O’Donnell case is a window into Activision-Bungie creative-freedom dispute

Tension between creative freedom and business is often the norm with publishers and developers. In the alliance between publishing giant Activision and famed development studio Bungie over the shooter game Destiny, that tension was evident again because of a court case that gave a rare look inside the relationship between companies.

A legal battle between composer Marty O’Donnell and Bungie exposed this battle after court records were released on Friday. O’Donnell prevailed in winning back his lost pay, profit-sharing, and founder’s stock in Bungie, which the company tried to deny him last year after it fired the creator of the music for Halo and Destiny.

The only reason we know about this dispute is because Bungie fired O’Donnell on April 11, 2014, and he sued to get his stock and money back. An arbitrator ruled in his favor, but the legal record of the dispute reveals a creative fight between Bungie and Activision Publishing. It shows that Bungie has had a stressful relationship with Activision, and it’s also reminiscent of the battle that Activision had with Infinity Ward’s former studio heads over the ownership of the Call of Duty property.

Sadly for Activision, a division of the Activision Blizzard company, this won’t help its efforts to make itself a creative haven. This year, Fortune and Great Place to Work named the parent company as No. 96 on the best places to work in the United States. Activision blizzard has more than 4,450 employees and revenues of $4.6 billion. But it operates like a big company, and that was evident in this dispute.

“I consider this to be done, and I’m moving forward, and I’m happy about it,” O’Donnell said in an interview with GamesBeat. “I’m very happy there were findings of fact in this case. The way you put it in the past, as a ‘rare look inside the game business,’ I think that is what it is. I don’t know why it had to get all the way to this point. In this one rare case, people can really see the details.”

O’Donnell said he wasn’t under a gag order, but he would let the findings speak for themselves. Activision and Bungie have not responded to emails requesting comment. The findings of fact by arbitrator retired Judge Sharon Armstrong at JAMS, Inc. in Seattle laid out the dispute.

The fragile alliance

Bungie was founded in 1991. O’Donnell was part of seven members on the team there, joining it as a contractor in 1996 and as an employee with the title of audio director in 2000. Microsoft acquired Bungie in June 2000, to make Halo for the original Xbox. O’Donnell created the music for Halo. That game came out in 2001 with the launch of the Xbox, and it was a flagship title. The Halo series has become a blockbuster, selling more than 60 million units to date.

Eager to be on its own and move to a new franchise, Bungie spun out of Microsoft as “Arete Seven” in 2007, while some of its team stayed on as 343 Industries to continue to work on the Halo property within Microsoft. Seven people, including O’Donnell, became the owners of the new Bungie.

On April 16, 2010, Bungie and Activision Publishing agreed to make a five-part video game franchise dubbed Destiny, according to the filings. The original release date for the code-named Project Tiger was set for Sept. 24, 2013 (it came out a year later in 2014). In the process of making Destiny, Bungie grew to more than 600 people.

Pete Parsons, chief operating officer of Bungie, asked O’Donnell to create all of the music for the entire Destiny franchise at the same time, rather than writing the themes one at a time for each of the game installments. O’Donnell composed a symphonic suite of eight movements, working with the legendary ex-Beatle Paul McCartney. O’Donnell recorded that music in early 2013. Dubbed the Music of the Spheres, the music will be used throughout the Destiny franchise. At least, that was the plan. O’Donnell also worked with the audio team on sound design, sound effects, cinematics, and part of the story, among other things. Beyond the thematic Music of the Spheres, O’Donnell had to create music for the moment-to-moment gameplay.

Above: Halo: Master Chief Collection

Image Credit: Microsoft

While it is fairly common for game soundtracks to be released separately, the court papers say that Activision had “little enthusiasm” for publishing the Music of the Spheres as a standalone work. O’Donnell had expected it to be published, and he became increasingly frustrated that Bungie was making insufficient effort to release it. During E3 2013 preparations, Bungie was getting ready to demo the game for the first time before a huge audience at the Electronic Entertainment Expo (E3), the biggest U.S. video game show. Activision was going to play the game music with a trailer, but shortly before E3, Activision took over the trailer work and supplied its own music, rather than the Music of the Spheres segments.

O’Donnell “reacted angrily” and believed “Activision had overstepped its proper role by assuming artistic control” of the trailer and its music, the filings say. Ryan, the CEO of Bungie, and management shared his concern and filed a “veto” letter with Activision, which overruled the objection, the court record shows.

But during E3, O’Donnell tweeted that Activision, not Bungie, had composed the trailer music. He also threatened Bungie employees in an attempt to keep the trailer from being posted online, and interrupted press briefings.

Above: Destiny is a blockbuster with a huge budget and an original theme song from a real-life rocker.

Image Credit: Activision

The court filings say that O’Donnell believed he was preserving Bungie’s “creative process, artistic integrity, and reputation, keeping faith with fans, and protecting Bungie and its intellectual property from Activision’s encroachment into artistic decisions.” According to O’Donnell’s view, the “Band of Brothers” ethos that had inspired the group’s earlier work was being damaged by the Activision relationship.

Ryan and other Bungie management felt that his conduct “hurt the Bungie team, hurt the game, drove a negative online discussion, and violated Ryan’s instructions,” the court papers say. They also believed that O’Donnell was elevating his interest in publishing Music of the Spheres over the best interests of the company. Activision advised Bungie that O’Donnell’s conduct may constitute a breach of the parties’ contract. O’Donnell had said that he considered Activision’s music for the game trailer to be “counterfeit,” hurting Bungie’s artistic and creative integrity and his own brand and reputation as a composer.

Ryan recommended that O’Donnell be fired. He wasn’t fired, but his conduct was considered “unacceptable” in his performance review. O’Donnell objected to the review, as he noted that Bungie presented no evidence of permanent damage to the Bungie-Activision relationships, the audio team, or ultimate game sales. Ryan was “enraged” by O’Donnell’s conduct at E3 and “barely spoke to him thereafter.” The court record has no information about why Activision chose to take over the game trailer work.

While Destiny was planned for a September 2013 release, the story was substantially revised in August 2013. That pushed the release date back to March 2014. O’Donnell returned to work after a vacation, but the audio team and his supervisor did not consider him to be fully engaged in his work. The release date of the game, meanwhile, pushed back to September 2014.

Meanwhile, O’Donnell argued that the audio work could not be completed until the game was in a bug-free, playable state. He felt the treatment was unfair but said he would continue to work. Members of the team complained that O’Donnell wasn’t contributing as expected, and his presence was frustrating the completion of the audio work. Ryan proposed to the Bungie board that O’Donnell be terminated, as he appeared to be unmotivated.

“I would leave it to people to understand how they would feel if they were in my position,” O’Donnell said.

The legal case begins

Shortly before firing O’Donnell, Bungie set up a profit-sharing plan in anticipation of Destiny sales. Each employee was entitled to a percentage of the profits, based on how many “points” they had earned, performance, and where they stood on the company’s ladder. The arbitrator said that Bungie was well aware of O’Donnell’s “loyal fan following when it assured the gaming community that O’Donnell, the famous composer of Halo, was composing the Destiny music. The board had a duty to give proper weight to the fact that, at the request of Bungie management, by early 2013 O’Donnell had composed and recorded all of the theme music that would carry the Destiny music forward for the following years. Without O’Donnell’s unique contribution and his fan loyalty, Destiny might not succeed.” The arbitrator said the board failed to exercise its discretion in good faith.

Ryan fired O’Donnell on April 11, 2014. O’Donnell filed a lawsuit later that month, and the case was moved to arbitration. In July 2016, the arbitrator ruled in a preliminary ruling that Bungie owed O’Donnell $95,000 for unpaid vacation and overtime, and that he was also owed his stock in Bungie and profit-sharing because O’Donnell had proved that Bungie had a “breach of good faith and fair dealing.” Last Friday, the arbitrator held up that ruling and said Bungie owed him 192,187 shares of vested stock (60 percent of his total), as well as $142,000 in profit-sharing. It’s not clear what the stock is worth, as Bungie is a private company. But it must affix a value to it within 15 days.

There was a side dispute as to whether O’Donnell violated his agreements with Bungie by attempting to release Music of the Spheres on his own. As he sought counsel, he disclosed the music to his pastor, but before Bungie had received actual copyrights for it. Bungie used that as “leverage” over O’Donnell, but Ryan later said that the non-release was due to the pending arbitration. Under the final agreement, Bungie is entitled to receive any copies of it in his possession, and O’Donnell has said he has already done so.

In September 2014, Bungie’s first episode of Destiny debuted. It had prerelease and first-day orders of $500 million. The third quarter sales amounted to 6.3 million copies or $47.5 million. People have now spent billions of hours playing Destiny. To date, roughly 40 minutes of the 48 minutes of Music of the Spheres have been released. O’Donnell created other music beyond that for Bungie, but it’s up to the company as to whether it releases that with other games.

O’Donnell’s non-compete with Bungie has now expired. He has started a new virtual reality game company, Highwire Games, with his friend Jaime Griesemer.

“I never want to go through this again, but I feel I could basically be a lawyer if I wanted to be now,” said O’Donnell. “You learn a lot of stuff.”

The reaction from the game development community isn’t favorable for Bungie or Activision.
“In my view, this conflict with Marty causes significant damage to Bungie’s reputation, as well as to Activision’s,” said one of the leaders of the game industry, who asked not to be identified. “While the latter can be shrugged off as the natural reaction of a corporate publishing overlord relationship, the actions/statements by Bungie show a direct vehemence between the company’s leadership and one of its most recognizable and beloved employees. The gamer community has already been chittering about Bungie’s new level of ‘douchebaggery’ while defending Marty’s position as a downtrodden employee who got ousted without a real cause. The issue is obviously more nuanced but the general read on the surface isn’t good for Bungie or Activision.”

The person added, “On the developer side, I sense that the majority are supportive of Marty’s position because they’ve been in similar situations where the studio executives lose sight of the valuable contributions of their employees, and have no idea of the potential PR impact of any single individual’s role. The negative actions by management resonate with a lot of developers in the industry who deal with ongoing issues like uncompensated crunch time, unpredictable work/life balance impacts, and unrealistic production schedules.”

Above: Bungie’s collaborative shooter Destiny in action.

Image Credit: Bungie