It’s 2000. A shiny new Ferrari pulls into the parking lot of Retro Studios’ enormous Austin, Texas, headquarters. Founder Jeff Spangenberg steps out of the car. It’s the first time he’s been to the studio in months. He’s there to lay off people. A lot of people. He’s there to lay off half of the company’s employees. It’s not the only time this will happen.

Retro, today, is known as the studio behind of one of the greatest games of all time, Metroid Prime, plus its two sequels and a pair of Donkey Kong Country games. The team is a part of the Nintendo family, beloved by fans who grew up with its games. But through a lot of its early years Retro was a studio on the brink of collapse, constantly churning but with no results. It was saved by Nintendo’s decision to trust it with one of its long-running franchises. Getting there, though, was a trial by fire that left many without jobs and with bitter feelings about a studio built on ambition and top-tier development talent.

Following last year’s announcement of Metroid Prime 4, in development not by Retro but a “talented new development team,” according to Nintendo, we decided to look back at where the Prime series started. We recently talked to 10 former Retro employees — from senior staffers to junior artists, sound designers and others — and heard a story of money, ambition, and anger. It’s a story that gets much worse before it ever gets better.

Fittingly, perhaps, it starts with a layoff.

The spark

By 1998, Spangenberg was a wealthy man.

After a slew of hits with his company, Iguana Entertainment, including Turok: Dinosaur Hunter, Aero the Acrobat, and the console versions of NBA Jam, he had quite the portfolio and the riches to show for it. A buyout from Acclaim Entertainment in 1995 didn’t hurt either.

“I mean, fuck, I think he had five garages at his house,” says former Retro lead animator Danny Matson, who visited years later. “I remember seeing the garages, and it was like, ‘Oh my god. How far does that go down? How many garages are there?’ And it was a lot. Five’s a guess, but it was definitely more than three.”

He came across as a happy guy, generous with money and upfront with high expectations, former employee Jason Hughes recalls. “He gave off a rockstar vibe. He was successful and enjoyed the lifestyle and the work,” he says.

After working for Acclaim for three years, Spangenberg found himself free. Laid off in 1998 — a year before his contract was set to expire — he responded by suing the company, alleging a breach of employment and wage payment obligations. The two parties came to an undisclosed agreement.

“He took great pleasure in poaching people from Acclaim. I heard at one time for every person he poached from Acclaim, he sent the HR person a Barbie doll, because she was a Barbie fan and she collected the special Barbies.”

Wealthy, free from employment and with a string of hits to his name, Spangenberg got to work planning his next business venture, Retro Studios, launching the company on October 1, 1998 out of his home. Securing an early deal with Nintendo of America helped Spangenberg both quickly bulk up his staff and open a new office.

Nintendo, then working on its unannounced GameCube console — codenamed Dolphin — helped fund his 40,000-square-foot studio. The space had one of Austin’s first motion capture stages, a receptionist, and a theatre where employees could show off what they were working on. When it came to filling the floor, Retro brought in developers from all over the country.

“Even the junior people were really, really good,” Matson says. “We had animators from ILM that worked on Star Wars. We had people with a lot of experience one way or another, or they were very talented. That’s all that I saw. Especially on the art crew — it was the best collection of artists I’ve ever worked with.”

The studio’s seats filled with top developers from Valve, Id, LucasArts, Looking Glass and, unsurprisingly, Iguana. Spangenberg also brought in people without video game experience, such as pen-and-paper and board game creators.

Additionally, he mined his former employer for a lot of talent — something one of the team’s artists, speaking anonymously for fear of impacting their current career, recalls as a malicious move.

“He took great pleasure in poaching people from Acclaim,” the artist says. “I heard at one time for every person he poached from Acclaim, he sent the HR person a Barbie doll, because she was a Barbie fan and she collected the special Barbies.”

Retro, initially, was developing four games to be launch titles for the then-upcoming GameCube. It had a football game called NFL Retro Football, a car-combat game called Thunder Rally, an RPG called Raven Blade, and an untitled action-adventure game. Employing approximately 120 people in its early years, Retro split its workforce into four teams, each with its own leads, programmers, designers, and sound engineers. Additionally, a tools and technology team was established to develop a proprietary engine that would be used for all four projects, although this structure changed over time to support multiple engines.

“Thinking that you’re going to do four games at a new console launch, that was ambitious,” former software engineer Jack Mathews says.

“Retro had a great first couple of years,” Hughes says. “I was there from the very beginning, one of the first engineers hired. It was exciting and optimistic.”

“It was a great buzz. [There] was great energy and the coffee machine ran 24/7,” sound designer Jeffrey Tveraas says.

Nintendo put a lot of money into Retro, developers recall. But as it would learn, money doesn’t always equal success. As time went on, cracks in its facade quickly revealed themselves. And once that happened, the studio fell apart quicker than anyone had anticipated.

The forest fire

In 2000, when Mathews joined, progress on the four projects was at a stalemate. Things were, as he puts it, “all over the place.” The studio had been working on its four projects for close to two years but with not a lot to show for it.

“Back then, everything was really [just like] art demos for the individual teams,” Mathews says. “Most of the engineering staff was actually concentrated in the tools and technology team. A lot of people were sort of building things, but without a game to run [them] in.”

“I remember one of my first days, an artist I knew from Ritual [Entertainment] was working there and building worlds for the RPG game in a hex pattern,” he says. “I was like, ‘Oh, are you guys piecing the world together in hex parts’ and [he] said ‘Nobody has told us how to build anything, so I’m just doing what seems to make sense. This was [approximately 1.5 to] two years after Retro started.”

Developers speaking for this story recall every game in development consistently underperforming, falling behind and missing milestones. Mathews says, by the time he joined the studio, the football project didn’t even have anything rendered on the screen.

One issue was a lack of access to GameCube development kits. As Hughes recalls, for a while Retro only had one. “Unfortunately, we had a relatively junior guy as our first technical director who didn’t know much about rendering and it sat in his office for a long time, not even powered up. Being that we were building our own engine — everyone did back then — this wasn’t helpful.”

While Hughes says it’s typical for a manufacturer to have a shortage of units to send out, Tveraas recalls this hindering a lot of development.

“There was work being done, then work had to be scrapped and started over because we got new development systems of the GameCube that we didn’t have previously,” he says.

To Mathews, though, this was a great excuse for studio leadership, particularly at the tech level, that had no way of getting anything done. “When I got there, they barely had a PC graphics engine running, no world editor and no tools at all to speak of. Maybe a Maya exporter,” he says.

“It was surprising to me, particularly on our project, which was [an] RPG, we never saw an engine,” Matson says. “Not until the very end. And I think what we ended up doing was tweaking one of the other engines to work.”

Numerous people Polygon spoke to cite issues with Retro’s management, particularly project leads from board game and pen-and-paper backgrounds, with no real video game experience. One developer speaking anonymously applauds the company’s desire to do things differently but says it wasn’t successful. “A design document would, literally, be 700 pages long, and I’m like, ‘I don’t even know what this is. It’s a story; it’s not a game,’” they recall.

“[The big problem on the RPG] was when they were starting to have meetings and they were making these plans [about] how they were going to have this demo done and this much work done,” Matson says. “We had to get it done in two months or whatever. It was literally laughable. It was absurd. Anybody who’s made at least a couple of video games ... and saw the state of what we had and what they wanted and our whole pipeline and how everything was done [would know], ‘This is just not going to happen.’

“And it didn’t. Not even close. They never even got close to what they were planning.”

Matson adds this is a common issue in the game industry, saying the “problem with a lot of people in management … is that they have the gift of the gab” and are able to convince the president of a company to bring them on in high-ranking positions.

“They can speak like they know what they fuck they’re talking about,” Matson says. “I’ve been on several projects and [at] several companies where people in very high positions really shouldn’t have been there and had no idea what they were doing.”

One person noticeably absent from this time in Retro’s history was Spangenberg himself. Former employees recall not seeing the founder for months, unsure of what he was doing. “He did do a really good job of bringing on a lot of really good people at the beginning of Retro, then he kind of disappeared from our lives,” says Mathews, who later co-owned Armature, the studio behind the 2016 game ReCore.

As each project’s status worsened, so did Spangenberg’s truancy. “After having run Armature for a number of years, looking back at it, I could see that he was super stressed and super freaked out about Nintendo,” Mathews says. “I think he got stressed, checked out. [He] saw everything slipping away and sort of retreated, rather than coming back.”

Retro not only didn’t have four games; it had zero games. And it had no leader at its head. Nintendo was pouring money into Retro and none of it was coming back.

“Every project at the studio was late. Everything was underperforming,” Mathews says. “People, I think, were just trying to figure out, ‘What do we do? How do we milk a stone?’ more than anything else.”

A visit from Nintendo of Japan would hold the answers to these questions.

For most of its early history, Retro Studios got direction from Nintendo of America — which was an issue, according to one anonymous employee, because “they have nothing to do with how the games are made. It’s all in Japan. … We weren’t interfacing with Nintendo of Japan at all. We never talked to Miyamoto. We never talked to Mr. Iwata. We never talked to anybody over there.”

In 2000, when the Eastern leg of the company decided to check in on its investment, everything hit the fan.

“So basically what happened on their first visit — it was a bloodbath,” the employee recalls. “[They] hated everything that we were doing. We weren’t developing games in their philosophy. It was a huge cold splash of water in the face.”

Despite these frustrations, Miyamoto did see promise in Retro’s action-adventure title — a science fiction game which reportedly featured three female protagonists. He’d already been kicking around the idea of a first-person shooter in the Metroid universe, and decided Retro was the studio to do it. However, one thing needed to change: Retro needed to be a one-game company. The other games needed to go, and with them a lot of people.

A few months after Nintendo of Japan’s visit, Spangenberg pulled into Retro’s parking lot in his new Ferrari. By the end of the day half of his employees would be without jobs.

“[People were like], ‘Everyone’s worrying about their jobs and you’re showing off how much fucking money you have and how fine you are. Everybody’s crunching here for you and you’re not even here,’” Matson says.

These layoffs weren’t terminating employees scattered across the company; they were removals of entire teams. With Nintendo dissatisfied with Retro’s lack of progress, all of Retro’s projects were killed through two large rounds of layoffs so the company could prioritize Metroid. First went the car combat and football teams, then the RPG team — though some of its people moved over to Metroid. The axe also fell in Retro’s motion capture studio.

“Retro, along with Nintendo, has decided its most effective approach as a video game developer is to focus on Metroid and give it the attention the franchise deserves,” Nintendo said at the time. “To do that, they refined staffing and are laying off 26 people, mainly the team that worked on [the RPG project] Raven Blade. Raven Blade is now cancelled.”

One thing unclear to the developers we talked to is why exactly Miyamoto and Nintendo of Japan trusted Retro with a new take on the Metroid IP. They could only speculate.

“Miyamoto didn’t like the Metroid series, in terms of the old Metroids. He doesn’t get them; those aren’t the types of games he likes to play,” an anonymous former Retro employee says. “At the end of the day, I don’t know what the decision was [that] made them trust us, because there really wasn’t much for us to be trusted on … In Japan, Metroid was never really a big thing; it was more of a big thing over here.”

Between 2000 and 2001, Retro was bleeding employees. According to those we talked to, few felt comfortable; they were scared they were the next to go. During this time, if you walked around Retro’s office, Tveraas says, you wouldn’t hear people working on games; you’d hear them working on resumes.

“I have been around and been involved in some pretty ugly layoffs, but this one kind of took the cake,” one developer speaking anonymously, who made it through both major layoffs, says. “The second time it was, ‘This is what’s happening. Go back to your office. If you have a packet on your chair you have a place on the team. If not, please pack your stuff and exit the building.’ It was bad enough that you just had this bombshell drop, but then you had to walk the length of this massive half-empty building back to your office wondering if you’ve got a packet on your chair.”

The issue with Retro was it was full of “bodies,” one anonymous team member says. The company would just throw bodies at a problem in an effort to fill seats. While a lot of those seats were filled with very talented people, they say, a lot were simply filled. By the time it got to deciding who stayed for the Metroid team, Retro was “cutting bone.”

“It was arduous decisions, because you were letting go of people that would be seniors and leads on projects, but you have no choice,” they say. “Those are just awful, awful, awful decisions. It’s never easy. … It sucks all the time.”

And as it turned out, Spangenberg himself wasn’t immune to Retro’s constantly falling ax. He was a liability, an anonymous employee says. “Basically when you have somebody with that stake who can come in and say ‘no’ — he might not have shown up to work for a year [and] … could come in and say ‘no’ to something. You just want those people gone,” they say, adding it’s worth spending the money just get rid of the person. “That’s usually the saner route, because then you don’t have to worry about any legal shit; you don’t have to worry about anything else this person does.”

Not only was Spangenberg increasingly absent, the way he ran his company and his extracurricular activities didn’t exactly match with Nintendo’s family-friendly image, specifically a website he had been running in his spare time called “Sinful Summer,” full of pictures from pool parties at Spangenberg’s house with scantily clad women.

“They were all dated, a lot of the pictures had strippers from the local strip club called ‘The Yellow Rose,’ some employees, a lot of friends. A lot of the pool parties were on weekdays,” Mathews recalls.

In 2004, an IGN report claimed employees ran pornographic websites from Retro’s office. According to developers we talked to, these stories were likely embellished versions of the Sinful Summer controversy — which Spangenberg hosted from Retro’s IP address. “Basically this was the thing that cemented the end for him, because once Nintendo caught wind of this, that’s when it was pretty much done,” Mathews says.

Additionally, the IGN report said employees “embezzled hundreds of thousands from the company and fled the country.” While multiple people we talked to recall hearing rumors about this at the time, no one had hard facts and we weren’t able to find evidence supporting the claim.

Still, the ax set its sight on the owner’s neck.

Nintendo bought out Spangenberg’s majority stake in the company, purchasing his 55 million shares for $1 million and becoming the majority shareholder of the company. Previously, Nintendo only held 15 million shares in the company.

“They didn’t want to give Jeff any money because they thought the way he did everything was reprehensible. They wanted him to exit as cheap as possible,” Mathews says. “I think he was backed into a corner; it was either a million or nothing.”

Replacing Spangenberg was then-vice president of product and development Steve Barcia. Barcia had been with the company since its founding, working on Raven Blade. Following his new role came a lot of changes for Retro. And a lot of new problems.

From the ashes, back into the fire

It was a skeleton crew compared to its former self, but an inadvertent trade-off of Retro’s layoffs was that it was left with, as Mathews puts it, “the cream of the crop.”

“I think that’s honestly the sad truth of what happened on Metroid, which is why we ended up with so many good people, was because they kept cutting it,” he says. “It’s like this awful sociopathic way of doing business, but it’s what happened. We just had some really good, really, really smart people that knew how to execute on that team by the end of it.”

At this time in Retro’s history, he says, the studio had laser-like focus. Everyone at Retro had their heads down, constantly working, experimenting on the long-running Nintendo IP they’d now been trusted with.

“Once we hit the Metroid cycle, I think it took us almost six months to do the first level that Nintendo approved, then we had less than a year to do the rest of the game,” former senior artist James Dargie says. “Things accelerated quickly. A lot of the theories and senior leadership best practices kind of went out the window at that point.”

After years of tumultuousness, things didn’t get better.

Barcia, now in charge of the ship, mandated a back-breaking work ethic from his employees. Retro quickly ran out of wiggle room during development of Metroid Prime, which had been delayed numerous times, and Barcia doubled down on his expectations from the studio.

“It was probably one of the worst experiences I’ve ever had,” one developer on the project recalls. “We had a rough time with development in general. But we had an enforced almost year’s worth of overtime. I think it was nine to 10 months of over time of at least minimum 12-hour days. I worked 48 hours straight on that project without sleeping. It was the worst.”

Those we talked to have mixed feelings on this time in the company’s history. One anonymous team member says motivation to keep working came from the game’s mounting excitement after a public showcase during E3 2001. It was a desire to “meet expectations,” they say. Mathews, on the other hand, cites a desire from the team members to prove themselves.

“‘Fuck all the people doubting us. We’re going to do this,’’’ he recalls thinking. “We weren’t doing it for the studio. You don’t feel allegiance to a studio that fires three quarters of your friends. For the team, we were going to get this done. We were going to show everyone that, as a team, we can pull this together.”

One team member says they heard years later Nintendo planned to shut Retro down after Metroid Prime’s launch, finally getting a game from it and cutting its losses afterwards. But then the game launched, and it was a hit. Retro was here to stay. But things at the studio weren’t exactly getting better. If anything, they were about to get worse.

“We had the worst morale. It was awful. We were just all beat down. We were just abused dogs,” one anonymous developer says. “That last year of development was just incredibly awful.”

In an effort to retain talent after Metroid Prime’s development, a combination of “management and high-level individual contributors,” as Mathews puts it, decided to put forth a royalty program.

And at the beginning, at least, it seemed to be made with good intentions.

According to an employee familiar with the decision making, the group working on the royalties spent “days” making sure the distribution of money was fair. While some seniors would make more than a junior for their contributions, the group making the decisions wanted to make sure everyone walked away happy.

“We all worked together really hard to create this curve, this nice curve that seemed very appropriate and fair,” they say.

But for reasons unclear, after all this work, Barcia came in and changed the numbers. As they put it, that curve became a cliff where seven or eight people were at the peak, paid handsomely, and everyone else was at the base of the mountain.

While traditionally, this type of information is kept confidential from employees, at Retro things didn’t work out that way. An accountant sent the royalty spreadsheet to the entire company, developers tell Polygon. Everyone in the office was painfully aware of who was making what, and the ones at the bottom of the mountain weren’t happy. The higher-ups at Retro sent everyone home early that day, scrubbing the information from all employee computers.

For many, this was the straw that broke the camel’s back.

“Morale was bad at the company, but the game was getting good reviews, people were happy with it and we’re like, ‘Wow. What could fuck this up,’” one employee says. “That was the thing that could fuck it up.”

Under Barcia, working conditions at Retro meant working under, as one developer puts it, “some of the worst working conditions in the world.” He was a smart guy, they add, someone who truly cared about the end product — even if it was at the detriment of his employee’s personal lives.

When enough was enough, a number of employees planned a mass exodus. Fed up with the way Barcia ran shop, they were going to leave.

“Put it this way: you have some of the top tier talent in the world at that time that could go anywhere,” a developer says. “Like, why would you stay?”

Nintendo, now with a hit under its belt thanks to Retro, didn’t take the news lightly. Barcia was replaced by Michael Kelbaugh — then Nintendo’s director of business development — in 2003. Kelbaugh brought a better working environment, more stability. Under his rule, the company went on to develop other critical and commercial hits.

The smoke clears

Today, outside of occasional press event appearances to promote new games, Retro is pretty much walled off from the outside world. Nintendo declined multiple interview requests for this story, and Retro hasn’t officially announced what it has in development.

According to reports, the company is currently working on a Star Fox racing game called Star Fox: Grand Prix, and was recently working on another project that went through “a rocky development cycle” and may have been canceled, according to Kotaku, sparking memories of the company in its early days.

Despite Retro’s trials, tribulations and failures in the early years, the first game it got out the door, Metroid Prime, stands today as one of the best video games of all time. Its two sequels, Echoes and Corruption, continue to receive similar high regards.

That’s not to say scars don’t remain on those who lived through the early days, though.

“There was a lot of negativity there. But I put out the best games I’m ever going to make.”

After his departure, Spangenberg has not given an interview about his time at Retro, and he did not respond to multiple requests to speak for this story. Spangenberg went on to found Topheavy Studios, developer of the adult-oriented trivia game The Guy Game, infamous for featuring live-action footage of women taking their tops off during Spring Break. In 2004, an underage girl sued Topheavy for featuring her in the game.

Barcia, too, didn’t respond to any of our interview requests. After Retro, he spent time with Electronic Arts working on the Def Jam series.

Some developers declined interviews, as well, telling Polygon they didn’t want to relive their years at the studio.

But for many, Retro was a time of creative freedom — even if things weren’t always getting done. Developers on Metroid Prime still talk about the team as being one of the most talented crews they’ve seen in their careers.

“I mean, three quarters of the people you would talk to had really awful experiences,” Mathews says, reflecting on his time at the studio. “It’s not a blast being anywhere near any of the layoffs. There was a lot of negativity there. But I put out the best games I’m ever going to make. The people I worked with were the most talented people I’ve ever worked with.”

Special thanks: Rascal