Our favourite analyst, Wedbush Morgan’s Michael Pachter, has previously said “that the video game software sector remains highly recession-resistant”.  We have seen a lot of development studios and publishers closing their doors over the last eight months who might beg to differ.  From Free Radical last December to the latest, Blue Omega Entertainment’s development team, at the end of last week.  Last Tuesday one of their programmers, Geoff Rowland, posted this on Twitter:

The entire Blue Omega team was laid off today (well, starting Friday). If anyone has job openings, send them my way and I’ll pass them on.

We have all been having a tough time this past year.  It is one of those unfortunate times where we are all likely to either know someone who has lost their job or have perhaps ourselves been made redundant so we have a lot of sympathy for the Blue Omega team and wish them all the very best of luck in finding employment elsewhere soon.  In what is perhaps a sad reminder of how quickly fortunes can change in this modern age BOE’s website still lists job vacancies within its games development team.

Why start the article with a Pachter-ism?  It is because of some things he said during one particularly black week in January.  That week there was news of Microsoft’s Entertainment & Devices Group suffering the bulk of an immediate 1,400 MS job losses, Sony announced a “headcount reduction and other restructuring measures” that would hit its Game businesses, Eidos closed its Rockpool Games Studio in Manchester and EA Canada laid off more than half of the staff from Black Box, the day after the studio launched their latest game, Skate 2.

Pachter said at the time that “a recession is about the impact on sales, and layoffs are a function of profitability”.  Common sense, no?  If you do not make sales you cannot generate profits so how do you pay the bills?  With modern games taking years and tens of millions of pounds to develop can you afford even one to fail?  In the current economic climate it would seem not.  Going back to Free Radical, for example, it appears to the outside world that it was simply the failure of Haze that tipped them into their death spiral.

Now the poorly received Damnation seems to have done the same to Blue Omega even though it had only been out a month and a day when they were laid off.  It is hard to know just how badly Damnation has sold at retail but vgchartz.com puts its first month sales at only 20,000 copies.  Compare that sales figure to another recent game that is considered to have failed at retail, Sega’s MadWorld.  That sold around 150,000 copies in its first month and has sold around 230,000 to date.

It seems it may not be as simple a story as “developer makes poor game that does not sell so cannot pay the bills” in this case though.  Shacknews have done some digging and found some legal documents that suggest all was not well with Damnation’s development since at least the start of the year.  You can read more details there but here is a quick Damnation timeline:

• 2004 – The Damnation prototype, which is a mod for Unreal Tournament comes second in the Make Something Unreal competition.
• 2007 – Blue Omega hires two developers, Velvetelvis Studios and Point of View, to do contract work on Damnation.
• January 14, 2009 – Codemasters send Blue Omega a letter terminating the Development Agreement.
• January 20, 2009 – Blue Omega file a lawsuit against Codemasters and ask to be awarded damages.
• February 25, 2009 – Blue Omega alleges that Velvetelvis’ “unacceptable,” “unfinished” and “untimely” work caused Blue Omega to miss its own deadlines with Codemasters.
• May 22, 2009 – Damnation released.

So if what Shacknews is reporting is true, it looks like things got pretty ugly in the new year.  In our own review of Damnation we found many faults that you might expect to see in an early, unfinished, build of a game; pop-ups, simple textures, AI seeming unaware of its surroundings, etc.  Perhaps it really was a game in need of another six months of work that just got pushed out of the door before it was ready.

If so it is a shame as, to draw another parallel with Haze, it was a game which showed some promise in the early material we read and saw.  Steampunk cowboys with big guns who ride motorbikes that can drive up walls.  What’s not to like?

Whatever the reasons for the game’s failure we should not lose sight of the fact the a group of people who were all individually doing the best they could have just lost their jobs.  Good luck guys.