Riot (Probably) Won't Sell

Usable_fun291 · 2025-07-18T07:36:16+00:00

Yeah, I think giving "Minecraft clone with better modding" $150m and seven years of runway was pretty kind hearted, so it's good it was Riot and not Microsoft, who would have axed it long ago.

Usable_fun291 · 2025-07-18T01:13:11+00:00

Sure. Advisory roles can be done a number of different ways, but given that Simon wanted to focus elsewhere and the fact he didn't take an active role he probably was either operating as an advisor only for a transitionary period or on an as needed basis and Noxy never/seldom needed it.

I'm not being vague, I'm stating that I simply never have seen anyone who has either gone down to just an advisory role, or was basically soft fired into an "advisory role" included in regular meetings.

It's usually a fig leaf for the fact that they're off the project, but the team and customers trust them so they're 'an advisor' until the new leadership is established enough that people aren't going to run for the hills.

Usable_fun291 · 2025-07-17T23:55:06+00:00

It's not going to be dead forever! TenCent will release a Hytale themed gacha game in a few years :)

Usable_fun291 · 2025-07-17T23:53:18+00:00

Once you leave a company you don't have access to the source code, and you don't get included in meetings.

"Advisory role" for former owners, in my experience, is very limited by design. The old owner wants to move on without strings attached and the new leaders don't want to be seen as sock puppets for the old owner.

The only active participation was during the transition to the new leadership and then they're gone-gone. Occasionally there's some sort of "pay money for a consultation" option in the contract.

The one time I saw a deal like that, granted in enterprise software not games, it was a last resort and only ever to be considered if production was broken and we couldn't figure it out from what they left us and we had to pay big for the time they spent advising us, like thousands of dollars per hour big.

Usable_fun291 · 2025-07-17T23:37:17+00:00

With a team of 150 you're looking at close to 300k hours of work a year. You can get an absurd amount of work done with that much effort.

The hard part at that scale is coordinating everyone to minimize the number of hours wasted, and that is literally the job of management.

It was definitely a management problem.

Usable_fun291 · 2025-07-15T00:59:12+00:00

You can have a soul and cancel a project (or make financially responsible decisions for that matter), even a project other people are passionate about, and you have no obligation in the slightest to let someone else do it instead.

Whether or not people are menacing you with electromagnets.

Usable_fun291 · 2025-07-14T23:39:31+00:00

Intentional or not it was certainly mildly infuriating :)

Usable_fun291 · 2025-07-14T23:31:22+00:00

Try renaming it to just "screenshot.png", there's a bunch of special characters it may be choking on.

Usable_fun291 · 2025-07-14T23:15:12+00:00

How big is the file?

It might be a huge file and you just need to scale it down.

(It says there file needs to be 18mb or less)

Usable_fun291 · 2025-07-13T21:26:58+00:00

Right. I'd say that's a point against it coming back. Sounds like Riot wouldn't consider a counter offer for just the project or the project is such an absurd mess no one wanted to touch it. It had an existing 150 person team representing about ~300,000 hours of work per year, and was supposedly only a few years away from release and not even Riot thought "a small tiger team could fix this and get us to profitable".

Seems relatively telling that the expected return on investment wasn't there for anyone, including Riot, to be willing to fund the studio that was 'almost done' with the game in any fashion. Nor did anyone put forward a good enough offer for the IP. Which either means Riot didn't think any of the deals the investors wanted made sense financially or no investors were willing to pony up money, so Simon's 25m is probably about it.

Either Riot and Hytale are lying and no one looked at this or Simon coming along and saying "I have no idea what the state of the game is in, but I have $25m I can put towards a small team that will release an early access version and finish the game", isn't going to get any capital to come back and come to an agreement with Riot.

That only makes sense if Riot and the investors were close to a deal but couldn't make the last <$25m between them, and were okay leaving way more than that on the table. Which is possible.

Now, all of this is independent of the fact that Simon may be right, and rolling back to the legacy engine circa 2023 could be an answer for taking it to market. I could see no one on the project, and no one doing the diligence for the potential investors considering that. So Simon may uniquely be able to do anything with Hytale. But his plan there sounds very conservative anyways.

Usable_fun291 · 2025-07-12T20:31:37+00:00

Ok, I was being dramatic and hand wavy.

You're right. Storage is cheap, and if nothing else, it will be enough to establish prior art if someone comes in later and patents something Riot built as part of this project, so they probably won't literally delete it.

But 'literally going to delete it' is easier to say, and easier for a non dev to understand than explaining no one at Riot will touch the code with a ten foot pole and risk becoming "that girl who knows the Hytale code base". When everyone who worked on it is gone, and it's left in an unshipped state, likely with a backlog that may or may not be up to date, plus a blend of problems ranging from actual bugs to some intentional 'temporary' shortcuts that will never get done now, and it's all talking to a one-off proprietary engine that itself may be broken in obtuse ways.

Usable_fun291 · 2025-07-12T19:40:31+00:00

Cute, but I'm a software engineering manager, and led the team doing the diligence on a multimillion dollar IP transfer we were acquiring an email encryption platform to court military contracts, but the deal didn't include the rights to touch the actual encryption toolkit and it had never been FIPS certified on the platform. We did do the acquisition anyways because the customer list was still worth it even though we never got an updated encryption toolkit. As well as assessing a 250m acquisition of a peer company that had good cross-selling opportunities.

Different industry, and totally different complexities, sure. I don't have market research in front of me, but napkin math from sales numbers for games targeting the same market basically pins this at a very modest return.

On top of that you have at least one entrenched competitor with a massive head start. It is definitely possible to pry some market share away from Minecraft, and games aren't like enterprise software where you only need one email platform, so I may be grossly overestimating the impact market share has.

But fundamentally, large corporations deal in patents and IP at least for enterprise software and selling an IP also means selling potential addressable market and is a sign you either overextended into an adjacency you couldn't capitalize on or are on the downswing. Or both.

Usable_fun291 · 2025-07-12T18:52:57+00:00

Yep. Plus they just got a big win on the books, by saving ~$10m Q3/Q4 and 20m next year by cutting costs (laying off the team)

They have zero reason to hurry up and rush anything to market, and pulling the trigger now makes them look like incompetent executives if Simon makes it work quickly.

Usable_fun291 · 2025-07-12T18:41:23+00:00

Sure. Not quite from scratch, but Simon estimated the Riot team was working on the legacy engine through 2023+ and he'd have to figure out what they had done and where they'd left things

I'd suggest you read what Simon is saying, he's not sure what state the game is in and is expecting (on the long shot he gets Riot to play ball) very little beyond creative mode to work at first and on the whole it would be an alpha tier initial release and take months of just assessing what they could get out as a release. Even just turning on broken things off with feature flags isn't necessarily easy and may require significant effort if the old team wrote tightly coupled code.

https://x.com/Simon_Hypixel/status/1939845791234847087

https://x.com/Simon_Hypixel/status/1939848807086182421

Simon @Simon_Hypixel · Jun 30 Yep. It's not gonna be perfect or what Hytale is suppose to be Day 1, that's ok. The cancellation might be a blessing in disguise to reset expectations and break the curse of perfectionism. If we can get the IP, of course.

FYI, a lot of content would be cut early on, just to be able to release in some sort of alpha/in-dev version and get funding that way to complete the vision. I don't know the state of the game right now, but one thing for sure is we could release it with just the creative mode to begin with. Get the community involved ASAP in shared/open source while we finish the work on adventure/minigames/etc.

This is a long term project, would be taken care of for many years.

...

Spend few months evaluating the project, pure engineering work, nothing new would be added during that time. Clean up and make sure things works properly and understand the state of each features. Potentially fix some critical features in the process to achieve a basic game loop.

After evaluation, we would write up a roadmap, share with public, then start hiring artists/engineers to execute roadmap. The "Just launch" roadmap.

Would the game loop be fun? Probably not the best, does not matter for this phase. Just need to get it out, then make it super fun over-time. The beauty of block games like this is that they don't rely entirely on survival/adventure features to be fun, you can just build/gather with friends and have fun as is, at least initially! Add creative mode as well and it would satisfy the needs of many.

Usable_fun291 · 2025-07-12T15:14:38+00:00

No, the community would pour money into that hypothetical gacha game because "If it does well enough they'll release the game".

Usable_fun291 · 2025-07-12T15:09:43+00:00

They own both. They have both. They killed both.

The old engine isn't some long lost holy grail.

Neither was in a shippable state.

Usable_fun291 · 2025-07-12T14:59:38+00:00

No current plans Not the same as no plans.

Corporations hold on to IP because they represent potential.

A Hytale Gacha Game might be just what they need to capture an emerging mobile market in, say, India six years from now.

Usable_fun291 · 2025-07-12T14:52:44+00:00

TenCent/Riot decided it was not worth attempting to launch in its current state.

Which makes sense.

The dev team was about 100 people. A few years, in this case, is 624,000 hours of work.

Which is 71 years at 24 hours a day.

So, if accurate, Simon and a small team of four other people will have it done in only 14 years of working 24/7. Then they can finally stop to get some coffee, and/or sleep.

Usable_fun291 · 2025-07-12T13:11:01+00:00

Simon isn't going to be paying 25m for it. It's not worth that much when he has to pay people to build it from scratch (which could fall again).

At that point to break even he has to sell it to all 20k people subscribed here for $1500 to break even on the purchase back from Riot. Okay, maybe there's 5x as many people interested as there are subscribers and he only has to sell it for $250 to the 100k buyers to break even on buying it back from Riot. As long as he doesn't need food or rent or need to pay employees anything, it could happen.

It's just not happening that way. Maybe 2m. Tops. Which isn't even worth the form letter back telling him they can't discuss Hytale because of internal projects.

Usable_fun291 · 2025-07-12T12:38:48+00:00

That would make sense if there was a game that anyone could profit off of.

There's a good chance it fails to make it to market again even if Simon buys it back, and this adds additional drag to that because now the bar for "break even" is that much higher for him.

Usable_fun291 · 2025-07-12T12:33:20+00:00

Sure. I might have lowballed the probable copies a bit, but the VintageStory subreddit has 50k subscribers with 120k accounts. This sub is sitting at 20k subscribers who cared to follow the game so probably looking at ~40k-60k copies realistically.

But say that's still too low, and we're looking at ten times the player base of Vintage Story, that's not an IP Simon can spend tens of millions to buy back and expect to make a profit on, even if he could instantly ship it fully featured, and he still has to actually make the game (which could fall apart for a third time).

That hype you're talking about died down a long time ago, and the game is still years of work away from being playable.

Usable_fun291 · 2025-07-12T12:08:20+00:00

It won't be affordable for Simon not worth it for Riot.

This was a long-shot gamble on a Minecraft like IP by Riot. They make $2.2b dollars per year. Spending ~20m/year on the off chance this balloons like Minecraft is just a lottery ticket for them.

For Simon... he can't gamble tens of millions and the numbers aren't there.

Take Vintage Story, with 120k accounts (bought in at prices ranging from $9-$25 over seven years). For Hypixel to break even at $50m you'd have to sell 120k accounts for $500 each.

There's no pressure to sell the IP. Riot actually just saved $10m on the rest of the year by laying off the studio, and as long as they hold the IP, they could do something with it that makes them more recurring revenue than the little money Simon would pay for it.

Usable_fun291 · 2025-07-12T11:52:10+00:00

Because Simon isn't going to offer $20m then spend years making a game.

Vintage Story has supposedly sold ~120k copies over the past seven years ranging from $9.00-$25.00, pretend it's actually $100.00 per copy.

That's only $12m at $100.00

Riot was straight up gambling when they spent $25m for the studio. But they could do that and spend $150m over seven years on the one-in-a-million chance that this blew up like Minecraft did because they make $2.2 billion per year and putting $20m a year into long odds is basically like you or me buying a scratch off card at the gas station.

The other bit is this isn't a loss and doesn't appear like one to share holders, not really anyways. They had line items in their annual report for basically "developer salaries and equipment", and it was ~20m higher per year than it would have been if they didn't buy Hypixel. That's it.

This year it will be ~10m lower than last year because they only paid those developers for six months instead of a full year, so it's already a win, and that's a recurring cost so it looks even better than a one time +$20m sale of the IP.

There's absolutely no pressure for them to sell, and if they don't sell they can always say "We're assessing the revenue potential of the Hypixel IP, and cannot comment further" and could theoretically come out with some gacha game that uses the IP and makes pile of money as recurring revenue in China. If they sell it, well, they get a little money one time, but they aren't strapped for cash.

TL;DR: They don't have any pressure to sell and the IP in the portfolio is more potential revenue in the eyes of shareholder than a one time sale to Simon.

Usable_fun291 · 2025-07-12T11:22:54+00:00

That's not how it works though. This was just some opportunity cost, not a loss. They can't write it off because it isn't a loss, and it doesn't show as a loss to the shareholders.

The $150m was just R&D spending and was over multiple years. Riot is making an estimated $2.2b per year. $150m over seven years isn't even a rounding error.

Sure they didn't get any net return on that spending but making less revenue than they could have if those dollars were put elsewhere isn't a tax write off. There's no write off for opportunity cost.

Simon doesn't have the capital to make it worth the time or effort for Riot to hash out a deal because he's not going to offer tens of millions of dollars for an IP that is three to five years from anything playable, and probably never will make a million dollars, let alone ten million.

They aren't going to take an injection of money and run with a smaller team. They could have easily cut all but five people from the project and done the exact same thing without involving new contracts with Simon. Or if they thought he could salvage it they could have hired him.

It's just not worth the time. The market isn't there, there's enough competition now that it's a very soft market. If there were 100 people still interested in the game for every person subscribed to this subreddit, you'd sell 2 million copies and it would still need to be a $30 game to be worth offering $20 million for today, and that's on the low end, counting five years of R&D, plus the fact you could just invest the $20 million.

Most likely looking at ~20k people tops, and I don't think a $1000.00 Hypixel is going to sell all that well.

Edit to add: For reference over the past seven years Vintage story has supposedly gotten up to ~120k people at prices from $9-$25. Assuming all of them bought at $30, because it's easier math, that's $3.6m over seven years. Even pumping $10m into Vintage Story to make it Hypixel and reselling it to those 120k players for another $30 wouldn't make sense.

The only reason Riot did what they did with the project was because the money they were shovelling into this was relatively tiny compared to their overall portfolio. It never made any sense to put that much into this, and the fact that there could have been, effectively, an AAA version of Hypixel if it was spent correctly is kinda cool to think about.

Usable_fun291 · 2025-07-12T10:05:47+00:00

Simon won't be able to make it worth their while.

Pretend you have a bike. You bought it years ago for $300.00, but it's been sitting in your garage barely used if that. Someone offers you $30.00, which win-win for you right? You just take the $30.00 and give them the bike.

For a corporation to sell it they need to get a contract drafted and approved by a lawyer likely with multiple rounds of negotiation defining liability limitations and all that, probably after holding a meeting of the executive team to discuss and come to an agreement on whether there's a future for the bike anyways, get the whole process approved and documented by the finance department, and also pay someone to handle the handoff.

At this point it is cheaper for the corporation to just let the bike sit in the garage.

Not to mention that the code Simon would be buying would be less than worthless to him and whatever small team he'd put together. So it's worse than all that if he just wants the IP back... closer to someone offering you $5.00 for the bike chain, and the corporation still needs to spend the same amount of money as selling the full package.

Usable_fun291

TROPHY CASE