Entertainment, Software Programs

TIMELINE: Bethesda Settles With Interplay, Saves Face and Fallout Franchise

Longtime legal wrangling between Bethesda and Fallout is drawing to a close. Both parties recently submitted a sealed document "Joint Motion to Dismiss With Prejudice" i.e. document 167 containing the following full docket text:

"-SEALED-Joint MOTION to Seal to Temporarily Seal Joint Motion to Dismiss With Prejudice by Bethesda Softworks LLC Responses due by 1/23/2012 (Attachments: # (1) Joint Motion to Dismiss With Prejudice, # (2) Exhibit 1, # (3) Text of Proposed Order)(Stahl, Howard)"

This is a standard legal procedure when the parties reach the terms of settling agreement, meaning this legal saga will come to its end almost three years since it started.

The long standing legal saga between Bethesda and Interplay is finally drawing to a close

We have reported on the Bethesda versus Interplay case on several ocassions, but the timeline goes roughly like this:

  1. 2003 – Interplay cancels development of Fallout 3 (Project Van Buren), closes PC game development team
  2. 2005 – Interplay licenses Fallout franchise to Bethesda for three single-player games named Fallout 3, Fallout 4 and Fallout 5
  3. 2006 – Interplay starts work on Fallout Online (8-K form filed with SEC)
  4. 2007 – Interplay taken to court by ex-employee, bankruptcy threat
  5. 2007 – Interplay sells complete Fallout single-player franchise to Bethesda. The company refuses to buy rights for multiplayer (Fallout Online) for 50 million USD.
  6. 2008 – Masthead Studios start development on Fallout Online under codename V13
  7. 2008 – Fallout 3 by Bethesda comes out, becomes an instant hit with over 5 million games sold. Estimated net revenue: 350 million USD.
  8. 2009 – Bethesda sues Interplay in order to take control of the whole franchise. Interplay investors freeze financing of Fallout Online due to lawsuit (Interactive Game Group, German VC fund)
  9. 2010 – Fallout: New Vegas becomes a steamroller hit: franchise earns Bethesda estimated 400 million USD. Fallout: New Vegas is not named "Fallout 4" in order to avoid running out of titles in terms of original license.
  10. 2011 – Interplay posts screenshots from Fallout Online
  11. 2011 – Court rules that Interplay can’t present Masthead "V13" (Fallout Online) work or witnesses, Interplay counters and tries to void the 2nd contract
  12. 2011 – Court suspends after three hours in session, settlement talks begin
  13. 2012 – Both parties send a sealed "Joint Motion to Dismiss With Prejudice" preventing both parties, especially Bethesda to sue Interplay over Fallout franchise ever again.

We expect to hear of the settlement very soon (Interplay even pushed back their financial report), and even mainstream media such as The Wall Street Journal reported that settlement is agreed and that the publication is only the matter of time.

The reason for the settlement is not hard to comprehend. If the court would end up siding with Interplay in this case, the 2007 contract for selling the Fallout franchise would be null and void. Should the Fallout end up reverting to the original licensing contract, Bethesda would owe Interplay 12% of the total revenue earned by Fallout 3-5, and that part would include Fallout: New Vegas, which is a standalone game by all accounts.

Given that the overall revenue figure for Fallout 3 hovered around the $350 million and Fallout: New Vegas exceeded 400 million, we reach a figure of 750 million dollars. Then, TESV: Skyrim achieved 650 million dollar revenue so far, which probably means Fallout 5 would either earn 500 million (conservative estimate) to 750 million (following the trend of recent games by Bethesda). 12% of  1.25 to 1.5 billion dollars is 150-180 million dollars, plus add in interest, damages and legal fees. If you understand the U.S. Justice system, then you can probably guestimate how much "damages" are usually awarded.

Herve Caen - Interplay CEOStill, we expect to see the settlement going anywhere between 50-85 million dollars. Our guesstimate is that Bethesda Softworks LLC will gain full control over the franchise (both single and multiplayer). Knowing that ZeniMax Media Inc., recently started an online business unit (ZeniMax Online Studios LLC), it isn’t hard to predict where a Bethesda-owned Fallout Online would end up.

What is important to know in this story is that at the time of writing, Interplay Entertainment Corporation is worth only 9.2 million dollars (IPLY.PK), with some three million USD in liabilities. Settling the case for a large sum of money could lead to revival of the company and see regained interest from the investors.

After all, Interplay would gain a lot of fiscal resources which the company could spend on developing new titles and reliving their old franchises. For example, Volition recently expressed interest in bringing back the Descent Freespace franchise. Interplay also owns Baldur’s Gate: Dark Alliance, BattleChess, Earthworm Jim, MDK, Boogerman and more.