Interplay gives up everything for $2m in Bethesda Fallout suit

Interplay gives up everything for $2m in Bethesda Fallout suit

By Rob Crossley

January 9th 2012 at 10:33PM

Fallout MMO effectively scrapped as all rights, including merchandise and prior games, are surrendered to Bethesda

Cash-strapped publisher Interplay has voluntarily cancelled development of the potentially lucrative Fallout MMO in return for a $2 million payout from Bethesda.

An eleventh-hour settlement was reached between both parties last month, with counsel negotiating final terms during a recess on their day of trial in a North Carolina court.

Interplay concedes it no longer has the right to publish any game based on the Fallout brand, and has agreed to pay its own court fees.

The publisher has also surrendered its rights to sell the original two Fallout games and spin-off Fallout Tactics, effective at the outset of January 2014. Rights to sell merchandise will also be transferred to Bethesda on the same day.

In return Interplay will receive $2 million.

Bethesda has not claimed that its rival publisher will receive anything else materially beneficial to its business as a result of the settlement.

The move effectively cancels the Fallout MMO, which had been in development at Bulgarian studio Masthead.

On December 29th, Masthead settled in court with Bethesda and conceded it has no legal right to use any Fallout intellectual property.

“No payments were made by either party as part of this settlement,” Bethesda said.

It is not known if Masthead was awarded any further material benefit for settling in court.

Money troubles


In May last year, Develop revealed that the California based Interplay had been operating in financial disarray.

The publisher warned investors of “substantial doubts over our ability to continue as a going concern”, and claimed that – at the time - its cash balance had fallen to $3,000 by the turn of the year, with a working capital deficit nearly at $3 million.

Grave details of financial instability were exposed in an SEC document. The 76-page report – which was released two months after its initial submission deadline – warned throughout that Interplay could face bankruptcy, and that it may have to generate funds by selling the company.

Interplay was functioning “without a credit agreement or credit facility” by the turn of 2011, the company said at the time.

“The lack of any credit agreement has resulted in a substantial reduction in the cash available to finance our operations,” it added.

Bethesda acquired Fallout intellectual property rights from Interplay in April 2007.

The group said it “conditionally” licensed back to Interplay certain trademark rights to make a Fallout MMO, provided Interplay secured $30 million in financing for the MMO and commenced full scale development of the game by April 2009.

Bethesda would go on to claim that Interplay never met this demand, and today also implied that Masthead’s work on the MMO had been minimal.

Due to both settlements, Bethesda claims that all litigation has been completed with respect to the Fallout IP.

The Zenimax-owned publisher is also embroiled in a legal dispute with Minecraft creator Mojang for the use of the word ‘Scrolls’ in its upcoming game.

Zenimax chairman Robert Altman said he was “pleased to avoid the distraction and expense of litigation while completely resolving all claims to the Fallout IP”.