The Repopulation rejects blame for Hero Engine’s financial struggles

December 30, 2015 10:00 AM

The Repopulation’s struggles with the money-troubled Hero Engine service have led to game delays, server downtime, and suspended development, and the drama continues today.

Earlier this week, an Idea Fabrik Hero Engine rep seemingly defied confidentiality agreements by telling its community that its revenue problems are the result of a single client refusing to pay royalties for two months.

“Starting in September 2015, one of our clients has refused to pay our royalties amounting to 30% of their revenues. Idea Fabrik/IFS is a small company, and our funding relies on those royalties and our VC’s. After two months of not getting our royalties paid, we were faced with difficult decisions. And after additional two months without being able to find a solution, we had to shut down their live game servers. Please note that we still hope for a positive outcome for all the players and fans of the game – that’s why their development servers have always been and are still up and running, so they can continue to work on their game.”

Given the two-month timeline and The Repopulation’s recent server outages, fans assume that Hero Engine was accusing Above & Beyond of being the non-paying client. Yet back in November, Hero Engine told everyone that it was in the midst of third party financing “negotiations to secure our funding for the present and the future” and that it did “not involve any of [its] middleware partners.”

A&B’s JC Smith defended his company on Steam, explaining that “Idea Fabrik’s funding was pulled by an individual who had funded them for years.”

“A third party proposed a joint deal between themselves, Idea Fabrik, and oursleves which would allow Idea Fabrik to stay afloat. This deal involved us covering Idea Fabrik’s bills for the next 5 months to get us to launch as part of a bridge loan. The problem is that this deal was brokered with the same person who had pulled their funding, which sounded a lot like extortion to us. From our standpoint a situation had been created where if we wanted to launch the game we need to take this deal by Midnight, or servers will all be going down. After some careful thought we found it was unacceptable, because it had a list of obligations such as us sticking with them for two years, no guarantees on servers after that point, and starting $1.2M in debt. Royalties were not reduced, and no guarantees were made about what would happen after those five months. So we rejected it. This occurred right when the news was first breaking. We felt like this was a bluff at the time to try to get us to cave in and accept a significantly worse deal out of desperation. It turned out it was not a bluff and their funding was pulled.”

Smith says that the ensuing negotiations produced multiple deal offers, one of which included an option to pay only royalties, but that they were not acceptable to A&B because Hero Engine’s finances were so shaky that it could not guarantee tech support and server uptime, which could lead to A&B’s financial ruin and the doom of the game.

“The royalties being referred to here by Idea Fabrik are things that were not due to them until weeks after this situation had already happened, and amount to a small amout of money. The problem is that we at this point feel like this is something that will likely need to be resolved in a court, and the fact that we have already paid a huge amount of money to Idea Fabrik. We feel that at the end of the day they will owe us money, but that we will never be able to collect it because they will liquidate. The money in question here wouldn’t cover our alpha servers for a single month, nor would it allow us to begin selling the game again, or to patch again. In our opinion they had stopped living up to their agreement and the service which should have been provided so we feel that we were not obligated to pay it. This was an non-issue as our server bills were higher than the amount owed, and if we wanted to keep servers online we needed to cover the full costs every month without money coming in, which was not an option.”

Ultimately, Smith says, “We owe them nothing.”

“This has nothing at all to do with the problems. It is something that happened after the fact, and I’m surprised to see them go on the offensive here.”

Smith charitably suggests that Idea Fabrik’s confidentiality-breaking accusation might have been the result of angry gamers shouting it down for The Repop’s server downtime.

Source: Timeline, Hero Engine, Steam. Thanks, Liandreth and DK.

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