News broke on Tuesday that Catalyst Game Labs, publisher of Shadowrun, Eclipse Phase, Cthulhutech, and Battletech, is in severe trouble to the tune of $850,000 being embezzled from their corporate coffers. You can read the initial detailed report of the issue here.
On the one hand, eek. On the other hand, embezzlement has practically become a tradition in the RPG industry, so it’s not all that surprising.
What I want to point out, though, is the press release Catalyst put out on Wednesday, the very next day after the news broke.
For Immediate Release
Catalyst Game Labs recently completed a detailed financial review of the company. We learned that over the past several years the company has achieved dramatic growth in terms of demand, increased total revenues and strong sales with an increasing market share in the gaming industry, despite a lackluster economy. We are thrilled by that news and are eager to move forward with our upcoming original game Leviathans, along with our other new casual games. We also remain committed to plans for our beloved licensed games: Shadowrun, BattleTech, Eclipse Phase, and CthuluTech.
While we wish the review had only uncovered positive news, we also discovered our accounting procedures had not been updated as the company continued to grow. The result was that business funds had been co-mingled with the personal funds of one of the owners. We believe the missing funds were the result of bad habits that began alongside the creation of the company, which was initially a small hobby group. Upon further investigation, in which the owner has willingly participated, the owner in question now owes the company a significant balance and is working to help rectify the situation.
The current group of owners was presented with this information on Monday. Administrative organization for the company is under review, and accounting procedures have been restructured, to correct the situation and provide more stringent oversight. We feel the management team at Catalyst did the responsible thing by seeking this financial review and we will continue to restructure as needed. We are in discussions with our partners and freelancers to remedy any back payments that may also be due as a result of this review.
We are embarrassed that this situation did occur but we hope our eagerness to make these changes, along with our reputation for making great games, will encourage you to stand by us. We understand that for a few employees the news was too stressful and we wish them all the best in their new endeavors. However, the majority of the team remains and will continue to bring great entertainment to you all. We appreciate the support our friends, freelancers, and fans have provided us in the past and look forward to a successful future.
Now, I’m not saying any of that is true or it isn’t, but I do want to say this is the best example of game company PR I’ve seen in a long time. If you need to do damage control, this is how you do it.
- It’s prompt – put out less than 24 hours after the news hit.
- It’s upbeat – explains sales are great, the game will be fine, the guy just made a mistake, and it’s all on the path to resolution.
- It’s detailed – not too much detail, but enough that you can kinda trust you’re being told a decent part of the story.
- None of it is obvious lies – it’s sad that that’s worthy of note but look at the competition.
When confronted with similar issues, other game companies instead tend to:
- Disappear, and not address the issue for months (WEG)
- Spin a tale of woe about personal finances, health, psychological problems, betrayal, and dark magic (Palladium, WEG)
- Make a declaration that is either a transparent lie or gives no detail and tells you it’s none of your business (WotC)
I like this press release so much that I find myself hoping it’s true and that they can recover from this in a meaningful way! I hear that the Eclipse Phase guys have already said they won’t work with Catalyst any more, they’ve shed a couple employees, and some other freelancers are turning their backs on them – those are bad signs. But, who knows.
Aside: The public somehow thinks that it’s mostly the big companies like AIG or Lehman Brothers that are full of illegal shenanigans – but having worked for small companies, I am willing to bet the percentage is just about equal. Human nature’s the same in small and large scale.