Anonymous Employees Claim Gearbox and Randy Pitchford Denied Borderlands 3 Royalty Bonuses

Randy Pitchford

Anonymous Gearbox employees (as well as those close to them) have accused management and CEO Randy Pitchford of denying royalty bonuses for Borderlands 3.

The new comes from Kotaku, reporting the claims of six individuals allegedly “close to Gearbox”. They state that Pitchford told employees on March 31st that they would not be receiving (in Kotaku’s own words) “significant” royalty bonuses.

“Employees at the studio will get small bonus checks,” Kotaku reports. “But nothing close to the tens of thousands or even hundreds of thousands that many had expected.”

Kotaku further cites claims from “more than a dozen current and former Gearbox staff who have spoken to Kotaku over the years,” that Gearbox pays employees “below-average salaries for the video game industry.”

Staff are then offered profit-sharing, a scheme reportedly used at Gearbox since it began. Kotaku report that 60% of royalties go back to the company and its owners, while 40% is distributed among employees in quarterly bonuses. Kotaku also report that bonuses from Borderlands 2 allowed Gearbox employees to buy houses, “a fact that the studio often touted while recruiting new employees.”

After several flops (including Aliens: Colonial Marines, and Battleborn), management allegedly promised employees “six-figure bonuses following the launch of Borderlands 3,” with those who had worked longer at the company getting larger bonuses.

As aforementioned, in an alleged meeting between Pitchford and employees (including three of the sources), Pitchford revealed the bonuses would be much lower.

Pitchford allegedly stated that this was due to significant company growth, and inaccurate sale projections. While the game had sold well, it (in Kotaku’s words) “cost way too much to make.”

Gearbox parent company Take-Two notes in their Fiscal Third Quarter 2020 report (during which time Borderlands 3 went on sale) the company made $930.1 million in GAAP net revenue (generally accepted accounting principles).

While it does not list how much Borderlands 3 sold, an earlier press release [1, 2] states the game had numerous sales achievements, that “Establishes [the] Franchise as Billion Dollar Global Brand.” These include the game selling over 5 million copies within its first five days of launch, and more.

“Within its first five days of launch, 50 percent more consumers purchased Borderlands 3 versus sales of its predecessor – Borderlands 2 – making the title the fastest-selling in 2K’s history, as well as the highest-selling title for the label on PC in a five-day window. In addition, Borderlands 3 has sold-in more than 5 million units in its first five days, leading the Borderlands franchise to generate more than $1 billion in Net Bookings and becoming the second franchise in 2K history to achieve this milestone.

Borderlands 3 marks 2K’s highest percentage of digital sales for a cross-platform, cross-distribution title, with more than 70 percent of consumers purchasing the game digitally in its first five days of release. In addition, Borderlands 3 delivered the highest pre-order sales figures to date for a 2K title, as well as broke pre-order records with the Epic Games Store. Initial sales of Borderlands 3 have exceeded the label’s expectations and, in particular, PC sales of the title through the Epic Games Store have been incredibly strong.”

That last sentence claiming “initial sales of Borderlands 3 have exceeded the label’s expectations,” would directly contradict with Pitchford’s alleged claims that the sale predictions were incorrect. Sales being higher than predicted are unlikely to cause smaller or late bonuses either.

Despite all of this, the alleged claim of high development costs came from swapping from Unreal Engine 2 to Unreal Engine 4 midway through development, which caused additional development time.

In addition, Pitchford allegedly claimed that before the game’s publisher (2K Games) would give any royalties, they would have to recoup the game’s budget (“around” $95 million) and the budget for all downloadable content (“a sum closer to” $140 million).

While this is reportedly due to the terms of a contract, it is unclear whether the terms of this contract were shared with Gearbox employees, especially considering management allegedly made the effort to promise them of six-figure bonuses.

Finally, Pitchford allegedly told developers (in Kotaku’s own words) “that if they weren’t happy with the royalty system, they were welcome to quit.” Pitchford allegedly stated that he “hoped” to get an advance on royalties from 2K Games.

When Kotaku approached Gearbox for comment, they issued the following statement- denying the claims. Not only do they claim the first royalty bonuses had been paid out, but that Gearbox’ royalty bonus system was “to our knowledge, the most generous royalty bonus system in AAA” games development.

“Borderlands 3 represents an incredible value to gamers and an incredible achievement by the team at Gearbox Software. Our studio is talent-led and we believe strongly in everyone sharing in profitability. The talent at Gearbox enjoys participation in the upside of our games – to our knowledge, the most generous royalty bonus system in AAA. Since this program began, Gearbox talent has earned over $100M in royalty bonuses above and beyond traditional compensation.

In the most recent pay period Gearbox talent enjoyed news that Borderlands 3, having earned revenue exceeding the largest investment ever made by the company into a single video game, had officially become a profitable video game and the talent at Gearbox that participates in the royalty bonus system has now earned their first royalty bonus on that profit. Additionally, a forecast update was given to the talent at Gearbox that participates in the royalty bonus to set expectations for the coming quarters. Gearbox is a private company that does not issue forward looking statements to the public, but we do practice transparency within our own family.”

This is not the first time Pitchford has run into legal trouble. There are also some claims of him funneling money intended for projects and bonuses, into other projects and a personal company.

In 2013, an anonymous employee of Gearbox claimed that the company had taken money intended from Sega (intended for the development of Aliens: Colonial Marines) had been used on Borderlands, Borderlands 2, and Duke Nukem Forever. Gearbox also allegedly outsourced many elements of the game’s development, without notifying Sega.

In late 2018, Pitchford sued Gearbox’s former executive counsel Wade Callender over claims that he had used company credit cards for personal expenses and destroyed evidence that the studio funded a home loan of $300,000.

Callender countersued in December of that year, making the accusation that Pitchford had left a USB drive containing corporate documents and underage pornography at a Medieval Times Restaurant.

The accusations Callender made in a suit in January 2019 included the claims that he was harassed for his Christian faith, and that Pitchford had funneled $12 million from the studio. This money was intended to be bonuses for staff of Borderlands, and allegedly went to his personal company “Pitchford Entertainment Media & Magic.”

In August, Callender then accused Pitchford of contempt of court, claiming he hid documents that were previously requested by the court. The case was finally settled in October 2019, with the court stating “the evidence exonerated Randy Pitchford from the allegations against him.”

Pitchford, along with Gearbox and Valve, were also sued by composer Bobby Prince in October 2019 for allegedly using his music without his permission in Duke Nukem 3D: 20th Anniversary World Tour.

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Ryan was a former Niche Gamer contributor.

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