Videogames Inc.: Unraveling the Corporate Ownership of Game Developers

By Ian Williams | March 30, 2015 | 5:08pm

Video Games Features

This past February, Sony decided to ditch Sony Online Entertainment, the studio responsible for (among others) Planetside 2, the recent H1Z1 and Everquest, arguably the most influential pre-World of Warcraft MMO. The buyer of the studio and its collection of storied properties was multi-portfolio investment firm Columbus Nova, who immediately changed the name of SOE to Daybreak Game Company, a cheery name for a cheery new start.

The layoffs came almost immediately, of course. That’s how things roll in the videogame industry, particularly once massive multinational investment firms swoop in to pick the bones of faltering studios. But even by the cutthroat standards of the games industry, Columbus Nova stands out.

Columbus Nova is itself owned by the Renova Group. The Renova Group has a diverse portfolio, ranging from banking to Swiss steel construction. But the main thing Renova dabbles in is the Russian energy sector. And the catalyst for that dabbling is Viktor Vekselberg, the investment group’s owner.

Vekselberg is Russia’s second richest man, sometimes third. Regardless of the precise rankings, he’s among the richest and most powerful people in a Russia which concentrates its wealth and power in very few hands. He’s powerful enough that he’s been referred to as one of the “Four Horsemen of Russia’s Economic Apocalypse”, a moniker given to him after he and some of the other leading oligarchs in Russia were involved in an oil company cash-out. The Forbes article on it is a good read, but the quick and crude version is that the back and forth machinations over Russia’s oil sector which Vekselberg (and, presumably, the Renova Group, though they’re not mentioned specifically in the article) took a leading role in are an important factor in the ruble’s current freefall.

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Vekselberg and Renova have been involved in all sorts of bad things, alleged and proven. Renova is currently in a court battle with Norex, a Canadian company with Russian oil interests. Norex claims Renova hired an armed militia and sent them to storm Norex’s offices in a bid to seize their oil fields. That lawsuit has an on-off quality to it, with it being dismissed and then restarted in June 2014 after new evidence came out; some of that evidence came about due to the cashing out process detailed in the Forbes article.

Vekselberg was fined by the Swiss for breaking stock disclosure rules. He’s been linked to a shady property deal for the Hungarian embassy, which was bought for $21m and then sold to the Russian government for $116m. A prosecutor’s investigation into mishandling of construction money for a Moscow innovation hub cites him by name.

Which brings us back to Daybreak.

While it’s obviously at a great remove, Vekselberg is the owner, in the end, of Daybreak. He almost certainly will never deal with it personally. He may not even really know that he owns it beyond seeing it mentioned in a report now and then. But he does own it. And the stuff he’s involved in, the oil and the steel and the shady land deals and the militias, are involved with Daybreak, too. Again, at a great remove, but it’s there and it’s real. Everquest Next will be funded from here on out by oil and land speculation.

I never heard about this. Had I not run across a small snippet of a discussion on some forums about what the buyout means for Daybreak’s future, I never would. I don’t precisely mean that as a criticism of either consumer or press, but the fact is that we simply weren’t interested in who Columbus Nova and Renova were when the news broke. This disinterest is plain when you read the reports on the transaction, even in the business first examinations. Investment firm, Columbus Nova, press releases, next story. I didn’t dig. I didn’t care and this is the type of thing I claim to care about.

Because, in the end, it’s videogames. And videogames, more than any other entertainment industry we have, are considered a separate sphere from the rest of the capitalist machinery which we live in. Some of that is a very natural way the industry has evolved; games were kids’ stuff, until they weren’t, and people still talk about them like they’re kids’ stuff, particularly in the mainstream press. Games creation moved from five person shops to multinational corporations employing hundreds seemingly overnight and it was all just too fast for everyone to adjust how we speak about them.

But some of that disinterest is willful. We videogame enthusiasts have consciously cordoned the realm of games from the rest of the world because they’re special, distinct from the muck and ruin of mergers and exploitation. TV shows and movies are finite; a game can be played forever, repeatedly, so good ones can come along, grab you, and not let go. How could they not be special? How could they not be adored and loved unconditionally?

The problem is, of course, that videogames aren’t special, at least not in their work practices or funding. When we close our ears to those laid off or simply accept it as the cost of entry, some of it is that we don’t want to think that our special, wonderful hobby could be capable of grinding laborers to dust. And when an investment firm snaps up a big studio, we don’t bother checking into it because there’s no way that it could be headed up by an oligarch involved in dirty oil deals. Videogames are too small, the workers too creative and unique, for them to be caught up in the tedious squalor of big business.

While Renova is the most outwardly objectionable outside investor in videogames, they’re hardly alone. Mayfield invests in both Ouya (so much for the advent of Kickstarter giving all power to the people) and second-tier transportation disrupter Lyft; they also invest in HealthTap, an app which, as near as I can tell, aims to slowly introduce Uber/Lyft style atomization to the healthcare industry. Nokia’s invested $6m into the studio behind Ruzzle, just as they hinted at getting into patent trolling. IDG Ventures, one of TellTale Games’ investors, also has interests in South Asian textiles and Chinese mining. One of Funcom’s big investors is Stiftelsen KGJ, primarily known for being involved in the Norwegian shipping industry.

Some of those are worth pausing and thinking about. Some are innocuous. But all of them are things that we’re not terribly interested in knowing. They’re public knowledge; every website linked has a portfolio of companies invested in or owned which is viewable by the public. But the fact is that we don’t really care, if we’re honest. We don’t care where the money to fund videogames comes from, any more than we’re worried that our food comes from about six different corporations.

My intent is not to moralize, though there is obviously a moral dimension to my editorializing here. The fact is that it’s impossible for any of us to navigate the world built for us in a fully ethical, responsible fashion. There is no ethical consumption, as my colleague Austin Walker so rightly put it. And that’s not our fault; this is the most important point. We can control, to only a very limited extend, how much we buy into the system, but we can’t escape. We can only try our best to figure out the limits of our tolerance for each individual conflict between morals and what the system demands as best we can.

I’m reminded of something Ta-Nehisi Coates wrote when he was grappling with whether to finally set the NFL aside when the league’s negligence on concussions was fully revealed.

“I’m not here to dictate other people’s morality. I’m certainly not here to call for banning of the risky activities of consenting adults. And my moral calculus is my own. Surely it is a man’s right to endanger his body, and just as it is my right to decline to watch. The actions of everyone in between are not my consideration.”

Obviously that quote is about the NFL and not videogames, but the moral dilemma he addresses is one which is real, personal and must be respected. When something is so ingrained in our lives and cultural language, it’s too much to demand that we cease outright. Coates wouldn’t do that with NFL fans, even though he quit, and I wouldn’t do that with videogame fans, even though I’m not quitting.

Each of us has a line where he or she says “no more,” even if that line isn’t remotely in sight. Where that line is for you, I don’t know. Perhaps Vekselberg is the line where you can’t play Everquest anymore. Maybe it was the layoffs which followed the purchase. You probably haven’t reached that line; I know that there’s every probability that you’ll catch me on Steam playing Planetside 2 someday, so I haven’t reached it.

What I do know is that we cannot close our eyes to the reality that our games are not different from the rest of the world. They are made by people, funded by things that are not always nice, and overlap with politics, economics and industry in ways that we need to pay a little more attention to. We should all want this honest reckoning with the moral dimensions of how the games industry works.

Ian Williams has written for Salon, Jacobin, The Guardian and more.