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EA settlement with Activision involved 'little or no' money

May 17, 2012|By Alex Pham and Ben Fritz
  • Jason West, left, and Vincent Zampella, whose studio created the Call of Duty franchise, are set to have their day in court May 29.
Jason West, left, and Vincent Zampella, whose studio created the Call of… (Ann Johansson )

The 11th-hour settlement between Electronic Arts Inc. and Activision Blizzard Inc. in the billion-dollar lawsuit over the Call of Duty video game franchise involved "little or no" money changing hands, according to an analyst.

The surprise settlement, announced Wednesday afternoon, removes one obstacle in Activision's lawsuits involving dozens of game developers who created the company's lucrative Call of Duty shooter games.

Activision sued EA in 2010, alleging that EA had improperly recruited two key Call of Duty developers, Jason West and Vincent Zampella, while they were under contract with Activision.

Still outstanding are lawsuits that Activision and West and Zampella lobbed at each other in 2010. Each side claims the other breached a contract that specified bonus payments and royalties owed to West, Zampella and the developers who worked in their studio. That lawsuit is set to go to trial May 29.

In addition, Activision faces a related lawsuit from 40 game developers who worked for West and Zampella accusing the company of jilting them of bonuses and royalties.

By mollifying EA, Activision is now able to focus on the developers.

As for the cost of settling with EA? Their terms for agreeing to bury the hatchet are confidential.

But according to Michael Pachter, an analyst with Wedbush Securities, it's very likely that both parties walked away without exchanging any money.

The reason is that both companies would have to set aside money for any substantial settlements and disclose that amount to shareholders. EA made no such disclosures with regard to the lawsuit and does not plan to, according to an EA spokesman, who declined to comment on the settlement.

Although Activision also made no disclosures regarding its settlement with EA, it did note in a report filed May 9 with the Securities and Exchange Commission that its lawsuit against the developers could have "material impact on the company's business."


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