Gamasutra has received confirmation from a Flagship Studios representative that the Hellgate: London developer has seen significant staff cuts.
This morning, Gamasutra obtained information from a source close to the company indicating that staff at both the Flagship development team as well as online services subsidiary Ping0 were let go. Both companies operate out of the same building.
Flagship declined to go into further detail about the layoffs, beyond stating that there was truth to the reports.
Hellgate: London was released last October to favorable-skewing reviews, but was plagued by notorious launch issues and certain major gameplay criticisms. The company's core founders were comprised of former Blizzard North developers responsible for the Diablo games, and Hellgate was intended as a spiritual successor to those titles.
The news comes despite claims by co-publisher Electronic Arts that Hellgate has over one million active subscribers - being particularly successful in Korea.
In a statement last month, Flagship intended to reassure fans of the company's health despite worries generated by a post on CVO David Brevik's blog.
"All our Directors and Founders are still working at Flagship, and all of them are working on Hellgate: London or Mythos," read the statement. "The team size for Hellgate is as big now as when we shipped."
A second source close to Flagship indicated to Gamasutra that even at the time of such outward confidence, the company was going through internal turbulence.
[UPDATE: Fan site Hellgate Guru has translated a Korean news report indicating that Hellgate: London's publisher in the region, HanbitSoft, "...is taking full control over the Hellgate: London intellectual property from Flagship Studios," and intends to continue the game using in-house staff.
However, Flagship has officially responded: "This story is an outright lie. We have no idea where they are getting their information from and have asked legal counsel to pursue the issue... We are mystified by Hanbitsoft’s conclusions and any attempt to take over the IP will be met with a strong and swift response."
In addition, a statement from HanbitSoft's U.S. lawyers has now been added to the Hellgate Guru story, with the attorneys noting:
"(1) HanbitSoft is an exclusive licensee of both Hellgate and Mythos in Asia, with rights to sublicense the games; (2) in addition, HanbitSoft is a secured creditor who has been pledged the Mythos (but not the Hellgate) intellectual property as collateral for a loan; (3) Comerica, another secured lender, has been pledged the Hellgate intellectual property as its collateral for a loan; (4) Flagship Studios does not currently own the intellectual properties to either game, which are held in separate companies subject to the security interests of lenders, and Flagship Studios’ interest in those companies is also pledged to its lenders; (5) it is unfortunate that Flagship turned down additional investments HanbitSoft offered to make that would have allowed it to keep its doors open, but HanbitSoft hopes to work with Comerica and some of the team at Flagship to see if there is a way to continue to generate content to keep Hellgate online in Asia and to finish the development of Mythos."]