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Posted on April 1, 2014, Phil Hornshaw No-Win Situation: The Troubled History of Firefall, Part 2

This is a second of our three-part series on Firefall creator Red 5 Studios. The names of sources found in this story have been changed to protect their identities. Read Part 1.

Mark Kern might have likened his last year as chief executive officer at Red 5 Studios to a “no-win situation,” but he wasn’t the only person working there who felt that way.

Employees working at the studio under Kern who spoke to GameFront told stories of struggling through situations they didn’t feel they could win, either. After seven years of development, the studio’s only game, Firefall, remains unfinished — and many sources said the reason for that is a combination of wasted work, a lack of direction from management, and an often-toxic working environment.

That wasn’t the case for all employees, though. For some, Red 5 Studios was a place where like-minded gamers came together to work to create something new, and for whom the studio’s inner culture, known as The Tribe, was a tight-knit community that made them feel welcome and excited to be there.

Kern helped seal the deal that kept Red 5 from closure — and, at the time, saved many employees’ jobs.

Most agree, however, that the studio could be a volatile place under Kern’s leadership. He was the ultimate authority at the studio, and his decisions on gameplay designs often meant throwing out features and projects he’d previously greenlit in favor of new directions.

What was worse, though, was Kern’s explosive temper. The boss was prone to yelling, and was often absent, which made trying to pursue the ideas and goals he laid out even more difficult. What’s more, disagreeing with him was often a good way to get fired.

But what made Kern, the last of three founders who left Blizzard Entertainment and start Red 5 in 2006, such a central authority figure? The studio’s flat hierarchy, which meant that almost no one was considered “above” anyone else, was one part; the lack of defined producers and middle management was another.

And there was the fact that in 2010, Kern helped seal the deal that kept Red 5 from closure — and, at the time, saved many employees’ jobs.

It was also a deal that returned Kern to the position of CEO, after he’d left the job in 2008.

‘A hero’ with ‘bags of money’

Things were looking bleak for Red 5 Studios in 2009. The end was imminent — three years after its official founding, the studio was close to shutting its doors.

“The company was running well and everything was looking great. Then the economy dropped out that summer.”

At that point, Firefall was in a prototype phase, with Red 5 looking for a new publishing contract, which would have meant more money and the ability to take the game to a completed state. The studio had made a deal in 2006 with Korean publisher Webzen for worldwide rights to Red 5’s game for about $25 million, according to The9 financial documents, but issues with that deal had resulted in Red 5 getting publishing rights back in many territories, including North America and Europe.

“We spent six months and we had a prototype, and we demoed it for Sony and EA, and everybody, and we had a great response,” said Greg, a Red 5 staffer who had been with the company since around its founding.“EA was vying for it and Sony was vying for it, and finally, the company was running well and everything was looking great. Then the economy dropped out that summer.”

With that economic hit, the publishers Red 5 had been pitching were less willing to spend, and backed out of any potential deals. Soon, the studio found itself running out of money, so Red 5’s management was looking to exit gracefully by providing severance packages and closing up shop, one source who worked at the company at the time said.

But the studio was saved from closure, thanks to an agreement to sell a controlling interest to Chinese publisher The9. The sale injected millions into the company, and gave The9 an 81-percent controlling interest in Red 5.

The deal also elevated Mark Kern to the position of CEO.

For many at the studio, the deal with The9 must have seemed like a life preserver tossed out to a drowning victim.