Activision Announces 7 Studio Layoffs

We’re genuinely excited for DJ Hero. While there are concerns around the office about the property’s commercial viability thanks to the pricy peripheral, there is no ignoring the influx of talent attached to the title. But our enthusiasm for the project can’t blind us entirely from Activision’s questionable business practices during development, especially as pertains to purchase of developer 7 Studios.

Need a refresher? DJ titles are the new hotness, with several currently on the docket. Activision’s DJ Hero is joined by Scratch: The Ultimate DJ, Armin Van Burren: In the Mix and Deep Silver’s recently released DJ Star. With Activision’s pedigree in the music game genre, one would expect them to be positioned at the head of the pack by default. However, unwilling to risk being bested, Activision purchased the development studio behind Ultimate DJ earlier this year in what many saw as a fairly transparent attempt to cut out the competition.

Needless to say, some legal battles ensued. Genius Products and Numark Industries, the publisher and peripheral designer for Ultimate DJ respectively, quickly filed a lawsuit against Activision and developer 7 Studios. The pair claimed that Activision made the move in order to gain access to their competitor’s technology and/or delay the release of Ultimate DJ. They demanded that their intellectual property be returned to them at once and were outspoken about alleged past clashes with Activision when they were in legitimate talks about selling the IP.

The Los Angeles Superior Court sided with Activision initially, then reversed its decision, leading to a string of counter-suits and legal speak ripe with defamation from both parties. In the end, all the source code from Ultimate DJ was returned to Genius Products, who found a new developer in Bedlam Games/Commotion Interactive.

Founded in 1999, 7 Studios once heralded its independent status, being the only independent video game developer selected for Inc. magazine’s list of fastest growing companies in the United States. The studio focused heavily on games based on movie properties, having developed Shrek the Third, Fantastic Four: Rise of the Silver Surfer and Napoleon Dynamite: The Game. Struggling financially at the time of the acquisition, Activision maintains that the purchase was for the best of all involved.

So what has 7 Studios been up to since the merger? Now untangled from the DJ web, we’re not sure what has been occupying the studio’s time, aside from the early 2009 release of Space Champ for the Wii and Nintendo DS. But news broke this morning that shed some light on the situation. According to Kotaku, Activision is laying off 30 individuals from 7 Studios as a way to realign its business focus to the music game genre. 7 Studio’s website lists their official headcount at 125, but the number may be dated as the page also boasts about their status as an independent developer.

Officially, Activision scooped up 7 Studios to “bolster its development capabilities” and play the role of the white knight in a time of financial toil. Unofficially, it looks like Activision pulled the rug out from under a competitor to further serve itself, resulting in layoffs of those caught in the crossfire. To be fair, job loss may have come without interference from Activision due to the aforementioned financial struggles on 7 Studios’ part. Still, we personally would have rather seen DJ Hero rely on its own merits as a vehicle to success. But in the cutthroat business world, bigwigs aren’t always comfortable leaving performance to chance.

Scratch: The Ultimate DJ is slated to release in early 2010. DJ Hero hits retail shelves at the end of this month.