Frogwares, the Ukrainian-based studio best known for its Sherlock Holmes titles and more recently the Lovecraftian detective title The Sinking City, has had a topsy-turvy past 12 months. In September 2019 Frogwares called out publisher Focus Home Interactive for unfairly delisting their titles, while earlier this year the studio announced it was going fully independent, as well as revealing its next project – Sherlock Holmes: Chapter One.
But that’s not all the studio has been up to, with the team fighting tooth and nail behind closed doors to terminate its contract with The Sinking City licensee/distributor Bigben Interactive/Nacon (Nacon and Bigben Group merged in early 2020 and now operate under the name Nacon) for several contract breaches. In a statement put out today by Frogwares, the Ukrainian studio revealed that they have been in a battle with Bigben Interactive/Nacon since before the release of The Sinking City on June 27, 2019. Over the past year, Frogwares has attempted to resolve these issues amicably and out of the public eye through legal avenues. However, despite the courts ruling in favour of Frogwares, Bigben Interactive/Nacon has continued to impede Frogwares and their attempt to sell The Sinking City, so much so that the game has been removed from most digital storefronts and is now only available via Frogwares’ official store, Origin and Gamesplanet.
The deal between Frogwares and Bigben Interactive/Nacon is not your typical publishing deal. Instead it’s a licensing agreement, something that is quite common in the games industry. Under the agreement, Bigben Interactive/Nacon would receive the rights to sell or commercialise The Sinking City on four platforms: PS4, Xbox One, Epic Games Store and Steam, in exchange for a financial contribution to the game’s development when every milestone was reached, as well as a split of the game’s royalties. As per all of Frogwares’ previous titles, Frogwares would remain the owner of The Sinking City IP. However, despite all parties being happy with the contract’s terms and conditions, issues began to surface not long after the agreement was signed.
Frogwares insists that they held up their end of the bargain, completing and submitting milestones on time, which were approved by Bigben/Nacon, who was consistently late with payments, forcing Frogwares to issue formal notices so they could receive the remuneration they were entitled to. Making matters worse was Bigben/Nacon’s insistence that Frogwares share its source code after they had recently acquired Cyanide who were also working on their own Lovecraftian game (Call of Cthulhu for Focus Home Interactive). Frogwares refused to comply with this request and as a result Bigben/Nacon withheld payments for over four months. Furthermore, Bigben/Nacon failed to divulge correct information in relation to The Sinking City’s business plan, meaning that the studio was effectively sailing blind when it came to knowing sales forecasts and other marketing deals (such as sales deals), all of which hindered the studio’s ability to plan for the future. The only time they knew any correct information was in relation to the Epic exclusivity deal thanks to the minimum guarantees in Epic’s contract.
Despite being beneficial for developers, Epic Store exclusivity is a sour point for a large number of gamers. When it comes to The Sinking City’s one-year Epic Store deal, Frogwares CEO Wael Amr tells WellPlayed that the studio wasn’t involved in the entire process, only “part of the talks on various aspects”. However, Amr admits that Frogwares and Epic have always shared a good relationship, so the studio would have happily spoken with Epic on their own terms to see if the two companies could reach a deal to work together.
Monetary issues were just the tip of the iceberg though, as Frogwares also claimed that Bigben/Nacon created the perception that they owned the rights to The Sinking City by removing Frogwares’ logo from the front of the game’s box art, registering various web domains for The Sinking City and Sherlock Holmes titles, distributing a Sinking City pen and paper RPG that not only included the wrong copyright information but was created without consulting Frogwares entirely, and implying that they owned The Sinking City IP when Nacon launched on the public stock market. All of this caused confusion among industry partners and platform holders. Further compounding Frogwares’ issues, was an unauthorised attempt to release the game to Utomik, a move that would have breached the game’s Epic Store exclusivity deal.
After a number of delays, The Sinking City finally launched on PS4, Xbox One and the Epic Games Store on June 27, 2019, and what should have been a day of celebration turned into a day of misery when Bigben/Nacon notified that Frogwares that all previously approved milestones had been retrospectively cancelled, which meant the studio wouldn’t receive any profits from the sale of the game. Enough was enough, and it was here Frogwares decided to take legal action against Bigben/Nacon, with the studio filing a lawsuit in August 2019.
What proceeded was a lengthy and exhausting legal battle that saw Bigben/Nacon fail to provide a satisfactory response to the lawsuit. As a result, Frogwares decided to terminate the licensing agreement with Bigben/Nacon on April 20, 2020. Bigben/Nacon refused to honour the termination, pointing to the emergency laws in France established to protect businesses during the COVID-19 pandemic. Despite refusing to rip up the contract with Frogwares, Bigben/Nacon still refused to honour their side of the deal when it came to payments, documentation and other commitments.
In my review I said that The Sinking City was “one of the best Lovecraftian experiences in years”
While emergency laws have been implemented to protect businesses suffering from crushing financial impacts of COVID-19, the video games industry has seen a surge in sales and profits, with Bigben/Nacon boasting about their performance in documentation sent to shareholders, claiming that “Turnover was up sharply at €15.7 million (compared with €10.4 million for the 4th quarter 2018/19) thanks to the boom in digital sales, benefiting in particular from the “lockdown” effect, which “boosted” games sales.” Despite these positive sales figures, Bigben/Nacon’s refused to pay royalties in the amount of roughly one million euros owed to Frogwares.
Thankfully Frogwares had an escape route, with the emergency laws triggering the Force Majeure clause in the Frogwares contract. It allowed Frogwares to terminate the agreement if the parties could not mitigate the impacts of an unforeseen event (such as COVID-19) for a period of 60 days. With all this evidence the court ruled in favour of Frogwares, however Bigben/Nacon refused to accept the ruling and appealed the decision on July 17, 2020, which the presiding judge dismissed. Meaning that in the eyes of the law the contract is now terminated.
Despite the matter being legally behind them, Frogwares is still dealing with lingering effects of the confusion surrounding ownership of The Sinking City, and after exhausting all other options, the decision was made to remove the title from remaining platforms whose deals weren’t negotiated by Frogwares in order to prevent further sales and revenue going to Bigben/Nacon.
Amr says that the studio wanted to go public because “We want our fans to finally know why The Sinking City is not on certain platforms and why we’re being forced to delist it on others.”
Speaking after the ruling, Amr acknowledges that the ongoing issues with Bigben/Nacon were a constant burden on the studio as they were developing The Sinking City.
“We wanted to be open with the team so we never kept them in the dark,” says Amr.
“Throughout development, these issues would come up and have an impact on the morale and motivation of the team. Making games is hard enough as it is. Then when you throw in all manner of unnecessary issues like we experienced it simply piles on the difficulty.”
Will players ever return to Oakmont?
Despite a messy couple of years behind the scenes, Frogwares is looking forward to what the future holds, with Sherlock Holmes: Chapter One scheduled to launch in 2021 on next-gen consoles and PC. While I am glad that we’re getting another Sherlock mystery, I am a little sad we won’t be diving deeper in the waters of Oakmont, at least not just yet. With all the commotion the development of The Sinking City encountered, I pressed Amr for answers on whether this had any impact on the studio’s decision to go back to the Sherlock Holmes series for their next project.
“We had planned to go back to the Sherlock universe as is,” he shares. “The legal troubles and the behaviour of Nacon is not leading our strategic decisions. It’s unfortunately a situation that influences a lot of our work but not to such an extent.”
As for The Sinking City, Frogwares is unsure when it will return to digital stores, only saying that they are working on having it re-listed as soon as it can.
Frogwares ends the statement by offering to help other studios so they don’t end up in a similar position:
“We hope that this transparency will help everyone to be aware of what is really going on behind the scenes. We only have one goal: helping to banish bad practices by speaking freely about them, instead of remaining subject to the code of silence. We know that we are not the only ones in this situation. This is our way to help the video game industry become more ethical.”
WellPlayed will endeavour to reach Bigben Interactive/Nacon for comment and we’ll update should we receive a response.
If you would like to read Frogwares’ official statement, you can read it here.