CryTek Cancels Sequels, Allegedly Can't Make Payroll -- Are They On The Brink?

Crytek -- developers of the CryEngine and the hit Crysis series -- is, by all accounts, in significant trouble. Reports of problems are mounting at multiple publications as employees speak out about missed paychecks, layoffs, and multiple staff departing in the wake of non-payment. Eurogamer is reporting that Crytek UK has laid off or lost 30 staff working on Homefront: The Revolution since development started in 2011, including the Managing Director, Karl Hilton.

Crytek, of course, is strenuously denying any and all reports that the company might be near bankruptcy, but comments coming from ex-employees (a rapidly growing group) paint a different picture. Multiple individuals have spoken to various publications, stating that they've gone weeks without payment, that bonuses have been withheld, and that morale has hit rock bottom. Since the beginning of the year, Crytek has reportedly canceled an original IP project of its own, killed development on Ryse 2 after a dispute with Microsoft and poor sales of the original. This last, at least, we can confirm -- Ryse sold an estimated 0.91M units to date. At $60 per copy, that's just $54.6 million total -- assuming Crytek took home 100% of that amount, which they assuredly don't.

This means Crytek lost a ton of money on Ryse, and while Microsoft likely covered some of the cost for development since a new game for a new console is never going to sell in huge figures, it's still a crushing blow for the company. Reports now indicate that Crytek is being headhunted by other studios anxious to lure away top talent while others claim that the company may secure last-second angel investment. Reports indicate that morale has been punched through the floor partly by the studio heads continuing to show up in top-end luxury sports cars while developers have been asked to skip paychecks or received only 30-40% of owed pay.

These reports aren't confirmed yet, but it's not hard to see the problem. Ryse sells poorly, which leaves Crytek deeply in the red. By failing to secure a deal from MS on Ryse 2, Crytek fails to secure the revenue stream that would've come flowing in at the same time. The company's F2P efforts have collapsed (Warface is a mediocre title at the best of times), and it has no major launch or huge IP to kick out the door. This is precisely the kind of crunch between income and outflows that killed 38 Studios. Its Kingdoms of Amalur was well-rated and regarded but the company spent far too much on its development to continue as a going concern after the game failed to turn into a multi-million copy blockbuster.

If Crytek collapses it could punch a ragged hole through the company's plans to compete with the Unreal Engine through its own licensing system as well as AMD's Mantle support -- Crytek was a prominent adapter of AMD's technology.