Kira Samishii said: »
Lakshmi.Jaerik said: »
I have some insight into this if anyone's curious. I don't have any inside information, but I do have about 20 years' experience in this industry at this point, including at the executive level, and can help interpret a lot of Konami's statements and Kojima's silence on the matter.
The principle problem is that Konami is losing money. I know this will be a shock to a lot of gamers who look at the sales numbers and buzz around MGS/SH and assume they must be making bank, but in general, the AAA industry has been in complete free-fall for the past ~5-7 years and even the big studios are feeling the pinch.
The core issue (and I could elaborate more on why but it's too long of a post for here) is that it now costs on average one hundred times as much money to make a AAA console game as it did 15-20 years ago, while the average retail cost for a game has actually decreased over time:
This has been sustainable because the number of customers was also growing at the same time, but the actual AAA customer space hit saturation and stopped growing at an adequate rate to compensate some time ago. This means that profit margins are now so very, very low that even one game not making back 2-3x its cost and you have to close the studio because you don't have enough money to make another game. With development costs now reaching and exceeding $100M in many cases, and with studios only making about $15-20 (or less) from each sale, you can see why sales numbers in the millions of units -- while impressive -- just aren't good enough anymore. It's become an absurdly risky business.
Meanwhile, mobile gaming is going through the roof because by and large, it is an untapped market of casual gamers that are willing to spend just as much money for games that still cost, on average, one tenth to one hundredth the cost of a AAA game. This puts these studios in far stronger position to survive long-term, and many developers are actually happy because one or two of these games can fail and everyone doesn't lose their jobs. I personally refuse to work on most mobile games anymore because I find their business practices unethical, but at the same time, many studios are being forced to go this route because AAA has simply become too risky.
Kojima is a big name and will only work on big, expensive titles. Konami is out of money, Kojima's projects are all late and significantly over-budget, and there was likely a stand-off at the very high level about whether they should continue to bet the company by doubling down and giving him more to finish. Konami's shareholders recently decided to replace all the senior management, including the CEO, and it's likely the new executive team decided they could no longer afford to bet on a handful of big Kojima titles if they wanted to save the company. Hence their announcement about changing Konami to be a mobile-first company.
Now, keep in mind: big names like Kojima are not normal employees in this industry. They are employed more like movie stars. They are not typically standard W-2 equivalent workers like you and me, but work under executive contract. This is a two-way negotiated employment term that protects both sides in case of disputes like this. They usually go something like this:
"I will work for you for (typically two years) for this pre-set amount of money. I agree that I am not eligible for promotion of raises during this time and will not receive performance reviews. I have no expectation of further permanent employment and we will re-negotiate a new contract at the end of these two years. You may elect not to renew the contract for any reason, no harm no foul, or you may choose to renegotiate another two year term with my agent for a higher or lower rate depending on how well I've done.
In exchange for giving up this regular employment status, you agree that you may not terminate/fire me during these two years without paying a substantial penalty for breach of contract, in order to give me the operational freedom I need to make important but likely unpopular decisions during this time.
If you elect to fire me and pay the penalty anyway, in exchange for this payout I permanently agree not to discuss the terms or reasons publicly, in order to not cause any further financial or operational damage to the company on the way out. I also permanently agree to waive my right to sue the company for any reason beyond the terms of this contract, and vice versa."
I have little doubt that this is what is occurring here. Konami is going to become a mobile company because it's out of money and can no longer make big bets on AAA games under people like Kojima. That company has effectively gone out of business, and you are safe to mourn it appropriately. It is rebooting as a casual/mobile studio and likely little remains except the name and logo. MGS was likely considered too far along to cancel, but has been given an unmoveable deadline and a set amount of money to finish and that's it.
The team has likely been moved to contractor status through this time, and told they will either be moving to mobile games or leaving after the game ships. Many likely left at this news, and so before or concurrent with the announcement the whole MSG team would have had their internal network, source code, etc. rights curtailed to the bare minimum needed to finish MSG, to match those of an external contract group. (In case disaffected MSG employees decide to say, grab all the source for other Konami games on the way out.)
As far as Kojima is concerned, one of two things likely happened: 1) they basically removed Kojima from effective control and told him to simply no longer show up for work, but will continue to keep him on payroll through the end of his contract to avoid paying the severance penalty. This is actually very common, and would explain why Konami insists that he is "still an employee" while failing to explain what he is actually still in charge of, and why his name has been removed from publicity and marketing. Or 2) they actually fired him, paid the penalty, but both them and Kojima are now legally obligated to not discuss the terms or reasoning for the severance in order to avoid causing further harm to the Konami brand and/or Kojima's personal reputation.
The principle problem is that Konami is losing money. I know this will be a shock to a lot of gamers who look at the sales numbers and buzz around MGS/SH and assume they must be making bank, but in general, the AAA industry has been in complete free-fall for the past ~5-7 years and even the big studios are feeling the pinch.
The core issue (and I could elaborate more on why but it's too long of a post for here) is that it now costs on average one hundred times as much money to make a AAA console game as it did 15-20 years ago, while the average retail cost for a game has actually decreased over time:
This has been sustainable because the number of customers was also growing at the same time, but the actual AAA customer space hit saturation and stopped growing at an adequate rate to compensate some time ago. This means that profit margins are now so very, very low that even one game not making back 2-3x its cost and you have to close the studio because you don't have enough money to make another game. With development costs now reaching and exceeding $100M in many cases, and with studios only making about $15-20 (or less) from each sale, you can see why sales numbers in the millions of units -- while impressive -- just aren't good enough anymore. It's become an absurdly risky business.
Meanwhile, mobile gaming is going through the roof because by and large, it is an untapped market of casual gamers that are willing to spend just as much money for games that still cost, on average, one tenth to one hundredth the cost of a AAA game. This puts these studios in far stronger position to survive long-term, and many developers are actually happy because one or two of these games can fail and everyone doesn't lose their jobs. I personally refuse to work on most mobile games anymore because I find their business practices unethical, but at the same time, many studios are being forced to go this route because AAA has simply become too risky.
Kojima is a big name and will only work on big, expensive titles. Konami is out of money, Kojima's projects are all late and significantly over-budget, and there was likely a stand-off at the very high level about whether they should continue to bet the company by doubling down and giving him more to finish. Konami's shareholders recently decided to replace all the senior management, including the CEO, and it's likely the new executive team decided they could no longer afford to bet on a handful of big Kojima titles if they wanted to save the company. Hence their announcement about changing Konami to be a mobile-first company.
Now, keep in mind: big names like Kojima are not normal employees in this industry. They are employed more like movie stars. They are not typically standard W-2 equivalent workers like you and me, but work under executive contract. This is a two-way negotiated employment term that protects both sides in case of disputes like this. They usually go something like this:
"I will work for you for (typically two years) for this pre-set amount of money. I agree that I am not eligible for promotion of raises during this time and will not receive performance reviews. I have no expectation of further permanent employment and we will re-negotiate a new contract at the end of these two years. You may elect not to renew the contract for any reason, no harm no foul, or you may choose to renegotiate another two year term with my agent for a higher or lower rate depending on how well I've done.
In exchange for giving up this regular employment status, you agree that you may not terminate/fire me during these two years without paying a substantial penalty for breach of contract, in order to give me the operational freedom I need to make important but likely unpopular decisions during this time.
If you elect to fire me and pay the penalty anyway, in exchange for this payout I permanently agree not to discuss the terms or reasons publicly, in order to not cause any further financial or operational damage to the company on the way out. I also permanently agree to waive my right to sue the company for any reason beyond the terms of this contract, and vice versa."
I have little doubt that this is what is occurring here. Konami is going to become a mobile company because it's out of money and can no longer make big bets on AAA games under people like Kojima. That company has effectively gone out of business, and you are safe to mourn it appropriately. It is rebooting as a casual/mobile studio and likely little remains except the name and logo. MGS was likely considered too far along to cancel, but has been given an unmoveable deadline and a set amount of money to finish and that's it.
The team has likely been moved to contractor status through this time, and told they will either be moving to mobile games or leaving after the game ships. Many likely left at this news, and so before or concurrent with the announcement the whole MSG team would have had their internal network, source code, etc. rights curtailed to the bare minimum needed to finish MSG, to match those of an external contract group. (In case disaffected MSG employees decide to say, grab all the source for other Konami games on the way out.)
As far as Kojima is concerned, one of two things likely happened: 1) they basically removed Kojima from effective control and told him to simply no longer show up for work, but will continue to keep him on payroll through the end of his contract to avoid paying the severance penalty. This is actually very common, and would explain why Konami insists that he is "still an employee" while failing to explain what he is actually still in charge of, and why his name has been removed from publicity and marketing. Or 2) they actually fired him, paid the penalty, but both them and Kojima are now legally obligated to not discuss the terms or reasoning for the severance in order to avoid causing further harm to the Konami brand and/or Kojima's personal reputation.
If the gaming market shifts to mobile games, I'm going to flip a ***...
Even Square is getting in on it by porting older FF games and creating new side titles (War of the Lions, Record Keeper, Dimensions and 1/2/3/4/4-2/5/6) for Android and iOS. Not to mention the apparent Mobile FFXI and that new Final Fantasy mobile title I can't recall the name of.
