Stormy weather

Stormy weather
Hot new computer game maker ION Storm appears to have all it needs for success -- top talent, plenty of money, and legions of anxious fans. So why is its future so cloudy?

By Christine Biederman
Now is the moment to do or die. Again.XXXIt's come about pretty quickly. Only minutes have passed since an odd time-travel device, a magical samurai sword, deposited you here in the sixth century. Looking around, you noticed it was snowing lightly, and from the looks of it, a storm was blowing in.

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In front of you loomed an ominous medieval castle. Eager to commence your quest--to revise history by capturing the elusive daikatana, the saber you are chasing through 3,600 years--you hurried inside. The castle responded by hurling vermin, fantastic creatures, and deadly germs at you. In short order you've shaken a gang of bats, dispatched a nasty pair of werewolves with your crossbow, and beaten a hostile archer to the punch with a few well-aimed arrows. Then came the pack of squealing, plague-carrying rats leaping for your face. Since you know there are times to fight and times to turn tail, you've just slipped through a secret passage and down an elevator. (An elevator? You're rewriting history already.)

Now you're back outside, and there he is--a plague-infected half-man, half-zombie. And then another. And a third.

This doesn't look promising. Over one side is a drop that looks to be several thousand feet, and in front of you, Black Death. Where are your fellow time travelers, Mikiko and Superfly? Aren't you supposed to be able to page them somehow, to get you out of a fix like this? And where's the damned daikatana--literally, the "big sword," the magical eight-in-one weapon?

Oh, well, black-magic time. Pointing your staff at the three zombies, you draw a circle, then a pentagon, and the gates of Hell fly open, and...next thing you know, the menacing undead explode into a few dozen flying, bloody chunks.

"More gibs for your money," laughs a voice from across the centuries. "That's gibs, as in giblets."

And with that, you're back in the late-20th-century offices of computer game developer ION Storm, located high atop a downtown Dallas skyscraper. It is December 17, 1998--less than three months before the scheduled release date for Daikatana, the computer game that Mr. Giblets, ION Storm producer Kelly Hoerner, has just been demonstrating. It's the game that a tribe of computer gamers is dying to get their trigger fingers on.

It's also the game that could make or break ION Storm.
The glimpse has been impressive, and if this little tease is any indication, Daikatana is apt to be a runaway best seller--which, in this corner of the entertainment world, means selling 500,000 retail copies. Of course, judging a computer game by this demo would be like reviewing a three-hour movie based on a 30-second trailer. It can help whet an audience's appetite, but it can also create expectations that the game won't meet and fuel a lot of bad press.

For a number of reasons, the poison pens are already warming up.
For one thing, there's the hype. Since ION Storm was founded two years ago, and even before it released a homegrown game, it has garnered as much ink as any developer in the $2.5 billion a year PC game business. According to internal company documents, ION has spent hundreds of thousands of dollars on public relations, hiring New York and Los Angeles press agents to pitch them as the "it" boys of the information age.

Then, too, there's the fact that Daikatana will carry the byline of John Romero, one of the gaming industry's most bankable stars. Romero is one of the originators of the "first-person shooter," a genre that casts the player as hero in a strange, Mad Max sort of fantasy world filled with violent weapons and ritual gore. Romero is semi-famous for masterminding these digital planets, conjuring the monsters, inventing the armory, jury-rigging the ever-so-slight plots, and scripting the spewing blood and flying body chunks. The computer-gaming press covers Romero incessantly, and he's even beginning to get his mug in mainstream publications such as Rolling Stone and Time, or their digital supplements, anyway.

Yet amid the hype, there are signs that the company is imploding. In the last 12 months, two of the six original owners--former Chief Executive Officer Mike Wilson and former Chief Operating Officer Bob Wright--have been given the boot. Wilson was the first to go, the apparent victim of a coup led by current CEO Todd Porter and art director Jerry O'Flaherty. But Wilson, a flamboyant marketing whiz, didn't go far. Last January, he set up a cooperative publishing house, the Gathering of Developers ("GoD" for short), in a former cathedral about a mile from ION Storm.

In May, it was Wright's turn. ION Storm fired Wright, they claim, because he tried to incite a rebellion among ION's employees. (Wright denies this.) The two sides sued each other, Wright claiming that the remaining ION partners tried to cut him out of a pending buyout by game publisher Eidos. The case is set to go to trial February 15.

Throughout it all, ION Storm has been hemorrhaging employees; of the approximately 85 people ION employed a year ago, more than half have quit or been let go. Finally, six weeks ago, virtually the entire team working on Daikatana jumped ship and joined Wilson's company.

The situation was so dire that Eidos, the London-based publishing company that has been bankrolling ION Storm, felt compelled to issue a public statement proclaiming it remains "fully confident in" Daikatana. But internal ION Storm documents leaked to the Dallas Observer show that, behind the scenes, the place where the "designer's vision is king" has turned into a toxic mix of prima donnas and personality cults. Internal ION e-mails and interviews with former employees suggest that Romero is missing in action and that Porter has taken the supervision of Romero's long-delayed title. Eidos is pressuring ION to get Daikatana out the door by any means necessary, and has pulled out of a long-negotiated deal to buy part of the company.

As a result, ION Storm is shopping for additional capital. The company has run through $26 million and is spending at a rate of nearly $900,000 per month. Every month the number of copies of Daikatana it needs to sell goes up. In the meantime, ION has become a little like one of John Romero's own nightmare worlds. For Romero, Porter, and the remaining owners, the goal is to take advantage of the hype and the hot market to milk as much cash as they can from the company. For Eidos, the goal is to force ION to get its titles out the door and try to recoup some of the $26 million it has sunk into the company. And for many of the workers, the goal is to find the exit and go play somewhere else.

On November 19, eight of the most talented young designers, conceptual artists, and sound men in the game business went nervously to their last day of work at ION Storm. One by one, they filed to their futuristic steel-and-fiberglass cubicles, stared at their 21-inch monitors, and waited for a sign.

Their secret couldn't hold much longer. Nothing stays under wraps for long on the 54th floor of Chase Tower. The "ION Eight," as they were subsequently dubbed, had already lined up a publishing contract of their own, and several trade publications were already sniffing around, trying to confirm that John Romero's hand-picked whiz kids were walking out en masse.

It was a stunning move. Two years ago, when ION Storm started with $13 million, it was the place everybody in computer gaming wanted to work. Billing themselves as the shop where "design is law," ION would pay game designers to pursue their artistic yen. In fact, the ION Eight had been recruited with the promise that they would share in game royalties. But perhaps the most stunning part wasn't that they were abandoning the promise of money, or artistic goals, or even the hippest offices in gameland. They were abandoning John Romero.

At 31, Romero, who claims to have been designing games since he was 13, is an industry legend. In 1991, Romero, Adrian Carnack, John Carnack (no relation), and Tom Hall founded id software, a tiny Mesquite-based company that turned out an extraordinary series of hit games--Wolfenstein 3-D, Doom, Doom II, and Quake--and helped make Dallas the center of the universe for first-person shooters. Along the way, id lost game designer Hall, who moved to a competing company. But it gained Mike Wilson, a brash young marketing guy who came up with clever new avenues for selling id's products, such as distributing games as "shareware" at 7-Elevens, allowing customers to sample the game then call id with a credit card to unlock the full version.

Id got rich, and its founders became celebrities in the wired world. But Romero was a star. His Doom was among the first games to be widely played simultaneously by multiple players on the Internet and set the pattern for dozens of knockoff games from other developers. Doom spawned a virtual community, as well as a whole new generation of self-taught computer talent. Using the game's readily accessible programming as a blueprint, these amateurs learned to design games themselves at the University of John Romero. They idolized the guy, and Romero basked in the adoration, growing his hair out into a flowing black mane and making deity-like appearances on the Internet. With the first big royalty checks he acquired the requisite toys, a yellow 1991 Ferrari Testarossa and a yellow Humvee.

Where there's such money to be made, Wall Street is sure to follow. By the mid-'90s the money men had seen the diagrams showing how the industrial age had given way to the information age, they had read about the Internet, and they were eager for a piece of the action.

"Look at the economics of the business," explains Mike Wallace, an analyst with Warburg, Dillon, Read, a New York City brokerage firm. "Let's say you sell 3 million copies of a product at $40 a copy [wholesale]. You get 120 million in revenue. It usually costs a couple of million to develop a game. Compare that to what it costs to make a movie. So the economics in this business are similar to movies, but better."

One of the ways Wall Street got its slice was by funding companies like Eidos, publishing greenhorns looking to become the next CBS Records. Flush with cash from initial public offerings, the new publishers went scouting for talent. The deals work like book and record contracts. The publisher agrees to pay the game developer a percentage of the wholesale price of each game sold. To enable the artists to develop their games, publishers also loan, or "advance," some royalties. The advance is usually payable in installments, with a portion payable on signing and subsequent chunks to be dispersed upon reaching certain milestones (say, completion of the "design document," or master blueprint for the game). Once the game ships and starts selling, the publisher recoups its advance from the developer's royalties.

"Honestly, I didn't see how it could miss," recalls former ION Storm CEO Mike Wilson. "I had just driven up the rates for a PC game well beyond where they had ever been...It went up over the course of a year from, like, a million dollars a game to two or three or four [million] in advances. And I'd just renegotiated the Quake royalty [rate] up into the 40s [percent]...So I knew that the going rates were pretty good. And with John's name, and Tom's--you know."

As he speaks, Wilson leans back in the conference room of the neo-Gothic church that houses GoD, a publishing cooperative he started a year ago after leaving ION Storm. At the time he departed from ION Storm, both issued public statements claiming Wilson was leaving of his own accord to start GoD. In truth, internal ION documents and interviews indicate he was edged out by Todd Porter, stripped of his 5 percent equity and shown the door after he tangled repeatedly with Porter over a variety of business and personal issues.

Thanks to a mutual non-disparagement provision in Wilson's severance agreement, in print the two companies give each other the PR equivalent of air kisses. But in the semi-privacy of company e-mail, they say what they really think. "[Tell Wilson], 'You better be fucking glad we wrote off your car and house, you fucking rat-faced bitch,'" wrote ION partner and art director Jerry O'Flaherty, after Wilson and his former partners skirmished over a minor business issue last October.

Now, in late November 1998--almost a year to the day after his ouster from ION--Wilson was about to even the score.

The latest round of hostilities began in October over taxes--specifically, whether ION would pay Wilson's partnership taxes as they had done for the other partners. Porter agreed to pay the taxman so long as Wilson signed a document releasing all claims Wilson might ever have against ION.

Fine, Wilson said. Just make it mutual.
What Wilson knew but Porter did not was that in October Wilson had gotten a call from the team developing Daikatana. They had been unhappy for a long time. They had threatened to walk out last May, but the uprising had been quelled. Now they were ready to go again.

"Game developers are a special breed," he explains. "They're very loyal, and all you have to do is treat them with a minimal amount of respect, and they'll stay with you forever. But if you don't, these guys have talents, and they're going to go off. You can shit on them only so many times."

The timing of the Daikatana team's call was fortuitous. Wilson was in the midst of negotiations for the rights to develop a game based on KISS: Psycho-Circus, a best-selling series of comic books by Todd McFarlane featuring rock dinosaurs KISS. (If all this reeks of adolescent geekiness, just remember we're talking about a $2.5 billion gaming industry.) In October, there was still no development team attached. And now, here was one on the horn. Wilson and the "ION Eight"--now expanded to 11 ION employees known as Bloodshot Entertainment--quickly came to terms. By the afternoon of November 18, they were all set. They had even drafted a public statement, which they planned to release at 6 p.m., when they handed in their resignations.

But at 5:30 that afternoon, Wilson informed them that Porter had left early, without signing the release. And so here they were the next morning, nervously perched in their cubicles, waiting for a sign that it was time to bolt. It came shortly before 10 a.m.--after Wilson cashed the check that Porter had signed that morning. Logging onto his computer, Wilson sent a message to ION audio man Will Locanto: "The monkey has landed."

Locanto and the others handed in their resignations.

The defections hit the insular world of gaming like a miniature Starr report. Within hours, "BitchX," a wicked little Web site that serves as the gaming industry's Drudge Report (but is better written) had posted the item. By the next day, the news hit virtually all of the 50-odd Web sites and online editions of print publications that cover computer gaming. It even worked its way into mainstream press.

Two weeks later at ION Storm, CEO Todd Porter was still doing damage control.

"A lot of people have made a really big deal about this," says Porter. As he speaks, Porter sits at the head of a marble table in ION Storm's glassed-in conference room. Behind him is a stunning view of east Dallas. "I look at it as a real positive. The team that we have on there now is...incredibly motivated, incredibly, incredibly talented...The guys we hired to replace them were, you know, heavy-hitters...Some people who left were going to be phased out anyway. "

Though ex-ION Stormers laugh about Porter showing up in the early days decked out in business suits, he since appears to have embraced gamer chic. During this interview, he sported jeans and sneakers and a ponytail streaked with gray, which made him appear older than his 38 years.

About Daikatana, he remains upbeat: "We expect to sell two and a half million units of Daikatana." He is no less bullish about Tom Hall's project, Anachronox, a role-playing game due out this summer. "We expect to sell about two and a half million units of Anachronox." As support, he cites "awards" handed out before anyone has ever seen the games: "They've already both won 'best new game of 1999.' The most-anticipated titles of their genres."

Perhaps it is no coincidence that two and a half million units of Daikatana is about what ION Storm needs to sell in order to pay back its advances from Eidos and begin earning royalties, according to documents leaked to the Observer. When ION Storm first prepared its business plan in the fall of 1996, they projected Daikatana would sell something more like 175,000 retail copies. Of course, the plan also projected that Daikatana would be out in 17 months, and would get ION out of debt in 26 months.

Internal e-mails also hint at what Porter would never publicly admit: The defections may have killed the ION Storm owners' plan to sell part of their equity to Eidos for $12.5 million.

Like many of the men who run software game design companies, Porter is a self-taught programmer who worked his way through a half-dozen companies before striking out on his own. Born in Chicago, Porter set out to enter the seminary, attending tiny Central College in Pella, Iowa, for three years before dropping out to work in the software industry. According to testimony from a deposition, he also worked for a while as a male stripper. (He danced under the name "Preacher Boy.")

Porter has undeniable talents for myth making, self-promotion, and landing on his feet. Take, for example, the story of his previous company, Distant Thunder, a game developer consisting of himself and artist Jerry O'Flaherty. According to ION's press materials, "[w]hen Todd Porter turned a $30,000 investment into a $3 million return, it was a sign of things to come." In fact, this Midas-touch story is exaggerated. In 1994, Porter borrowed $30,000 from a software-industry investor named Stephen Kennedy. According to Kennedy, Porter quickly ran through the cash, as well as through a $240,000 advance from Merit Software. The company was about two weeks away from folding when Porter got lucky: publisher 7th Level came in with new money from its initial public offering and saved the day. In February 1995, they sold the company to 7th Level for $1.5 million. Porter got 70 percent. Distant Thunder, which existed only a year, never produced a game. It did begin G-Nome, a title that 7th Level eventually published. It flopped. (In 1996, a computer-gaming magazine named G-Nome "Coaster of the Year"--as in, fit to put your drink on.) As for 7th Level, in 1997 it got out of the game industry.

According to Porter, Romero sought him out to start ION Storm. (Romero declined to be interviewed.) "[Romero] had heard about what I did with Distant Thunder," says Porter. "And he was looking for a guy to do the business side...He wanted to start a company, and he wanted a guy with business sense behind it...and I said, well, I'll only start it if I can bring Jerry [O'Flaherty]. And he said well, only if I can bring Tom [Hall]."

Business sense or no, Porter originally came to ION Storm as game developer. When ION got its start late in the summer of 1996, it had five owners: game designers Porter, Romero, and Tom Hall; art director Jerry O'Flaherty; and Bob Wright, the sole "biz guy." With entrance of Mike Wilson--also a "biz guy"--in January 1997, the five owners became six.

Porter quickly revealed, however, that his true talent lay not in design but in arrogating power. In the beginning, Romero was to own the biggest share of ION, 30 percent, and the "suits," at 5 percent apiece, would have the least. Porter, O'Flaherty, and Hall were to have 20 percent each. According to numerous sources who were there at the start, however, Porter was unhappy with his percentage, and demanded that O'Flaherty surrender 5 percent to him. (O'Flaherty declined to be interviewed.)

But they were busy starting a company. There were publishing deals to negotiate and employees to hire. Game publishing was hot, and Romero was hot, and they dangled him as publishing-contract bait. Soon ION snared a whopper: Game publisher Mindscape offered the partners a $13 million three-game contract with a $3 million per game advance, as well as $4 million for 4 percent of the company--a figure that implied ION was worth $100 million. "We used it as the deal to beat," Bob Wright recalls. In December 1996, London-based publisher Eidos beat it. Eidos had fresh cash from an initial public offering and needed the credibility that signing John Romero would bring. On Christmas Eve 1996, Wright and Romero came home from San Francisco, Eidos' U.S. headquarters, with a six-title, $22 million deal that promised them a 40 percent royalty. (ION's effective royalty rate is actually less, since the company must pay companies from which it licensed programming technology.)

It was a great contract--so great, they overlooked a complication. From the start, their plan had been to plow profits into their own publishing company. "When I left id, to my knowledge ION Storm was signing up for three titles with Eidos," recalls Wilson. "And after that we were free to publish. And when I got there, Eidos had, in a sort of typical, 12th-hour negotiating tactic, said, 'Well, we want options on your next three,' which effectively made it six games." ION Storm came up with a strategy: They would acquire other companies' games or add development teams in order to "burn" through the three options.

It was a time of giddy optimism. "We were trying to be a full-fledged entertainment company," recalls Bob Wright. Wright, an attorney and MBA who for many years was a partner at the downtown Dallas firm of Jenkens & Gilchrist, is a fatherly sort who went by the nickname "Bob Popular." He reluctantly agreed to answer some questions only because, in an interview with the Observer, Porter laid the recent departures squarely at Wright's feet. Wright is suing ION for wrongful termination, as well as for the value of his 5 percent interest in the company. He declined to answer questions about the suit.

Wright now works at Edge of Reality, which develops games for Nintendo. Ironically, it was Porter who lured him to ION Storm, after Wright handled the legal end of Porter's Distant Thunder deal. Wright's reputation and credentials, in turn, lent Porter and his new partners credibility. ION Storm had its first location in Wright's law office in the Quadrangle, which Wright closed to join ION Storm.

Still, there were tensions. Porter, especially, had a genius for rubbing others wrong. In one early e-mail exchange, he throws a fit because the company's accountants haven't prepared tax returns quickly enough, and conjectures it's because Wright and Hall owe the government. Hall replies succinctly: "Yeah, I called Bob up and asked him to delay it...Piss somewhere else, angry boy."

There were other unresolved issues. "I also didn't know at the time that John had pretty much decided he had paid his dues and he was gone," recalls Wilson. "He just wanted to do interviews and be John Romero. Just be a producer. I'd never even heard the title of 'producer' at a game developer until I met Todd. I'd worked at places like id that were very tight shops where anyone who didn't have a full-time job was a shirker."

From the start, Porter demonstrated a talent for winning partnership battles. The purchase of Dominion was the first. Porter had been struggling through a design document for his game Doppelganger. He shifted his focus from that project in the summer of 1997, when he learned that Dominion, a strategy game he'd worked on at 7th Level, was for sale. The other partners were interested only because of the company's plan to burn options by acquiring new games, but Porter was far more enthusiastic. "Dominion is not just a way to burn an option,'" he opined in an e-mail dated June 3, 1997. "It is, in my opinion, a top-10 product...In fact, we are talking about a product that could sell [more than] 500,000 units."

His partners were decidedly cool. In an e-mail, Romero doubted it would sell 500,000 and wrote, "the only reason we're thinking about acquiring it is to burn an option, simple as that." Wilson had another bone to pick. He believed Porter might already have mucked up a Dominion deal by suggesting to his old colleagues that ION was willing to pay too much.

Porter vehemently denied the charge. "I have wondered for some time," Porter e-mailed Wilson, "why it is that you seem bent on attacking me...[P]erhaps it is just plain office politics."

Wilson sent a sharp reply. "Pretty much all I've heard from you since I've been here are the reasons why you can't work...you couldn't do a design document without the engine, and then you couldn't do it without art time. Then, all I hear about at our meetings about how to structure the company are concerns about 'what happens to me' when this place all goes to shit...You seem to be focused on meltdown strategies, and protecting the individuals [owners], not the company."

"[W]e had to wait for a deposition to discover that you've never actually finished much of anything. You bark orders at people like they're a bunch of fucking construction workers...even those not on your team...You consistently try to elevate yourself above the other non-partner, or even 'junior partner' members of this company."

Porter sent a halfhearted response, but he would soon get even.

In August 1997, the six ION partners unanimously voted to acquire Dominion. Porter told the partners four guys working six weeks could finish it. With that assumption, the purchase made sense; even at a price of $1.8 million, they couldn't lose. As long as they finished the game for something between $1.8 million and $3 million--the amount Eidos agreed to advance for the title--they would have an automatic profit. (Developers are not required to repay advances if a title fails to recoup its advance.)

Porter proceeded to assemble a team composed mostly of former 7th Level staff. Meanwhile, programmers hired by Romero, Hall, and O'Flaherty were arriving. E-mails from the period suggest that the hiring went on willy-nilly, new employees sometimes showing up without anyone from human resources expecting them. Nor was creative the only side where things were wild. In the spring of 1997, ION signed a lease to move into a formerly unoccupied space atop Chase Tower in downtown Dallas. The ION partners intended it to be a showplace, a futuristic office that would garner lots of press attention. They spent well over $2 million finishing out and furnishing their sky palace. Meanwhile, the business side was scrambling to make payroll. "We couldn't meet our milestones," explains Wright. ION had to meet certain agreed-on goals in order to get its advances from Eidos. The failure to progress, though far from unusual in game development, was a real problem for ION. Ultimately, Eidos agreed to remove the milestones and advance money based on ION's monthly expenditures--a concession that made the company's life easier but also removed any real pressure to produce.

Behind the scenes, the jockeying for position continued. Eventually it seems to have escalated into a power struggle between Porter and O'Flaherty on one side versus Wilson and Wright on the other. Though Romero was the star, both he and Tom Hall took little interest in day-to-day business issues.

Things came to a head in late October 1997, when a whole host of personnel problems and employee complaints led Wilson, Wright, Romero, and Porter to a bar, where they concluded over beers that Porter had to go.

"I called [Romero and Hall] over there," Wilson says. "Because everybody was bitching about Porter every day, and that had to stop."

"And I said 'Look...this is the situation. We've been lied to, [Porter] said it would take six weeks [to finish Dominion] and now it's going to take forever. He's hired all of these full-time people, etc., etc. And [John] said 'Aw, shit.' And...I don't remember whether it was John first or Tom, but they were both absolutely ready to fire [Porter]."

The next week, after consulting with counsel, they called a partnership meeting. "And on the way [to the meeting], John says 'You know, I don't think I can do it. I think we're firing [Porter] just because everyone hates him. And we really haven't given him a chance to fuck up.'

"And not only did [John] choose not to fire him, he chose to tell him that we were going to fire him. And that's when the whole thing started shifting."

A month later, the tide carried Wilson out the door.

Certainly, Wilson did his part to help. In October 1997, with the knowledge and approval of Chief Financial Officer Steve Pittsenbarger, he borrowed $30,000 from the company to buy a used BMW. "I wrecked the car while I was in the process of getting a loan," recalls Wilson. "And it was very hard to explain. Because I went from borrowing money for a week, while my loan officer was out of town, to, it's almost 45 days later, and I still haven't repaid for the car. And here I am in this inquisition brought on by Todd."

In the meantime, at the partners' request, Wilson had presented them a draft of the business plan for the long-planned publishing arm. Porter and O'Flaherty attacked the plan, saying the business guys were getting too much equity in the new venture. At about the same time, Eidos indicated it was interested in purchasing an ownership stake in ION Storm--a position that Porter and O'Flaherty advocated, since it would put money directly in the partners' pockets.

On November 26, 1997, ION Storm had a board meeting at which the "ION Strike" business plan was discussed. It went well. Over the weekend, however, all hell broke loose.

Porter, Romero, O'Flaherty, and Hall all decline to discuss what happened, but apparently they met over the weekend and decided to kick Wilson out of the company. "The decision was made without my vote or participation," recalls Wright. "On Monday, I was simply asked whether I was going to be an ION Storm guy or a Mike Wilson guy."

Meanwhile, Dominion was way behind schedule. Internal ION documents show that in December 1997--six months before Dominion was released--its costs crossed the $3 million mark. Though the business side sent concerned e-mails, nobody else seemed to care. The press binge was starting in earnest. Hundreds of media representatives trooped through ION's offices. In between interviews, the partners focused on luring Eidos to buy a stake in ION. E-mails show that Porter had convinced Romero and Hall that they had to grab the cash now, because the company's valuation would never be higher.

In late '97, some of the mad money being thrown at developers just a year or two earlier was already beginning to dry up. "A couple of years ago, when gaming was first starting to take off, a lot of companies came in and threw a lot of money around," recalls industry analyst Mike Wallace. "There was a lot of reckless spending, and a lot of companies have since gotten out. A lot of people lost a lot of money. And there have been consolidations. So I think the reckless spending is over. In fact, the last company to come in and throw a lot of money around was Eidos at ION Storm."

Porter, who took over as CEO after Wilson left, was still convinced that Dominion would be a hit. He turned down a deal with Compaq computers that would have paid ION 75 cents to $1 for every Compaq computer sold with Dominion already installed, and would have guaranteed ION a minimum of $1.5 million. "He didn't want to 'cannibalize' Dominion's retail sales," says Doug Myres, ION's former head of business development who now works at GoD. In February, Porter and O'Flaherty announced that ION was beginning a comic-book division. The proclamation was not popular with some of the troops, who felt the company was having trouble getting games out, and here was the CEO charging off in another direction. The issues were never resolved. By May, they boiled over.

On the morning of May 13, Jonathan Wright, the programmer responsible for the artificial intelligence in Daikatana--making the computer characters smart--invited Bob Wright to lunch with eight other employees, mostly Daikatana team members.

According to seven of the 10 who were at lunch, the Daikatana team was seriously disenchanted. (Two did not respond to requests for interviews, and one, Shawn Green, supports Porter's version.) They wanted some changes, or they were ready to leave. "I told them to be very concrete and to present their problems in writing to their supervisors," recalls Bob Wright. "I didn't think any more about it. On Friday, Porter comes in and confronts me, and goes off on how I've supposedly incited a riot...On Monday, when I came in, rumors were circulating that I was gone."

"We fired our COO," insists Porter. "We fired him because he'd gone to [the Daikatana team] and told them that he could start another company with them."

On May 19, Hall, Porter, Romero and O'Flaherty held a formal meeting to fire Bob Wright and expel him from the partnership. Both sides moved quickly to file suit--perhaps because the long-awaited deal with Eidos was set to close just after June 4. Eidos was to buy 19 percent of the company's equity for approximately $12.5 million--at least $8 million of which was to go directly into the partners' pockets. (Wright alleges his firing was trumped up, in part, to cut him out of the pending deal.)

The deal would also have lowered ION's royalty rate from 40 percent to 25 percent and would have forgiven $15 million in advances. But it was never closed, and in June Dominion hit the stores.

It was a disaster. Although a few magazines that had deals with ION Storm for "exclusives" gave it big spreads, those gaming magazines that run straight-up reviews panned it. According to internal ION Storm documents, Dominion averaged 7,000 copies per month in the first four months it was on the shelves. Even those figures may be high. According to PC Data, a software marketing research firm, as of November 30, Dominion had sold 14,000 copies in the United States, a total dollar figure of $466,600. (ION Storm refused to comment on these figures.)

ION spent much of the summer and early fall being discovered by the mainstream press and warding off bad publicity in the gaming press, but with little luck. On September 30, after BitchX posted a summary of the proposed deal with Eidos--all correct, except for the part about it being a "done deal"--Director of Web Development William Haskins complained bitterly to Porter. "Either people who are no longer with the company know a whole lot more than the people who are here, or we've got a leak that the Titanic can sail through."

Next week, the Bitch scored again. At about the same time that ION laid off several artists, Todd Porter had sent an e-mail to the entire company asking if anyone wanted to buy his Lotus. He had to make room in the garage for his new Ferrari, it seems. The Bitch posted the entire e-mail.

Next day, Porter sent a message to his network guy ordering him to begin tracking employee e-mails.

But Porter was too busy to be distracted for long by the bad press. The long-awaited deal with Eidos was about to close. On October 6, all four shareholders went to the offices of their lawyers to sign documents.

But the deal never happened.
In an e-mail sent to "the owners" and outside counsel on October 23, Porter summarizes the conversation with Eidos, explaining why the publisher now has cold feet: "VERY VERY VERY concerned about Daikatana not shipping on time (as well as the other titles)...VERY VERY VERY concerned about people leaving Daikatana--though I tried to assure them that most of [those] who left were shit anyway...VERY concerned that John's heart is not in Daikatana...VERY VERY VERY concerned about the AI in Daikatana and that there is a TREMENDOUS amount left to do." He also says that Eidos opined that the games "are worth 1/2 what they were 6 months ago (and though they didn't say it outright--therefore we should be as well)."

Porter offered a few key employees "cash incentive[s] to get the AI done quickly." Even then, the programmers were dubious. "If it can be done, we'll get it done," Andrew Welch told Porter. "We may just have to cut some shit out of the game too to be honest...We're talking about a huge amount of work to be done by Thanksgiving--that's less than a month."

Porter looked for someone to lay it all off on. "John, Tom, Jerry, and I have decided that we...really want to countersue Bob...for Corporate Espionage (or whatever the legal term is) by attempting to cause a mutiny amongst out employees, many of whom are now leaving threatening to make our title, Daikatana, ship late costing us at least 4 million is [sic] lost sales." Porter also says he wants to accuse Wright of running the "biz side" with "such reckless abandon that it has cost us a multimillion-dollar deal--it has cost us $12.5 million personally," and he admits they have had to "eliminat[e] one of our titles."

But he made a critical mistake. On November 15, before Porter went off to be deposed in Bob Wright's lawsuit, he apparently posted his e-mails to the company server to be disposed of, but someone forgot to hit "delete" before the employees got there.

"They were posted to the main server where someone found them, and told other people, and everybody in the whole company started reading," recalls one former ION employee. There was the company CEO giggling about planned firings, telling Eidos the employees who left "were shit," getting rid of hardworking colleagues to hire old chums. One set of e-mails that received wide circulation suggests that Porter fired a PR firm in part because Rolling Stone decided to take just Romero's picture.

"It just confirmed everything we already knew," explains one employee who left after the e-mail incident.

Many had been planning to leave anyway, so the e-mails just eased a little guilt. Their reasons, like those of all who have left, were varied. "If you wanted the overriding problem with John Romero's character, I'd say it was his emphasis on being John Romero in the public eye, rather than getting things done, especially the things that made him John Romero in the public eye in the first place," says one former ION employee. "It's this idea that once you've reached this pinnacle, life's a free ride and you don't have to do anything from that point on, which is totally wrong."

Others were more willing to tolerate Romero's rock-star hours. "A lot of us accepted that early on," says another former employee. "That's not necessarily why we left. As long as we could produce a good game that, at the end, would be on the shelf--our game with our name on it--it was no problem." For them, the situation ceased being tolerable when they no longer believed Daikatana would ever come out.

Others were angry with Romero for letting Porter control the place. "Some people don't want to do anything," says one ex-employee of Romero. "And to them, it's not a high price to pay to let somebody else take control, if they can still do whatever they want."

Still others simply felt that the owners' emphasis wasn't on making games. "I approached Tom [Hall] about four months ago," says one recent departee. "About that very issue, about the focus of the company. And he told me it was basically to value up the company and sell it off.'

"I'm not going to lie to you and say the departures didn't have an effect," says Mike Breslin, ION's vice president in charge of business development. Nevertheless, Breslin declines to say exactly when Daikatana will be out, other than "spring." A new team has been cobbled together, consisting of old Dominion team members, conscripts from Anachronox, and a few new hires. But ex-employees, who get calls every day from the new team working on Daikatana, say that, during the course of reporting this story, the game's internal delivery date slipped from March 15 to June 1. Sources inside ION Storm say employees are on a mandatory 12-hour-a-day work schedule for the indefinite future.

As of late November, when the old Daikatana team walked, the innovations upon which the game is being marketed and that will distinguish it from similar first-person-shooters did not exist. The artificially intelligent sidekicks had not yet been programmed. And neither had the daikatana itself.

Nobody is yet willing to say that Daikatana can't pull it off. What they will say is that it's looking more and more like a long shot. "It depends on when it comes out," says Wallace. "That product is late, and usually when a product is delayed for a long time people start to lose interest. There have been exceptions--Half-Life [a current top-selling first-person-shooter], for example, was at least a year late. But that product had the quality, so it's had the sales."

Still, it's sold nowhere near a million copies in the United States. According to PC Data, Half-Life had not crossed the 100,000 mark as of November 30, a month after its release. And there has been only one game in the "action" category (the one in which Daikatana falls) to sell three million copies: Doom. Since 1994, all versions of Doom have sold around 3.5 million copies. Not even Quake, the game by which first-person shooters are judged, has in all its versions sold 2 million copies in the United States.

In other words, for ION Storm to reach that mark and survive the dilemma it has created for itself, the company may need all the magic that Romero and pals can muster. It may need a real daikatana.

Published:In last week's cover story, "Stormy Weather," the names of Adrian and John Carmack, two of the founders of id software, were misspelled. Also, the release date for the game Half-Life was misstated. The game began selling in retail stores November 19, 1998. Finally, the story stated that ION Storm Chief Executive Officer Todd Porter ordered the tracking of the company's e-mails the day after a gaming Web site published an internal company message. In fact, Porter issued the order -- in an e-mail -- several days later. We apologize for the errors.

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Christine Biederman