Red 5 Confirms Reorganization, Benchmark Denies 'Bankrupt' Claim

Red 5 confirms previously-reported layoffs as it reveals a new investment partner for its unannounced MMO in development -- and prior backer Benchmark denies EA's assertion that the studio is "bankrupt."
After news of layoffs and widespread reports of financial troubles, developer Red 5 is confirming that it's received a new investment as it undergoes a reorganization. "Red 5 Studios, Inc. is currently working on an unannounced massively multiplayer online game," says the company in a statement that did not offer further details on the project nor confirm or deny whether this is the same MMO it's been developing since it received $18.5 million from Benchmark Capital and Sierra Ventures in 2008. "Recently, the team formed around a new direction and took on additional investment from a strategic partner in the online games industry," it continues. "Red 5 remains committed to releasing a AAA quality, online title targeted for a worldwide release." Red 5 had been funded in part by Benchmark Capital, and Electronic Arts told us earlier today that Benchmark had tried multiple times to sell Red 5 to it. In a jab at Benchmark partner and former EA exec Mitch Lasky -- who has been vocal in his disapproval of EA's management -- the publisher also suggested that Red 5 is "bankrupt". Benchmark now stresses that's not the case. "Red 5 is not bankrupt nor is it considering such a thing," Benchmark's Bill Gurley tells Gamasutra. Red 5 did confirm, though, that it had to restructure its team to meet its current goals, though it declined to offer specifics. "As part of the restructuring, some team members chose to part ways while others were let go," it says. Concludes its statement: "Red 5 has great respect for these departing team members and the contributions they have made."

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