbitSoft is a secured creditor who has been pledged the Mythos (but not the Hellgate) intellectual property as collateral for a loan; (3) Comerica, another secured lender, has been pledged the Hellgate intellectual property as its collateral for a loan; (4) Flagship Studios does not currently own the intellectual properties to either game, which are held in separate companies subject to the security interests of lenders, and Flagship Studios' interest in those companies is also pledged to its lenders; (5) it is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open, but HanbitSoft hopes to work with Comerica and some of the team at Flagship to see if there is a way to continue to generate content to keep Hellgate online in Asia and to finish the development of Mythos.