Flagship Studios Closed – Rumors of Buyout Abound Along with Denials

Looks like all the hoopla surrounding Guy Somberg’s blog post about trouble brewing at Flagship Studios was not so far off after all, despite denials to the contrary and allegations of media sensationalism.

Reports started surfacing yesterday about lay-offs at Flagship Studios, and Flagships’s Community Manager, Taylor Balbi, has revealed that all Ping0 and Flagship Studios staff have been given pink slips after having been notified that on Saturday (today) the offices will officially close down.

Now, here comes the rumors and denials part. Korean distributor HanbitSoft, has released a statement regarding intellectual property control:

“It is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open.”

HanbitSoft hopes to independently continue development of Mythos, to which it owns the rights due to a loan agreement with Flagship, and Comerica owns the Hellgate: London rights through a similar loan agreement, and plans to continue Asian development of the MMO through HanbitSoft.

Rumors regarding selling the rights to Mythos and Hellgate: London to EA (the American publisher) or other houses are spinning the net, but HanbitSoft has made a move that has the former Flagship head-honchos up in arms.

Over on Gamasutra they are reporting that the fan site Hellgate Guru has translated a Korean news report stating that HanbitSoft, “…is taking full control over the Hellgate: London intellectual property from Flagship Studios,” and that they will not only continue to publish the game in the region, but will also use in-house staff to continue with the development.

Thus, Flagship has responded, calling the HanbitSoft’s comments in the Korean news report an “outright lie” and have asked legal counsel to pursue the matter. Flagship also went on to state that any attempt to take over the IP will be met with a “strong and swift response.”

“This story is an outright lie. 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.”

Now, with the lawyers stepping in on all sides, HanbitSoft’s US lawyers have issued a statement:

“(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.”]

To add even more fuel to the fire brewing in the Flagship corners of Seattle and San Fransisco, an unidentified source had told Kotaku that developers for both Hellgate and Mythos have a “hope that they will all have their jobs back at the end of next week at a brand new company.”

That statement (if true) could mean that Flagship has indeed been bought out by another company – or it is just a a former employee hoping and praying that they get their job back someway, somehow. We are not sure what is exactly going on at this point, other than the death of Flagship Studios as we knew it. It is the weekend, and I am sure more information regarding what really happened will surface sometime Monday when all the news outlets and offices are back in business after the two day break.

For more information on all of this, you can hit all of the following links below.

Via: Gamasutra, VoodooExtreme, Kotaku, Evil Avatar

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5 Comments on Flagship Studios Closed – Rumors of Buyout Abound Along with Denials


On July 12, 2008 at 12:23 pm

Not suprised… Hellgate london was hands down the biggest disapointment I have ever had with a video game.


On July 12, 2008 at 5:54 pm

Where did you get your information about pink slips being handed out? Let’s see some links. I just logged off the HG:L servers after playing for a couple of hours. I seriously doubt that FSS would close up shop…and keep the game running, lol.

Shawn Sines

On July 12, 2008 at 8:18 pm

@Bainek: Here is one link: http://ve3d.ign.com/articles/news/39866/Flagship-Studios-Closure-Confirmed-All-Staff-Fired-All-I-P-Lost

There had not been an official response from Flagship. I know Hellgate is up and running.. I was playing today as well (I’m a founder.. and hope it doesn’t go away) however Mythos was not running when I last checked..


On July 13, 2008 at 8:49 am

Looks like possible dark days ahead for Hellgate: London players. Though nothing is certain until the official word and IP ownership is decided if a legal battle ends up coming into play.



On July 13, 2008 at 12:53 pm

I just reinstalled and checked Mythos, the Mythos Test Center was up and running. I tried the Mythos Beta server and started downloading a patch, but stopped it because I didn’t want to wait. So after ‘closing down’, their released game and beta game are still playable…

Yesterday on the HG:L forums, Taylor Balbi discredited the VE3D comment they said he made. That Andrew Bursn sounds like a he has it out for FSS and HG:L, I wouldn’t take what he says for truth. You can tell he has a personal dislike for FSS and HG:L.

No idea what is going on, I really wish FSS would release a statement. Monday they are supposed to, but it sucks to make us wait, lol. I’m a founder myself, BTW, and really enjoy playing HG:L.