CD Projekt Red investors sue company over Cyberpunk 2077 debacle
On its release day, Cyberpunk 2077 immediately pivoted from one of the holiday season’s most hotly anticipated new games to one of this year’s biggest debacles, as bugs both comical and game-breaking proved to be so prolific on consoles that Sony even delisted the title entirely from its digital storefront for the time being. Developer and publisher CD Projekt Red has had its hands full for the last few weeks juggling broad mockery and unhappy customers, and now there’s a new woe on their pile: shareholder suits.
Two different law firms announced last week they were filing suit against CD Projekt, alleging the company violated securities law by misleading investors (and everyone else) about the state of Cyberpunk 2077 and whether it would be playable on current-generation consoles, the PlayStation 4 and XBox One.
Statements CD Projekt Red made about Cyberpunk throughout 2020 were “materially false and misleading,” the complaint (PDF) alleges, because the company failed to mention that the game “was virtually unplayable on the current-generation Xbox or Playstation systems due to an enormous number of bugs.”
Those bugs were not widely known prior to the game’s release, because the company did not make console copies of the game available for review. Every outlet that had a pre-release copy of Cyberpunk (including Ars) played it on PC. CD Projekt after release apologized for not making the console version available “and, in consequence, not allowing you to make a more informed decision about your purchase.”
The suit cites the many release delays the game faced, first from April 2020 to September 2020, then from September to November, and eventually from November to December. Each time the studio announced a delay, executives promised publicly that the game was totally on track but just needed a little more polish and kicked off a period of sustained crunch to make it happen.
In the wake of the game’s release, however, CDPR joint-CEO Adam Kiciński admitted that the company focused too hard on that thrice-delayed deadline instead of the actual issues with the game.
“We underestimated the scale and complexity of the issues, we ignored the signals about the need for additional time to refine the game on the base last-gen consoles,” Kiciński said in a conference call.
“We were updating the game on last-gen consoles until the very last minute, and we thought we’d make it in time,” joint-CEO Marcin Iwiński said in the same call. “Unfortunately, this resulted in giving it to reviewers just one day before the release, which was definitely too late, and the media didn’t get the chance to review it properly. That was not intended; we were just fixing the game until the very last moment.”
CD Projekt Red said in a filing over the weekend it would defend itself “vigorously” against the shareholders’ claims.
Meeting expectations
Given the ongoing debacle of the Cyberpunk 2077 launch, an investor suit seemed all but inevitable. This kind of legal action is incredibly common anytime a company takes a major PR hit.
Under US law, publicly traded companies have a fiduciary duty to their shareholders. Basically, officers of a corporation have a legal obligation to act in the company’s, and its investors’, best interest. Shareholders and corporate officers have a tendency to interpret this as a legal duty to maximize the company’s profits, although that is not exactly what the law says.
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The argument in this kind of shareholder suit basically says: The company did something it should not have—lied about something, downplayed a risk, made a colossal error in judgement, and so on—and as a result, harmed the company’s public image and, in turn, harmed investors.
Pinterest shareholders, for example, filed a suit against that company earlier this month claiming the board failed its fiduciary duty as allegations of rampant race- and gender-based discrimination inside the company were hurting its image with its largely-female user base. Google settled a similar shareholder suit in September, over its handling of harassment claims inside the company. And back in April, Zoom investors sued the overnight videoconference sensation, arguing that the company should have known its product was not up to spec before the pandemic hit.