The emerging social and mobile gaming sectors have a good amount of success stories, but they aren't immune to the kinds of problems that often affect the larger games industry.
Take MetroGames, the Argentina-based developer behind the Facebook game Coco Girl
. Despite the game being a consistently strong performer on Facebook's fastest-growing charts, and despite receiving a substantial amount of funding, the company recently issued a round of layoffs, Gamasutra can confirm.
The move towards layoffs is surprising, as Coco Girl
has seen an upward trend in monthly active users. And a lack of capital following a $5 million funding injection
from Disney-owned Playdom is alarming, as well.
"We are facing serious financial problems, and have had to make several layoffs this week," COO Julian Lisenberg told Gamasutra. "...Our games remain online, and our operations will continue as usual."
According to AppData
, Coco Girl
has 530,000 daily active users, up over 10,000 in the last seven days, and has 3 million monthly active users.
Accusations Of 'Extortion'
Lisenberg's comments followed a tip sent to Gamasutra from Facundo Mounes, a MetroGames designer who said that as of today, over half of its 80 employees were no longer with the studio, following a December 19 staff meeting. Mounes is still an employee of the company.
The terms on which these employees departed is up for debate. Mounes claimed that MetroGames, which was funded but not owned by Playdom parent Disney, is currently unable to pay employee wages, as well as December bonuses.
Mounes also accused management of "extortion," and claimed company heads were "pressuring" employees to quit, as opposed to firing them, so that former workers would be ineligible for severance pay that is required by labor laws.
He also added that in a recent staff meeting, management led by COO Lisenberg and CEO Damian Harburguer "declared that the reason for the closure is because the investor, Playdom, refuses to buy the company after three months of negotiations."
Faced with the various accusations, Lisenberg acknowledged the "serious financial problems," as well as the layoffs, but said, "The additional accusations made are not true." Lisenberg did not reply to further inquiries.
But two other MetroGames sources who were fired today said they were also pressured by management to sign resignations, and were fired when they refused. In an email to Gamasutra, one source, who wished to remain anonymous, claimed all of Mounes' allegations are true, including the claims of Disney/Playdom negotiations falling through.
"Today, I received a letter from MetroGames, informing me that I am fired," the source said. "However, there's an article in Argentinean law which states that they get to pay half of the compensation they owe to a fired employee, when they declare bankruptcy."
But he said MetroGames is showing no signs of actually filing for bankruptcy. "The company is still operating. Some employees have been asked to keep going to work to implement features and maintain games like Coco Girl
on Facebook. They also kept artists around, which indicates they are planning to continue operations."
"As you can imagine, these people are really distressed and do not have a clear picture of what's going on. We were all told to start looking for new jobs on that Monday [December 19]," he said.
The source corroborated Mounes' claims about management withholding pay, stating that Harburguer and Lisenberg "Had private meetings with us employees. In these meetings [Lisenberg] asked for our resignation in exchange for our salary for the current month."
"We were basically being told that if we did not take this money, we weren't going to see a penny later on," he said. "This is extortion, and their actions trample our rights. We ought to be fired properly and paid what we are owed by law."
Additionally, both Mounes and the anonymous source claimed that management "stripped" remaining staff of their working tools, such as their computers and keyboards, in order to pressure workers to quit.
"I will continue to exchange letters with [management], demanding my full compensation. If they refuse, we will go to trial," the source said. "The 30-plus employees who didn't resign are in the same situation as me."
Another former MetroGames iPhone developer, Juan Manuel Perez, was also fired today, and backed up Mounes' and the anonymous source's claims in an email to Gamasutra.
"[Management] pressed us to quit, so any legal action for that compensation can't be taken in the future. [Management was] arguing that, 'If you don't take the money now, you won't get anything in the future.' Today, most workers were fired (as we didn't quit), but they said that we're not going to get compensation. So, we're going to trial."
Mounes said he was baffled as to how the studio can have a fast-growing Facebook game, $5 million in funding from last year, and currently be in such dire financial condition.
"Where did all that money go?" Mounes asked. "All the compensation they have to pay to their employees accounts for around a half million."
While MetroGames' employees, whose livelihoods have been put on hold as a result of the current situation, have issued statements that are understandably emotionally-fueled, management took on a more pragmatic stance.
Confronted with the allegations, CEO Harburguer's sent the company's official statement to Gamasutra: "Following several months of strenuous efforts to sell the company to a qualified buyer, MetroGames is now very short on operating capital. We believed we were close to making a deal, but it ultimately did not close. As result, we had no other choice than to downsize fast."
"We informed our staff of our financial condition last week. A significant number of really talented employees have left the company and we will be forced to make additional reductions very soon. We regret that this happened during the holiday season, but we did not want to take drastic action while any chance remained that a deal would be successful. We are doing everything we can to help our former employees find new positions with other companies in Buenos Aires and elsewhere."