Home / Software & Gaming / Source: Crytek is sinking, wages are unpaid, talent leaving on a daily basis

Source: Crytek is sinking, wages are unpaid, talent leaving on a daily basis

Overnight word began spreading that perhaps Crytek was in a spot of financial trouble once again, after an anonymous post appeared online from someone claiming to be an employee who had not been paid properly for six months. After publishing our original coverage of this story, a Crytek employee at the company’s Frankfurt office got in touch with KitGuru to better explain what is going on behind the scenes at the company right now. It’s certainly not a pretty picture.

We will be keeping our source on this anonymous but do be assured that we privately verified who they were and their employment at Crytek. With that out of the way, let’s tackle issue number one- the lack of pay.

According to our source, things had been relatively stable financially up until around June of this year, at which time, employees at the Crytek Frankfurt office discovered they were not going to be paid on time. At the time, Crytek’s upper management assured employees that all financial problems would be worked out by August and that there would be enough money to remain stable for at least 18 months.

Payroll was two weeks late for July and August. September came around and payroll was five weeks late. Wages for October and November have actually yet to be paid at all and with December’s pay due in three weeks time, things aren’t looking particularly bright. Our source told us that up until June, there had been no indication that financial issues were on the horizon.

As you can imagine, morale amongst employees at Crytek is low and apparently resignations are being handed in on a near daily basis. The company is said to have lost some irreplaceable talent over the last few months and many more are seeking employment elsewhere. Those who remain at the Frankfurt studio have submitted a legal letter to management informing them that if wages for October, November and December aren’t paid in full by the end of next week, then they will stop working. Those at the Budapest studio have apparently already stopped turning up to work.

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So where have all of these financial problems come from? Well it turns out that Crytek may have expanded too fast. The company has around 700 employees spread out across its six studios and next to no revenue coming in. The licensing money from Crytek’s 2015 deal with Amazon has been spent and the company has made some poor investments in new projects. Rather than building on stronger IP like Crysis, Timesplitters or Ryse, Crytek has tried its luck with VR and free to play projects, which aren’t paying the bills.

Over the last couple of years, Crytek has been working on two free to play titles: ‘The Hunt’ and ‘Arena of Fate’. While neither of these have been publicly cancelled, our source tells us that these are failed projects and won’t see release any time soon. In an effort to recoup some money, Crytek’s Shanghai studio as well as the company’s Sofia based studio (also known as Black Sea Studio) are potentially going to be sold off.

According to our source, Crytek co-founder, Cevat Yerli has not shown up at company headquarters for months and is said to be focussing on other business ventures, effectively leaving Crytek to its fate without a solid business plan. The other two Yerli brothers still show up at Crytek HQ but they have not been taking advice from other members of management on how to move forward and communication has been lacking.

We have contacted Crytek to see if they are aware of these claims and get their side of the story. I will update if/when I hear back with an official statement.

KitGuru Says: There are a lot of claims being thrown around about Crytek right now from multiple sources but it is important to get both sides of the story, so hopefully Crytek representatives will be able to get back to us in an official capacity soon. I do hope this mess is cleared up soon and those affected get the wages owed to them. 

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  • Mike

    Isn’t it amazing they let themselves get into this position?

    Do you know what friends do when making an indy game and the funds run out? They get side jobs to pay rent if they have to but they keep making their game on a cheeseburger budget. Why don’t people do this in corporate studios? Cause they have no passion for it and why should they? Most of the money the game makes they won’t ever see.
    AAA studios have long been on the way out. A new age is upon us. One
    where artists and programmers make the money, not fat cat corporate
    shrills who had nothing to do with the production of the game.

    Then in time they will be very successful and they shall rise up as new corporations, publicly traded with stock holders. Which contradicts what I just said in the last paragraph, so have a nice day!

  • l8oss

    wow did not know it would be sad to see crytek fold rather have EA fold

  • h3d

    “They get side jobs to pay rent if they have to but they keep making their game on a cheeseburger budget. Why don’t people do this in corporate studios? Cause they have no passion for it and why should they?”

    Many indies that go this route are either virtual entities with no physical pretense, or they’re ‘studio’ is actually someone’s flat, which depending on their location could violate zoning restrictions. There is at some point where you have to have a nexus of people available at the same time to make decisions, and since hundreds of people can’t go out and all get closing shifts at bars so they can be available during the day.

    I also take major issue with your assertion that people in AAA, especially the grunts that doesn’t see any money, aren’t passionate. C’mon dude. We all know that so many people want to go make games at an AAA level with a nice booster for their resume dick are just as passionate as those in the indie world. Have you not read the stories of the 8+ months of crunch many AAA devs go through on a regular basis? Try not going home for a week from a job that is ‘suppose’ to be more stable, and then talk to me about passion.

  • Robinjanderson

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  • invalidusername

    This isn’t the first time this has happened – http://www.polygon.com/2014/8/8/5982995/crytek-employee-pay-withheld-save-company-cevat-yerli

  • MangoMango

    Dear Crytek

    Hire an accountant, and then listen to them when they say “we can’t afford that right now”

  • LeLwrence

    But they can’t afford one :^)

  • MaxPain

    I am from Crytek Frankfurt and confirm Crytek is not paying us salaries and everything written here is true. October and November salaries are not paid and its 11th of December now and previous salaries were very late too. The company is not sincere with us. It deserves to go bankrupt.

  • Yep, we got the information via our sources in the beginning of october 2016 as well: https://gamezine.de/crytek-erneut-in-der-krise-interne-informationen-offenbaren-die-talfahrt.html

  • charlie Jason

    They tried to go free to play. That explains it.

  • Michal Gloc

    When you are software developer for a software company, the contract usually states that all the code you write belongs to the employer, also the code written at home or otherwise out of premises. This effectively makes it impossible to take second job in your primary skill. I don’t know Crytek contracts, but it’s likely it was similar. Unless by side job you mean working nights flipping burgers.

  • MaxPain

    The situation in Crytek is very bad, I would say dramatic. People don’t believe the management anymore. People are now very angry at the management and even HR. The first problems this year appeared when salaries for June 2016 were late. Then managment told us the problem is just a technical delay, for next 3 months – June, July and..possibly..maybe…August. The reality showed salary for July arrived mid August, and for August mid September. Later was only worse. Salary for September arrived on 31st of October. 1 month delay. Later…we in Frankfurt did not receive any salary. No salary for October and November. People are leaving, handing out letters to HR to state they will not work if the money will not arrive. Not money for the last month. Money for the last 2 months 🙁

  • I totally get your pain – it’s so shitty cuz u have fixed costs and everything.
    Though I knew this was coming I had no real evidence and proof, just what sources told me – basically that payments are delayed (salaries, as well as advertisements).

    I even asked openly for a leak or anything, cuz I know that the upper management is driving a ferrari / multiple ferraris (on company name) and I was wondering how that car got paid or if it’s leased or anything.

    Unfortunately the “leak-culture” isn’t very much implemented in Germany so I couldn’t investigate any further. So again: all evidence to put the finger in the wound or contact the labor union with information and asking them to give you guys support would be very much appreciated to [email protected]

  • I’m sorry to hear about the situation over there and I do sincerely hope it gets sorted out soon. If you would like to share any additional information with us privately, then you can get in touch with [email protected] and [email protected], we would be happy to hear you out.

  • Zeag

    As a fellow dev, you have my sincerest sympathies. Withholding pay is one of the most twisted form of abuse on employees. Every week you must decide if you put your faith in a company that you might like to work at that you’ll be given your due or end up simply leaving penniless now instead of even more penniless later. Truly a crapshow when you have a family to feed and bills to pay…

  • Lucas

    Yes, I’ll dance when millions of gamers will not be able to get their favorite product and tens of thousands are people are left unemployed. That’ll be a great day for the industry.

  • ekdikeo

    This should not be acceptable, in this industry or *ANY* industry.

    Game Developers–

    If you don’t get paid for your work, DON’T KEEP WORKING.

  • BigJimbo

    Well it looks like Star Citizen will be getting an influx of staff for its Frankfurt office :p (And this explains why their office space keeps growing!)

  • Adam Chambers

    Are you all all actively seeking to go to other engines, companies that currently use Crytek? Is it possible if there is enough of you to create a new engine because clearly the teams themselves have the talent. I know for instance that certain games have a full licence and created their own such as Star Citizen, are people actively talking to them for instance to move across because that would appear to be a good fit.

    All the best for the future and hope that you and everyone there get sorted.

  • Koszper Gábor

    OMG, imagine if Origin would stop working.

  • Georg Grabler

    Good engine, and they had really good games in the past. Though, some really good IP was sold off (FarCry anyone?).

    Sad to see it go down that way, but I understand that talent is leaving in a situation like this. If talent starts leaving on a daily basis and others are not showing up for work (so very likely trying to get new jobs already), it’s very likely to be too late to rescue.

    All the best for the Employees though, but I guess you’ll be fine, there is never a lack in the need of skilled people.

  • AJ Henderson

    If your contract states this as a developer, you are working at the wrong place. I’ve been a dev for 10 years at 3 different companies and have never once had stipulations like that in my employment agreements or even seen a company that I looked at with such an agreement.

  • AJ Henderson

    But that isn’t what would happen. Other companies would buy up the IPs and things would continue to happen, just with less management overhead and less monopolistic behavior (unless an even bigger fish gobbled them whole.) A company going under doesn’t mean their properties die (necessarily), they are most commonly sold off if they still have a market.

  • AJ Henderson

    It’s sad how often this is true, sometimes to truly disastrous consequences. My Dad has been a CFO for close to 30 years. One job he had for a short time was CFO of a biotech start up. He told the CEO that he couldn’t spend the way he was without going out of business within 2 years. CEO didn’t like that and fired my Dad. A year and a half later the company went broke with 200 million of the CEO’s family’s money wasted and the CEO committed suicide in the ensuing depression. It literally could have all been avoided by just listening to the guy whose job it is to make sure you don’t run out of money.

  • Lucas

    Monopolistic behavior? In what way do you mean? EA doesn’t come close to having any kind of monopoly. They just act like any major company acts to increase sales/profits.

    And buying up an IP is not the same as continuing a franchise. First of all, all the expertise that the EA studios have built up over the past few decades will be gone. So unless EA were to sell of its IPs and studios as a single package, no IP will ever be the same (and if EA can sell their property like that, they’re not in a phase of going under, also good luck finding a company that is willing to take over property in that manner). And even then, staff need not want stay on and they’re will undoubtedly be major cut. Second of all, relaunching the IP from a new studio will not happen overnight; there will be e.g. no FIFA/Madden for a few years, so their competitors do actually get more of a monopoly position and consumers don’t get a choice anymore. Third of all, the new owners might have a completely different vision for what the IP should be, after all they bought the IP to do with as they please.

    Fourth, and most importantly, why the hell would EA need to go under anyway. A lot of their games are well received, some incredibly well. They had major hits recently with Battlefield 1 and Titanfall 2; both great games. They might not work like some studios that work on only 1 game and that game is brilliant (everybody wants every studio to produce only games like The Witcher 3), but that almost never happens. Creative freedom and small scale studios make tons of crap, or overhyped shit like No Man’s Sky. Chances are, if EA were to go under, must of their franchises would die with them (as we have seen plenty of times in the past).

  • MaxPain

    Not many companies use our engine and that is one of the sources of problem of Crytek. Star Citizen has some of the best Crytek people already. What is obvious to everybody is that the company is a hostile place to its employees. Our life, our families, our plans, our financial safety did not and doesn’t count. We were misleaded with false information about temporary, technical financial problem just before last summer. Otherwise many people would simply quit this place faster and not by such recent unpleasant surprise, that salaries are not paid at all. We need to pay our rent, feed our children. This company deserves bankruptcy for how it treated and treats its employees.

  • AJ Henderson

    Ok, let me try to clarify as my initial comment was under developed and you’ve done a good job of pointing that out. Mostly I’m referring to the combination of their tendency to buy up successful studios to build their warchest and their heavy handed use of DRM and nickle and diming within their games. Monopolistic wasn’t the right word, but there are many good reasons that EA has a large portion of the market that wishes they were broken up.

    Going down the way that Crytek is going down wouldn’t really be the ideal, but having them broken up into more independent studios that are more agile and more innovative would be good. EA does have some good studios, but they also have a lot of mediocre studios being tied to the good ones and they end up pushing some pretty dubious revenue stream efforts which have had a negative impact (such as the near death of cheat codes to add to replayability in games because they’d rather sell controlled access to whatever they feel like rather than allowing tinkering.)

    EA also isn’t the only one guilty of this, but they are the biggest and when they gobble up a good studio that wasn’t doing this and then make them start doing it, it rubs people the wrong way and doesn’t earn them many fans.

  • Hi and sorry to hijack this thread/post. I’m Sandro and I work for IGN Germany. We’d very much like to talk to you about the situation at Crytek. If you’d be willing to talk to German press, please get in touch with me at [email protected].

    Once again, sorry to hijack your thread. Here’s an investigative potato.

    https://uploads.disquscdn.com/images/94d3e0c7b717d0799ea2b7dc907b0e456d40fb4d318291d3b68f713ef817d540.png

    Regards,
    Sandro Odak

  • Lucas

    Sure I get that. I’ve watched in horror as studios like Bullfrog and Westwood went the way of the dodo.

    At the same time big companies provide a strength to small studios. Making games is expensive, and a large publisher may have a lot of expertise a small independent studio does not. It does not guarantee quality, as you rightly point out, but it gives additional means.

    There are upsides and downsides to having major publishers. Since there is plenty of competition in the industry, I don’t see it as a bad thing to have publishers like EA or Activision. In fact EA’s policy has been better than most of the past decade or so (I’m more annoyed by what I’ve seen with Activision’s milking policy regarding such franchises as Guitar Hero and Call of Duty). In the end, it’s about making money, and to finance products that costs tens of millions, you need either a decade to grow as with Project Red, you need one extreme case of crowdfunding, or you need major labels with billions in turnover.

    To be fair though, I haven’t been a hardcore gamer in a while 🙂 Maybe that’s why I nowadays have less of a problem with EA.

  • MaxPain

    Hi. Almost everything was said about situation in company and its attitude to its employees in press across the web. I could also tell you there was a bonus system few years ago, where people were giving stars to other people. When there is a profit, we would be paid the bonus. 3 years of that star stystem and w never got paid for the accumulated stars. This company cheated its employees the whole time. It is not just a recent thing. I would not recommend anybody to join Crytek. Not worth your time and energy and life costs of relocation. I hope it dies as a bankrupt. It fully deserves it.

  • AJ Henderson

    Oh yeah, there are certainly upsides and downsides, but at the end of the day it’s one of those things where I think the “hardcore” gamers want to see games that have the replayability of so many classic games (and don’t mind paying more for a base game if that is what it takes) and then part of the issue is that gaming is now much broader than that and there is also a huge “casual” contingent that don’t so much care about the replayability or longevity of a game so much as getting their fix for a cheap initial purchase and maybe end up paying more in the long run because they nickle and dime if the next greatest thing doesn’t come along soon enough.

    We’ve gotten to the point where the second group is more predictable and therefore easier money, but it means large companies tend to cater and milk that group and ignore the “hardcore” crowd, even if the hardcore crowd may still be willing to part with more money. It’s also probably part of the reason for the vehement anti-exclusivity stance being taken by most of the VR community right now, which is primarily built up of “hardcore” gamers that are looking for the new experience and depth, not more of what they are used to. There isn’t really a perfect way to reach both crowds, but having more moderate size studios is closer to being able to meet the needs of both.

    It’s that trade off between agility and stability. At the small size, there is infinite agility trying to find where you can fit and survive, but no stability as the next paycheck is unsure. Then you move to medium size where you have your slot, it’s comfortable, but you still have to shift a bit and if things move, you still die on the vine. Finally at the large size, you have the strength to whether through changes and even make your own markets, but you also have to invest deeply in making a safe bet and can’t really experiment all that much.

    The small cater highly to the hardcore crowd but don’t offer enough development or predictability for the casual crowd. The large cater to the casual crowd, but lack the flexibility to cater to the hardcore crowd, especially if they are trying to milk the casual crowd for funding. The medium size can comfortably enough service both, but tend to be gobbled up by the large to do the aforementioned market building, but that means that the consumers that most helped build the studio up often lose out in the deal.

    A lot of it could be fixed by having strong commitments to do things like remove DRM after a few months, enable at least a parallel offline play mode after a few months and unlock cheat codes and manipulation of the game when prices get really low and people aren’t really buying stuff anymore. That would let them still cash in on the casual crowd but also give the long term replayability and interesting stuff that the hardcore crowd wants. It still isn’t 100% perfect for both, but it gets a lot closer to balanced.

  • Lucas

    I know this line of theorizing about industry developments; but I’ve wondered for a while now what if means to be hardcore or casual gamer: those lines have gotten blurred over the last 10-15 years. Also, if we assume for now that casual means you just play FIFA, CoD, or AC, then that market is huge, far bigger than the market for games like The Witcher III and as you say, easier money. (Games like GTA seem to cater to both audiences, so it is possible.)

    Economics 101: small demand means small production, big demand means big production. If the hardcore market is relatively small, it will get fewer games. We – putting myself in the more hardcore group – want different things out of games I guess. I don’t enjoy CoD at all, but the masses do. Similarly, I don’t enjoy the DC movies, or the Transformer movies; their quality sucks balls imo, but the masses love them. I guess as we get older, we look at things in a different light, and the industry has developed so much since I got my first NES 🙂

    That’s annoying sometimes, as any PC gamer will know. Consoles is where most of the money is made, PC is relatively small. You give some nice solutions, but I doubt there is a perfect way to solve this.

  • AJ Henderson

    Oh, I’m certain there isn’t a perfect way to solve it, but we can certainly do better than we are doing. I’d also add the AC series as a game series that can reach both sides. There certainly are some that reach both, but they are still generally tilted towards a particular portion of the market.

    The thing you are forgetting in market sizes is that of quantity of purchases vs quantity of gamers too. There are fewer “hard core” gamers, but they tend to spend a lot more time gaming and play a lot more games. Your average casual gamer doesn’t own more than maybe 20 or 30 games. I’ve had single checkouts from Steam with more than that and have over 1000 games in my library. That includes some very expensive and very specialized games such as the original Steel Battalion.

    There’s also the long term issue that while the casual base is more predictable, they are also more fickle in that they drift in and out of things, where as the harder core gamers stay within industry but adapt more frequently. The casual crowd bangs on something that hits popularity until it is old and then moves on en masse like a cloud of locusts. Both markets do have their advantages from a business perspective but one pushes the industry forward, the other milks it.

    This also isn’t just gaming, as you kind of illuded to with the point about movies. I’d also point to the broader technology industry with Apple. People LOVE Apple, but realistically, Apple isn’t an innovator. Apple’s strength is looking at when existing tech gets to the point it is mass marketable, polishing up a limited, but accessible package and then pushing it to everyone as a cultural thing. They don’t handle change well and when everyone tried to follow them, things became quite stagnant for a while.

    You have to have the innovation to keep things interesting and find the next thing that can be mass marketed before the masses get bored of what they have and the innovation really happens in the fringes, not in the mass market. You can find ways to improve the balance, but the two are really mutually exclusive to an extent as the mass market wants predictability and stability to a point and the innovating portion of the market wants new things and unpredictability.

  • Lucas

    If we compare casual gamers to locust, let’s call them for what they are: a plague 😛

    The movie industry is actually interesting because it has a much longer history. Marvel seems to be so successful because each movie manages to innovate on some scale, there is some artistic value to it. Transformers was successful at the start, but seems to be on a downward slope (let’s hope so at least). But no company is going to say no to a movie that makes them a few hundred million; even I saw the first one in the theater. With AAA movies (or games) being so expensive, playing it safe brings in the cash needed to fund innovation. You can’t have one without the other.

    One other thing about hardcore vs casual: I have never seen any research about the money companies make from these two groups of gamers. No doubt companies will do their own research, but I have no access to their data. So I cannot say whether there is more to be made from hardcore or casual gamers. All you can do is speculate based on anecdotal evidence; it makes sense that hardcore gamers spend more, but that means very little to me. Unless of course, there is research, in which case I’d be happy to read it 🙂

  • Anton Adamse

    Once upon a time, I was actually considering working for them, as I had a love interest for Cryengine, but was warned about the Yetli brothers. The three of them should eighter change their names or be very careful about entering the industry again :/

  • AJ Henderson

    Yeah, historically it was easy enough to verify by looking at total games owned vs number of gamers in a category, but now with micro-transactions, it’s all but impossible to tell for sure as the data is all siloed.