Publisher of Scratch DJ sues Activision, alleging ‘sinister strategy’

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Scratch: The Ultimate DJ, an upcoming game set to rival Activision’s DJ Hero, is at the center of a brewing legal fight. Credit: Genius Products.

The publishers of Scratch: The Ultimate DJ are suing Activision Blizzard, accusing the Santa Monica game company of embarking on a ‘sinister strategy of intentional interference and unfair competition.’

In the suit, filed in Los Angeles County Superior Court on Tuesday, Genius Products and Numark Industries lay out a tale of alleged corporate intrigue and backstabbing. They claim that Activision tried to thwart their ‘disc jockey-style’ game from hitting the market before Activision’s own hotly anticipated title, DJ Hero, which is scheduled for release this fall.

Just months ago, Activision and Genius were considering a deal. So what happened? Activision hasn’t returned messages seeking comment, and Genius President Trevor Drinkwater declined to be interviewed. But his lawsuit highlights the hazards facing developers and publishers alike as they stake their claims in a video game business that’s rife with me-too products.

Our story begins in Santa Monica with Genius, a distributor of home movies and television shows such as ‘Animal Planet’ and ‘Sesame Street’ DVDs. In February 2008, Genius enlisted California 7 Studios to develop a music rhythm game that lets players pretend to be DJs. By October, the suit alleges, 7 Studios started to fall behind on its work and was having trouble making payroll. That same month, 7 Studios filed a lawsuit against Brash Entertainment, claiming it was owed $581,000 for developing several games for Brash, which subsequently shut down. Genius said it pumped more than half a million dollars into 7 Studios to keep it afloat.

Meanwhile, Activision approached Genius and 7 Studios in late January to ...

... talk about buying the game, the lawsuit said. Unable to agree on a price, Activision instead bought 7 Studios in March. Trouble was, 7 Studios was still under contract to develop Scratch DJ for Genius, which owns the legal rights to the game, along with Numark, a maker of commercial DJ equipment.

This month 7 Studios, now owned by Activision, proposed ‘toxic’ amendments to its contract with Genius, which countered by canceling the agreement, according to the lawsuit. Genius alleged that its attempts to recover development assets, such as artwork and game code, were thwarted by security guards at 7 Studios’ West Los Angeles offices. Genius also said its efforts to recover nine custom turntables made by Numark were similarly foiled.

‘Activision is attempting to sabotage the release of our much-anticipated game and prevent it from getting to market prior to the release of DJ Hero,’ Drinkwater said in a statement.

The bitterness of the battle underscores the high stakes involved. Activision’s Guitar Hero franchise has been a phenomenal hit, generating an estimated $2 billion in sales in the last three years since Activision bought its developer, Red Octane. DJ Hero is one of Activision’s chief titles in the highly lucrative series and one of its biggest bets this year for keeping the franchise from losing steam.

It also gives the public a rare peek at the tooth-and-nail nature of the industry when it comes to protecting a development lead, no matter how slim. Scratch DJ was scheduled to be released in September. Activision hasn’t said when DJ Hero would hit stores, but it, too, was slated for the Christmas holiday. For Activision, first-mover advantage was crucial to Guitar Hero’s gaining a decisive lead in the market against its nemesis, Rock Band, which was published by MTV Networks in November 2007, a month after Guitar Hero III: Legends of Rock had hit store shelves.

We eagerly wait to hear Activision’s side of the story, and promise to share it with you once we have it.

-- Alex Pham