NEW YORK – Ambitious game publisher THQ says it was within inches of signing Respawn Entertainment, the startup game studio formed by rogue Call of Duty developers, but backed out because of a key contractual term that neither side would budge on.

Shortly after Jason West and Vincent Zampella were let go from Modern Warfare developer Infinity Ward, the pair established independent studio Respawn and partnered with Electronic Arts.

The deal made sense: Electronic Arts wanted the guys who made the best Call of Duty games so it could better compete with rival Activision. But Danny Bilson, vice president of THQ's core games business, says Electronic Arts was not Respawn's first choice of publisher.

"We were one deal point away from signing [Respawn]," Bilson told Wired.com Wednesday at a game preview event. "I saw [West and Zampella] recently, and they said it was that only one deal point, one that I wouldn't cave on."

The deal-breaker, said Bilson, was that Respawn wanted to own the rights to the intellectual property it would create. THQ wasn't interested in striking such a deal.

"My responsibility to our stockholders and to my CEO and the company is to build an IP library," Bilson said. Letting West and Zampella own the rights to their game, he said, would "open the doors for everyone else to say, 'I wanna own it too.'"

Zampella confirmed Bilson's account. "It should come as no surprise that, after Activision fired us in March 2010, the other major videogame publishers contacted Jason and me about working with them," he said in an e-mail to Wired.com. "I've known Danny Bilson for many years, so THQ was one of the publishers who approached us. We had serious discussions with them.

"As for the IP ownership, frankly, after what we'd just been through with Activision, owning the IP we were going to create was important to us. Unfortunately, THQ did not want to agree to that," he said.

Bilson likened the situation to Hollywood, pointing out that very few filmmakers own the rights to their films. Hollywood studios typically hang onto intellectual property rights; the biggest directors and writers can earn huge chunks of change for their work, but studios retain the bulk of control.

"I think because of the relationship [West and Zampella] were coming out of and the emotional stuff they were going through, they just really said, 'No, we gotta own it,'" Bilson said. "And EA, whatever their strategy was, [decided] to let them own it."

Electronic Arts will publish the new studio's titles, but Respawn will own all intellectual property rights. Soon after this deal was struck, Activision and Halo creator Bungie signed a similar agreement.

Activision is suing West, Zampella and Electronic Arts for "hijacking assets for personal greed and corporate gain." Activision has claimed that West and Zampella conspired to sabotage the Call of Duty franchise before jumping ship to Electronic Arts.

Bilson says THQ hopes to work with West and Zampella in the future.

"I'm talking to those guys, I love those guys, I respect those guys," Bilson said. "Maybe down the road we can strike another deal somewhere where it goes our way."

Photo: Chris Kohler/Wired.com

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