Hellgate: London’s development, like its eventual implosion, was epic. At GDC, Stephen Goldstein, Flagship Studio’s ex-director of business development, explained just how what seemed like a guaranteed hit went horribly, regrettably wrong.

Goldstein reminded us first of the happier, more hyped times at Flagship. In October 2007, when the founders of Blizzard North were on the verge of launching their new company’s first title, Flagship had secured 60 magazine covers to promote game. It had six publishers worldwide, and five co-marketing partners—meaning millions of dollars in marketing funds—in addition to comic books, novels, manga, action figures, and more, all born from original, internally owned IP.

But just nine months later, Flagship was laying off a hundred-plus employees, unable to pay the bills and beginning the process of handing off Hellgate: London to someone else. What went wrong?

Many things, according to Goldstein, including the fact that Flagship really hadn’t considered failure an option.

“Everything was plan A,” he said. “There was no plan B. Everything was going to be a massive success.”

Part of the reason for Flagship for not having a “plan A” was that the developer had begun to believe its own hype, he said. Not every person involved in the development of Hellgate: London was like a lemming blindly walking itself off of a cliff, Goldstein noted, but he warned other developers in attendance to get outside feedback from those not invested in the success of the game.

“When everyone’s telling you how great you are, take a step back and reevaluate,” Goldstein warned, “We really had no objective point of view. Everyone was in the trenches.”

Even the game-buying public had begun to believe the hype, a product of a massive marketing assault that resulted in lofty expectations. Goldstein said that “No matter what we would deliver [with Hellgate: London] it would be impossible to meet those expectations.”

One of the other contributors to Hellgate: London’s failure was tackling “too many firsts.” It was Flagship’s first 3D game, it’s first first-person shooter, it’s first subscription-based game, and it’s first time creating software as a service. On top of that, it planned to release the game worldwide in 17 languages, which required 17 builds of the game, with each of its six publishers looking to score “something special” for their version of the game.

Another factor was Hellgate’s ill-defined structure. It was a single-player game with a multiplayer component that was split into a free-to-play tier and a subscription-based tier.

But what Goldstein called “the company-killing moment” was that, at one point, it had passed on investment. That, hypothetically, could have given Flagship an extra four to five months of development time, a period Goldstein feels could have given the developer enough time to deliver a polished product.

Remember, when someone hands you money, take it.

Flagship Studio’s troubled demon hunting MMO will be shut down at midnight on January 31st 2009. Namco Bandai, who have been running the Hellgate servers since Flagship went under, say that the game will be free to play until it is shut down.

The game had been plagued with bugs and operational problems since its 2007 launch and eventually led to its developers, Flagship Studios, going out of business in July this year.

Hellgate: London Closing January 31st [Gamespot]

Some of them were just bad timing in the PC market. The PC market was lousy last year. Some of it was the fact that we were an independent studio. We didn’t have unlimited money, and we had to ship when we had to ship. Part of it was because we overreached, and that was a design problem that was totally our fault. We tried to do too much. We tried to be a standalone game and a free-play game and an MMO and an RPG and a shooter. We were trying to be something for everybody and ended up really not pleasing many people at all….

Sounds about right to us!
Bill Roper: ‘Hellgate Wasn’t As Good As It Should Have Been’ [1UP]

We’ve approached Flagship for comment and they’ve yet to explain their status to us. Then, a posting appeared on Hellgate’s official forums from Namco-Bandai’s senior director of business development, Zack Karlsson, stating:

Hello Hellgaters,

I know everyone is looking for an announcement, and we’d love to make one — but right now, many things are in flux and we don’t have all the information yet. As soon as we do, we’ll post here on the forums, on the website, and anywhere else we can find you.

The posting continued:

Unlike most games, Mythos has been running with our testing community for almost its whole life. I really feel like we’ve all done this together. And despite this bump in the road, I think we’ve succeeded wildly. This is undoubtedly the best game community I’ve ever seen. This is the best game development team in the world, in both Seattle and San Francisco. The things we’ve learned here, and with you all, will be with us forever”.

The game’s official site calls the suspension a “hiatus”, but offers no date as to when private beta or further development will resume.

We recently spoke to Flagship Studios, who told us at the time that despite some rough patches after Hellgate: London launched, the studio was fully staffed and dividing its time between maintaining Hellgate and testing Mythos.

But in his statement, Schaefer said:

“PC gaming is changing, and I believe we’ve had a sneak preview with Mythos. With any luck, this will not be a long hiatus, and Mythos will be back. But even if it’s not, and even if we all move on, we’ve taken a lot of important steps forward. Game development is in many ways a continuum, and we all build on what came before. I know neither [lead designer Travis Baldree], the great Mythos dev team, nor myself are planning on doing anything but make games into the future. So no matter what, we’ll pick up where we left off, and you’ll be hearing from us shortly. We may not be the best business people on the planet, but we know how to make games”.

We’ve contacted Flagship for further details and will update as we receive them.

Max Schaefer’s Thank You [Via Gamasutra]

We got an anonymous tipster who said Flagship shut down abruptly yesterday, and that developers for both Hellgate (San Francisco) and Mythos (Seattle) have all been pink-slipped. “But there’s also hope that they will all have their jobs back at the end of next week at a brand new company”, our tipster says.

But wait, there’s more. Flagship’s Korean partners/owners, Hanbitsoft, were said to be taking over. That sparked a foofaraw regarding who owns the Hellgate intellectual property.

Fan site Hellgate Guru first reported that HanbitSoft was taking full control of Hellgate: London and intended to continue the game. That brought a forceful denial from Flagship, and confirmation from HanbitSoft’s own attorneys (who slipped in a backhanded dig at the failing studio, which pretty much confirms Flagship’s demise.)

HanbitSoft’s attorneys said that while they’re an exclusive licencee of Hellgate and Mythos, it’s been pledged only the Mythos IP. Secured lender Comerica gets the Hellgate IP as collateral on the loan. Either way, Flagship does not own either, and also:

[I]t 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.

That sounds like the “brand new company” possibility our tipster mentioned. Either way, HanbitSoft says it threw Flagship a lifeboat, and it chose to go to the bottom. Ouch.

Finally, VE3D says it got more confirmation early this morning:

Flagships’s Community Manager, Taylor Balbi, has revealed, through sources, that all Ping0 and Flagship Studios staff have been made redundant. Employees were notified at a company meeting and subsequently informed that the offices will be officially closed on Saturday. Balbi went on to reveal that three of the studio’s top brass dug into their own pockets to provide 30 days of pay to all employees.

Our source says an official announcement will come next week (like what, at E3?)

Flagship Studios’ Closure Confirmed, All Staff Fired, All I.P. Lost [Voodoo Extreme]

If you think morale might suffer on the team, a blog entry from Flagship Studios audio and gameplay manager Guy Somberg suggests you might be right. Somberg said on his blog that work had become “depressing” because of fan response to Hellgate’s issues. (The original post has since been pulled, but MMO fansite IncGamers retrieved it.)

Although Somberg wrote that he loved being part of Flagship, he also expressed a fair bit of worry about many of his colleagues moving on from their jobs:

“This milestone wouldn’t have been possible for us to achieve without the incredible support of our publishing partner, Hanbitsoft, and our dedicated community in Korea.”

Wow, that Hanbitsoft must have the most magical marketing team ever! Hit the jump for the press release, which actually contains the words ‘Hellgate”, ‘Successful’, and ‘Launch’, all in the same spot.

Flagship Studios’ HellgateTM: London Celebrates The Most Successful Online Korean Launch In Three Years

San Francisco, CA (April 11th, 2008) – Flagship Studios today announced that its action role-playing game Hellgate: London has become the most successful online video game launch in Korea of the past three years with over 1 million accounts registered within the first two weeks of its open beta test. Hellgate: London is the first online game in over three years to use a monthly subscription business model.

After launching the open beta on January 15th, Hellgate: London quickly rose to the ninth most played online game, fifth most popular RPG and most popular online beta game in PC Cafes*, with over 1 million accounts. Hellgate: London was released commercially on February 22nd, and achieved record sales in its first week of presales.

“To become the most successful launch in Korea for over three years is an incredible achievement,” said Bill Roper, CEO of Flagship Studios. “This milestone wouldn’t have been possible for us to achieve without the incredible support of our publishing partner, Hanbitsoft, and our dedicated community in Korea. We look forward to expanding the Hellgate universe and building upon this success in the future.”

“Flagship Studios are well aware of how the Asian market operates very differently to the Western territories” said Alex Kim, CEO of HanbitSoft, “By listening to players’ feedback and through constant updates to the game, Hellgate: London will continue to be an incredible success throughout Asia.”

Hellgate: London combines the depth of role-playing games and the action of first-person shooter titles, while offering infinite playability with dynamically generated levels, items, enemies, and events. Whether online or off, a player creates a heroic character, completes quests, and battles through innumerable hordes of demons to advance through experience levels and branching skill paths. A robust, flexible skill and spell system, highly customizable appearances, and a massive variety of randomly generated equipment allow players to create their own unique hero.

For more information please visit the official Hellgate: London site at www.hellgatelondon.com
*According to Gametrics and Game Report

All the gory details of the patch can be found on the Hellgate:London forums.