SK hit with layoffs, rumored to be because Nintendo cancels Eternal Darkness 2.

[Xenon]

I already expected this to happen. So where to start?

Last year, Silicon Knights and Nintendo started to work together once again on a new title. Based on the fact that they already had Wii U dev kits and also based on Dyack's comments, it was Eternal Darkness 2.

With Nintendo being a major owner of Silicon Knights, they were pretty much the studio's last saviour. After the commercial and critical failure of Too Human, just as well as long delays of both Too Human and The Ritualist (Sega, later THQ), Silicon Knights was pretty much avoided by 3rd parties. While they still got a contract for X-Men Destiny, the title received miserable reviews. All of this led to a series of layoffs, going from 150 employees in 2007 to only 40 in 2012.

Of course, the Epic trial was not much of a help either. While SK already had a buckload of debt (e.g., a loan which needs to be paid back next year to the government (?)), 3rd party publishers feared that if SK lost the trial, SK would close shops and the game would end up unfinished.

So as already mentioned, the studio was solely dependent on Nintendo's goodwill since late November 2011. But then the trial against Epic took place last week, and SK lost it. SK was ordered to pay 4.5 mio USD to Epic, and additionally they may need to pay for Epic's legal fees (any idea about that amount? Should it be above one million?). The company's debt rose to a new level.

That's apparently when Nintendo noticed that things may not look as shiny anymore. I do not know what the budget for a mid-tier HD game like Eternal Darkness 2 would have been, perhaps 40, perhaps 50 millions USD? When Nintendo saw that they would need to pay an additional 10 million USD to have the company survive that develops the game, they didn't seem to like it, especially as they wouldn't get anything in return. This has happened in the past too, do you remember Factor 5?

So it looks like there have been internal discussions between Nintendo and Silicon Knights. NCL reviewed its decision and it appears as if Eternal Darkness 2 is cancelled for now. Hence, many of the 40-man team were laid off, leaving the studio in limbo now.

Obviously, Dyack anticipated what was to come. He did not comment on the outcome of the trial except for saying that they will appeal - that appears to be a last attempt to save the studio now; they've got nothing to lose anymore.

Good luck to all employees who lost their job!

IF this is true, my sympathies go out to all the Silicon Knight employees. Truly a sad day.

[lordhering]

Once the appeal is heard and finalized we will probably get a simple statement from SK and Denis regarding the entire situation. It doesn't look good but hopefully SK can be reborn as Tempered Knights or something weird.

The big issue is if SK goes under, who will purchase the IP's. Worst case scenario is EPIC getting TH and just sitting on it :-(.

[RAziel1979]

So what happened with them becoming self sustainable and being able to publish their own game(s)??
What makes this whole thing worse is that we have no clue if this is true or not because we can't get a single person from SK to talk to us or anyone else.

If this is true, then the only option is to make smaller games, right?

Damn this is ruining my evening.

[Sevens]

So what happened with them becoming self sustainable and being able to publish their own game(s)??
What makes this whole thing worse is that we have no clue if this is true or not because we can't get a single person from SK to talk to us or anyone else.

The ones who actually have a hard time are the members of Silicon Knights and their families. Our lack of information entirely pales in comparison and is of little significance.

If there is indeed such a connection with Nintendo then I hope they don't decide merely based on profit expectations.

[EasyLay]

Damn, not looking good. It sounds like SK are in their death throes now ... hope the company manages to survive ;(

[Guirec730]

Eternal Darkness on Wii U could be HUGE for driving system sales for hardcore gamers. Nintendo is foolish if they don't realize that, but it doesn't make a lot of sense for them to try to keep SK solvent to do it if that is all true.

What makes more sense is selling the IP to one of their second parties, like the folks who made Metroid Prime.

Regardless, good luck to those few who remained at SK. Better times must come.

[lordhering]

update...small amount

http://i.joystiq.com/2012/06/11/sili...it-to-epic-ga/

[RAziel1979]

http://www.gamesindustry.biz/article...-basis-in-fact

Those damn rumors!
Thanks DD for clearing that out for us.

[Zukan]

yeah so some nobody at neogaf gets away with generating rumors without citing any sources whatsoever, video game journalism picks it up as a hot and news worthy article and spreads BS around the net. Nothing new there...

[EasyLay]

http://www.gamesindustry.biz/article...-basis-in-fact

Those damn rumors!
Thanks DD for clearing that out for us.

good news at last

The media should really be sure before posting things like this. There was a rumour recently about SEGA closing it's European division which was just another scare story with nothing behind it

[Maawdawg]

It isn't really good news, they are still laying people off and just because he says Nintendo cancelling has no basis in fact could just as easily mean they weren't working together in the first place as they are still working together. At least DD came out and said something finally, still far too vague for my liking but it is better than nothing.

[Guirec730]

It isn't really good news, they are still laying people off and just because he says Nintendo cancelling has no basis in fact could just as easily mean they weren't working together in the first place

This is exactly what I was thinking.

[Ozymandias]

Well, it's a fact that Julian Spillane was laid off. He's a Project Director. And he says a bunch of other people were laid off with him. I'm guessing his team? Not exactly a "small number."

However, maybe he and his team were working on a smaller project and not ED2. So there's still a chance...

[daniel ampudia]

I really doubt he was working on something small. I also don't think SK has more than one project in development right now... which makes me think: now what?