Bethesda Softworks - Robbing Interplay Blind? @ Angry Gamers
 

This one is based on a strange premise in my opinion but Angry Gamers comes to the defence of Interplay, concluding the contract terms for Fallout Online are unfair and calling the process a "sleazy form of license acquisition":
Bethesda's parent company Zenimax, has reared its ugly head and turned Bethesda into an evil pawn in this sleazy form of license acquisition. These are the conditions set by Bethesda to allow Interplay to complete their MMO, you tell me if this seems fair:

• No single player or offline mode in any way.
• Must be for PC or Mac only, no ports to console whatesoever.
• Minimum of 10,000 monthly subscribers.
• Furthermore, Interplay must enter "full-scale" development of the MMO with a minimum of $30 million in funding by two years from the signing of the agreement, or it immediately forfeits its rights to the license.
• Interplay may not sublicense any part of MMO development without Bethesda's approval.
• The MMO "must meet or exceed such quality standards as may be set by Bethesda from time to time" in order for Interplay to remain in good standing, and Bethesda has the right to inspect Interplay's offices and development progress at any time during normal business hours provided two days' notice is given.
• The company must launch the game in North America and Europe within four years of that development commencement date, with the potential for a one-year extension if development is progressing adequately, giving the game a final release date limit of April 9, 2014
• In return for granting Interplay the MMO rights, Bethesda will receive royalties of 12% of sales, subscription fees, or other revenue generated by the game.

More information.

These Angry Gamer people are really naive. It's business. Nobody has to be nice and people don't expect to be treated nicely in business. That's why it's called business.

Since it's going to flop nobody is going to play Fallout Online it seems a little pointless to argue about.

It'll be interesting to learn what actually happened here. A lot of questions come to mind, including whether or not the terms of the agreement they reached ruined the deal so to speak.

The first thing I wonder is how Interplay got this deal in the first place. Obviously, Bethesda thought the rights had value. And it would have been cool for Interplay to have done it. But what was it that made them believe Interplay could really pull it off?

My guess is Interplay had verbal committments from a financial backer (or more than one) who, like Bethesda, was interested but also cautious. It could be that Bethesda outfoxed itself with the terms they were able to negotiate.

The first two bullets, especially the second, stand out hugely, I think. I suppose Bethesda didn't want the Fallout MMO to compete with their own single-player Fallout games. The other terms could be shrugged off, assuming everything went as planned, But those may have given the Interplay financial backer cold feet (just a guess).

The first point I've already commented on that "full scale development" is a vague point and could be interepreted as anything. The $30 million issue would be the obvious interpretation and I would guess then "full scale development" would be meaningless if that number could be shown on paper.

Its the second point that is really the clincher. This rider can and does supersede anything else written on the contract.

Angry Gamers doesn't seem to get some important things here: Interplay signed the agreement; they took the money.
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That's the kind of point that only serves to establish the spirit of a contract. It is strict, but it's vague and not something that would ever become an issue if Interplay made (or was making) a successful MMO.

How did they get the deal? I would guess it's simple. Remember, they owned the IP - but they needed the cash, so they offered the full sale conditional only on a license back for FOOL, because that was Caen's vision. Bethsoft figured they had little to lose with the right contract - and they were right.

I had forgotten, actually. So this deal was all part of the other deal, and that explains that (as far as Bethesda's part in it, anyway). That doesn't explain how Interplay thought it could pull it off or what went wrong, though.

It'll make for an interesting interview at some point down the road, I suppose.

at the time of this deal I was thinking that Interplay was betting that the Fallout name would be revived and they could leverage the name and somewhat of a financial turnaround into new investment.

Did they even think of selling the FOOL contract. I'm guessing not because they could have sold it to Bethsoft the first time.

It all seems fair to me. Part of protecting your IP is making sure that it only gets attached to products which are sufficiently financed and meet your standard of quality. In exchange, dev gets a critical boost in sales in a very rough market.

However, I'm not saying everyone involved isn't jerks.

I admit I have zero knowledge of business. But reading it sounds like a list made by Darth Vader. I only miss the "Imperial Troops" stationed at Interplay. ><

Most of the clauses are standard. Some of the vague clauses just look like eventual failsaves.

Heck, Bethesda hasn't even sued Interplay yet, instead trying to resolve the dispute they currently have about this deal (has Interplay fulfilled their obligations or not?) out of court.

It's a bad deal because Interplay had their backs against the wall. Angry Gamers is being pretty irrational about it, even seemingly not understanding that Interplay knew and accepted all these clauses, and had nothing forced on it.

Some of those terms definitely are heavy handed. It may seem surprising, but those kinds of terms may be perfectly appropriate and acceptible, depending on the nature of the business and the circumstances.

If your only chance at success is to step up and hit a home run, then what do you really care about all the other details? A proven home-run hitter may be in a position to get a sweet contract while others may need to apply their lips respectfully to somebody else's backside. Interplay wasn't a star and agreed to bank on its ability to hit a home run.

Unfortunately, it failed.

Yes and no. Yes Angry Gamers are overreacting. No it's not "standard", at least one of the clauses definitely isn't fair:
The MMO "must meet or exceed such quality standards as may be set by Bethesda from time to time" in order for Interplay to remain in good standing

"standards set by Bethesda" is a complete fog. It's anything Bethesda wants it to be. Using that clause they can basically end FOOL anytime they want without really needing to justify that decision.
It's as if I agree to let you use my bike if you give me $1000. The loan will last 5 years provided I think you ride it well enough. A week later I proclaim you're not good enough at it and rightfully take it back, and of course I get to keep the money too.

Is it legally valid? Probably. American law is known to give nigh absolute freedom to what contractors can agree on, and doesn't really care if one gets screwed so long as it's not a "consumer".
Should Herve Caen have signed that contract? Had I been his legal counselor, I would have advised him to give up any hopes of developing FOOL in exchange of more money for the Fallout franchise. Indeed given the forces en presence, negotiating more freedom to develop FOOL seemed unrealistic.

Not really. In fact, I'm pretty sure I've seen such clauses before, in contracts in which one party licenses out an IP it owns to another party.

Because that's what we're forgetting here: they're basically farming out an IP. Do you think BioWare licensed D&D or Star Wars without clauses of creative oversight and other safety clauses for those companies to ensure their quality standards are met? I doubt it. It's just protecting your own IP, which is what Bethesda is doing.

Interplay could have…

1. Not sold the IP
2. Found a different buyer with more favourable terms
3. A zillion other possibilities

They are a company with a demonstrated poor financial record and corporate governance who wanted once last attempt to waste massive amounts of investor money but found the terms of the deal difficult.

Tough.

They were the seller and they accepted the terms…how is that not fair?

I don't quite understand how Interplay could agree on these terms meanwhile they originally owned the IP ?

The list reads to me as if it had been vice versa …

That's not really relevant.

I don't understand your answer, because I don't understand what is irrelevant about this either.

He means whether or not Interplay used to be the owner is irrelevant to determine whether Bethesda had the right to include such terms in the agreement. And it's likely that had Interplay not agreed to these terms, Bethesda would have not accepted to let Interplay develop a MMO, or worse, buy the franchise altogether.

The contract actually contained 2 subcontracts: one whereby Interplay sold the Fallout IP to Bethesda, and another whereby Bethesda licensed the Fallout IP back to Interplay.

With the first subcontract Bethesda became the owner, therefore in the second subcontract they were the "licensor". They could then impose whatever conditions/restrictions they want to the licensee.

So Interplay first agreed to sell the entire Fallout IP and then agreed to license it under Bethesda's conditions.

I'm still not convinced that "The MMO must meet or exceed such quality standards as may be set by Bethesda from time to time" is a common clause in the industry. And if it were, I'm pretty sure it'd be possible to render most of these contracts void on the basis of the vagueness and unfairness of this clause.
My interpretation of this is it gives full, absolutely unpredictable, subjective, and discretionary power to the licensor. It's in effect a "I can take the money and cancel the contract any time I want with no counterpart/compensation/guarantee/protection whatsoever for the other party" term.