Annapurna Interactive has "splintered into two groups, both of which are now working to pick up the pieces" says new report

Earlier in the month, we learned that Stray and Neon White publisher Annapurna Interactive’s entire staff resigned after a dispute with boss Megan Ellison. Reported by Bloomberg as a disagreement over attempts to "spin off the video-game division as an independent entity," the details were nonetheless somewhat scant. A new report from Rebekah Valentine at IGN has since shed some more light on the walkout, which reportedly involved “disagreements over the direction of the Interactive division, chaotic departures, communication breakdowns, and a perceived lack of leadership transparency.” It’s a thorough account of some messy events I recommend reading in full, but here’s a brief rundown.

Prior to 2024, write IGN, tensions were already present. Opinions of Ellison within Annapurna Interactive "varied from indifference to latent mistrust given previous reports on her behavior toward employees," with anonymous sources citing "a strong fear of reprisal from Ellison in particular, given her resources, history, and reach."

Still, IGN also reports that work at Annapurna Interactive was "business-as usual" up until mid-March of this year, when employees were "suddenly informed" that co-founder and Annapurna Pictures CEO James Masi had been let go, causing a shake-up that reached right up to Annapurna president Nathan Gary. Annapurna claim that Ellison "reinstalled Gary as head of Interactive, and deemed Masi’s role unnecessary" - only for Gary to also leave the company around the same time. From the report:

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.

Ellison then held a video call, and "all the departed staff returned, including Gary and Masi, and discussions began for a potential spin-off of the company". The plan was for Gary and Annapurna Interactive’s staff to form a new company, named Verset, that would oversee currently existing Interactive projects. The developers that IGN spoke to were aware of the plans, and "were reassured their contracts would be fulfilled."

Verset was to become "the company’s indie arm," with former Sony producer Hector Sanchez to lead AAA and AA projects. This included "transmedia properties" - hence the recently announced Remedy deals. A lack of internal communication regarding these plans, however, lead to employees feeling "confused, concerned, and frustrated about the direction of the company and the future of its Interactive division, Verset or no Verset."

Around this time, write IGN, "discussions with Ellison regarding the spin-off appeared to have stalled out, and in August Annapurna officially terminated discussion." In a statement to IGN, Annapurna claim that "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."

Multiple sources told IGN that, in the months leading up to the walk-out, 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."

At the end of August, all 25 employees of the company - including Gary, Masi, and the rest of leadership - signed a joint resignation letter, giving two weeks' notice before departing the company on the 6th of September. This left Ellison, Sanchez, and CSO Paul Doyle "working on a semblance of Annapurna's gaming efforts." Despite the two week’s notice, IGN write, partner developers were not informed of the upcoming resignations. From the report:

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.

As it stands now, IGN say that Annapurna have "splintered into two groups both of which are now working to pick up the pieces". On one side, the 25 departed staff that form the remains of Annapurna Interactive ("or perhaps a future Verset"), and on the other, a "tiny leadership team" at Annapurna to support "around 40 projects". An Annapurna spokesperson shared the following statement with IGN:

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.

Hiring though!