Rebekah Valentine
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Last week, Bloomberg reported that 25 people comprising the entire staff of Annapurna Interactive walked out the door in a group resignation. But while some of the circumstances around their departure emerged in the reporting, one pressing question was left unanswered: why?
Having spoken to multiple individuals close to the situation who requested anonymity due to fear of reprisal, as well as an Annapurna spokesperson, IGN has pieced together a somewhat complex answer. Disagreements over the direction of the Interactive division, chaotic departures, communication breakdowns, and a perceived lack of leadership transparency at Annapurna Interactive led to a staff walk-out that has left 25 individuals jobless, Annapurna leaders scrambling, and numerous developers concerned about their contracts with the publisher.
A Company Divided
Though the collapse of Annapurna Interactive as we once knew it started earlier this year, its roots lie in the company’s historical leadership structure. Annapurna Interactive was initially conceived as the gaming division of Annapurna Pictures, which was founded by film producer and billionaire Megan Ellison in 2011. Annapurna Interactive itself was spun up in 2016, tapping a staff of industry veterans including including former Sony creative director Nathan Gary, former Sony executive producer Deborah Mars, and former Sony producer Hector Sanchez for leadership roles. Sanchez left the company in 2019, and former Capybara Games co-founder Nathan Vella was brought on that same year.
The film side of Annapurna’s business has undergone well-publicized struggles. In 2018, it was bleeding enough money to prompt Ellison’s father, multi-billionaire Larry Ellison, to step in. By 2019, Annapurna Pictures was reportedly teetering on bankruptcy, and in the ensuing years its film and TV output slowed significantly. Variety reports that Ellison disappeared from public life in 2019 almost entirely, leaving her business to largely run itself during the height of the pandemic. She reemerged in 2021, only to name Gary president over all of Annapurna, with Mars and Vella stepping into co-head roles at the Interactive division.
In the ensuing years, Annapurna Interactive continued to grow, releasing financial and critical successes such as Stray, Outer Wilds, What Remains of Edith Finch, and Cocoon. While the company claims the Annapurna Pictures side of the business hasn’t struggled in recent years, saying that film and TV were more profitable than Annapurna Interactive in 2023, a spokesperson alleged to IGN that Gary was a less-than-ideal steward of Annapurna Pictures. Under his guidance, they claim, resources were pulled away from film and TV, key executives were pushed out, and the company was largely refocused on gaming. Annapurna tells IGN that Gary also elevated co-founder James Masi to chief administrative officer, a role the spokesperson suggested was unnnecessary at a company of Annapurna’s size. Notably, Annapurna did launch an animation division under Gary’s tenure that released the critically-acclaimed film Nimona just last year, though an Annapurna spokesperson reached out to IGN post-publication with the assertion that it was Ellison who brought in Nimona as the foundation for what would become the animation division. IGN has reached out to Gary, but he declined to comment.
IGN understands that opinions of Ellison within Annapurna Interactive prior to 2024 varied from indifference to latent mistrust given previous reports on her behavior toward employees. Anonymous sources I spoke to all cited a strong fear of reprisal from Ellison in particular, given her resources, history, and reach. A few people referenced creative or compensation disagreements during their time at Annapurna that contributed to a general feeling Ellison would not keep promises. Multiple sources we spoke to described Ellison as a largely hands-off leader and rarely present in the gaming division, an attitude that for years suited many of Annapurna Interactive’s employees just fine.
Ad-Verset effects
This was the state of things at the start of 2024 according to our sources. Prior to March of this year, work at Annapurna Interactive was business-as-usual, they say, until employees were suddenly informed mid-month that James Masi had been unexpectedly let go. An Annapurna spokesperson confirmed Masi was made redundant, saying that Ellison had chosen to step back in at the company and oversee the Annapurna Pictures side again in an effort to re-invest in the film and TV side of the business. As a part of this, Annapurna claims that Ellison reinstalled Gary as head of Interactive, and deemed Masi’s role unnnecessary.
However, at this time, Gary also left the company. Annapurna claims he left of his own accord in response to Masi’s firing and his change in role. But sources say employees were told in the following days by leadership within Annapurna Interactive that Gary had been fired along with Masi. The belief that two of their leaders had been fired seemingly out of the blue sparked confusion and fury, and a handful of individuals quit in protest, including at least one other Interactive leader.
The sudden resignation of multiple key individuals came as a shock to the company, and IGN understands that Ellison held a video call with Annapurna employees to discuss what had happened and find a way to move forward. On the call, Ellison allegedly expressed a desire to keep the entire group, including those who had been fired or resigned, together. In the following days, all the departed staff returned, including Gary and Masi, and discussions began for a potential spin-off of the company that would allow Gary and Ellison to achieve their respective visions with minimal disruptions to partner developers.
Roughly, the plan was for Gary and the Annapurna Interactive staff to become a new company called Verset, with ownership split between Annapurna and Verset’s leaders. Verset would oversee all currently existing signed Annapurna Interactive projects, with revenue split between itself and Annapurna proper in Annapurna’s favor. It would also be free to sign its own, independent deals. Developers IGN spoke to report being made aware the spin-off was happening in the following months, and were reassured their contracts would be fulfilled.
While employees understood such a venture would take time to get off the ground, in the ensuing months a number of events occurred that made some skeptical of Ellison’s commitment to parting with Annapurna Interactive. In early summer, sources tell us that employees discovered Hector Sanchez had been quietly rehired back at Annapurna by Ellison and was working on gaming projects without the knowledge of the rest of the Interactive staff. The news wasn’t made official until August that Sanchez had been appointed president of interactive and new media at Annapurna — a title that seemed to some as potentially at odds with Vella and Mars’ roles at Interactive.
Annapurna, for its part, claims that talks between Ellison and Sanchez began as far back as February for Ellison to fund a new venture Sanchez was planning after departing Epic Games. As talks continued, Annapurna says Sanchez began negotiating with Remedy Entertainment for a deal related to film and TV spin-offs of its properties. However, when spin-off negotiations began to crystalize at Annapurna Interactive, Ellison offered Sanchez a position at Annapurna. The intent, per the spokesperson, was for Verset to become the company’s indie arm, and for Sanchez to lead efforts in the AAA and AA-gaming space, including transmedia properties.
Which is how, months later, Annapurna announced it was partnering with Remedy Entertainment on film, TV, and other projects including funding support for Control 2. The press release, which IGN received, referenced both Sanchez and Ellison. But it doesn’t reference Annapurna Interactive at all, and IGN understands Annapurna Interactive employees were only informed the deal was happening that morning. Employees, unaware of Ellison’s plans or the status of the spin-off, were confused, concerned, and frustrated about the direction of the company and the future of its Interactive division, Verset or no Verset.
While all this was going on, sources say that discussions with Ellison regarding the spin-off appeared to have stalled out, and in August Annapurna officially terminated discussion. Annapurna claims this was due to Gary’s lack of response to requests for feedback on legal drafts, and in a statement sent to IGN after publication, doubled down. “Any implication Annapurna was backtracking on the deal is false. We agreed to high-level deal terms and signed a term sheet in early April, which makes it all the more surprising that we never got a response.”
Meanwhile, multiple people told IGN that in those final months, they began to see signs of Ellison exercising greater involvement over Annapurna Interactive’s deals, projects, and budgets in a way that began to make them further uncomfortable with the direction the company was taking overall.
All of this came to a head at the end of August when all 25 Annapurna Interactive employees including Gary, Vella, Masi, and Mars signed a joint resignation letter. The group gave two weeks notice and departed the company together on September 6 leaving Ellison, Sanchez, and newly-hired chief strategy officer Paul Doyle working on a semblance of Annapurna’s gaming efforts. Sources tell IGN that up to the letter being sent and after, the group asked Ellison to work with them on other possible solutions such as the aforementioned spin-off, but did not receive any interest.
IGN also understands that despite the two-week notice, partner developers did not learn about the sudden exodus of all their Annapurna contacts until a day or two before it occurred. Annapurna claims they didn’t have enough time to collect developer contact information to alert them sooner, while Annapurna Interactive sources say they received no guidance from the company during that period as to who should tell developers, when, and how. An Annapurna spokesperson reached out post-publication to IGN to deny this, claiming it had active and open conversations with the Interactive staff on how to communicate the news.
Annapurna Aftermath
While IGN couldn’t glean any details on the future of the 25 departed employees, there are some indications that the group is collectively working on some new venture together. A website for Verset appears to be online at the time of publication with a PR alias, which IGN reached out to for comment. IGN was also unable to find any posts or other discussions from the departed members indicating they were looking for employment elsewhere. Whatever their future plans, IGN understands that the group did not have a ready-made venture waiting when they left, as some have speculated. If they build anything new, it will be largely from scratch.
Meanwhile, at Annapurna itself, efforts are underway to right the ship. Multiple developers I spoke to expressed a mixture of frustration and confusion at the sudden departure, but several told me they felt confident in Sanchez’s ability to honor existing obligations. Several individuals with projects at different stages of development told me about meetings they’d had with Sanchez in the wake of the event that they reported had reassured them. Sanchez has previously stated his intention both to backfill roles as well as work with outside agencies to fulfill Annapurna’s contractual obligations, and IGN has confirmed this process is ongoing. Earlier this week, Annapurna also posted an open role for a QA Manager overseeing “multiple external QA teams.”
The unusual situation appears to have impacted a few specific projects in unique ways. On August 30, iam8bit shared an announcement that an upcoming PlayStation 5 physical edition of Outer Wilds: Archaeologist Edition had suffered from a manufacturing error, and did not include the Echoes of the Eye expansion as expected. Annapurna Interactive at the time said it would “continue to investigate”, while iam8bit offered either a digital DLC voucher to impacted customers, or a replacement corrected physical copy. Both Annapurna and Interactive sources have told IGN that this issue is unrelated to the resignations, and Annapurna reassured that it will not be impacted by the upheaval at the company.
Then there’s Blade Runner. Last summer, Annapurna Interactive announced it would be developing its first in-house game, based on the Blade Runner franchise, titled Blade Runner 2033: Labyrinth. However, game director Chelsea Hash appears to be one of the 25 individuals who resigned, per LinkedIn, and IGN understands that all other full-time members of the development team joined her. Annapurna has told IGN that development on Blade Runner 2033 will continue despite the departure of its entire team.
An Annapurna spokesperson also shared the following statement when asked for further comment:
“The whole situation is a baffler, but now we’re focused on moving forward. We’ve had really great conversations with an overwhelming majority of our existing development teams and are grateful for their partnership. If our inbox is any indication, a ton of developers continue to want to be a part of what we’re building, and we look forward to seeing their pitches. We’ve also had an influx of quality job applicants and are excited to build a team passionate about our mission to tell original stories that aren’t being told elsewhere. P.S. We’re hiring.”
Annapurna has splintered into two groups, both of which are now working to pick up the pieces. The remains of Annapurna Interactive (or perhaps a future Verset) consist of 25 individuals who felt strongly enough about perceived mismanagement, poor communication, apparent spontaneous layoffs of leaders, and one another that they were willing to give up paychecks and stability at a time of overwhelming industry job and funding uncertainty. When IGN approached its sources close to this group about Annapurna’s version of events (specifically, the conflicting information around Masi and Gary’s alleged resignation/firing and the collapse of spin-off discussions), they reacted with skepticism, but did not feel they could safely provide more specific details.
Meanwhile, at Annapurna, a tiny leadership team is struggling to ensure that around 40 projects have the support they need, while the company’s partners have been left at various stages of development and uncertainty as to what comes next.
Annapurna Interactive as we once knew it — a beloved publisher of critically-acclaimed, unique, beloved indie games — is no more. What, if anything, will rise to take its place?
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.
Additional statements from an Annapurna spokesperson were added to this piece post-publication.