Report: Annapurna Interactive's baffling staff exodus caused by shifting resources, leadership clashes

Two weeks after all of Annapurna Interactive's staff suddenly resigned, new information has surfaced about events that seemingly led to the mass exodus.

A recent report from IGN claims the film studio's game division became fractured by strife within upper management, unfulfilled deals, and overall distrust in co-founder Megan Ellison.

Annapurna Interactive started in 2016 as an extension of Annapurna Productions by Ellison. Since then, it has released critical and financial successes like What Remains of Edith Finch and Stray.

Initially, Interactive was run by Nathan Gary, who then oversaw both Annapurna Pictures and Interactive. An Annapurna spokesperson told IGN the company became "refocused" toward games during his time running both divisions.

According to the outlet, Interactive co-founder James Masi was suddenly let go in mid-March. By this point, Ellison was overseeing Pictures after she'd disappeared for several years, with sources at the time alleging she would play "mind games" with staff and had several "explosive incidents."

With Masi's exit, Gary was reinstalled as the Interactive head, only to leave shortly thereafter. Annapurna told IGN he chose to leave, but other sources with the outlet alleged he was fired alongside Masi.

Interactive staff believed the pair were fired without warning, which reportedly led to "confusion and fury." Several employees, including a team leader, resigned in protest.

The straws that broke Annapurna Interactive's back

IGN reports that after a call between Ellison and the remaining Interactive team, all of the recently departed staff, including Gary and Masi, returned.

The pair were then reportedly set to head up a spinoff company called Verset. As IGN describes it, this new company would oversee all of Interactive's already-signed projects, and be free to make its own separate deals.

Ownership would've been split between between it and Annapurna's leaders, and the entire Interactive staff was set to to migrate over to Verset.

Instead, Hector Sanchez (an ex-Interactive leader who departed in 2019) was brought on to be Annapurna's new interactive and new media president. Under him, Annapurna Interactive would handle the triple and double-A side of games, while Verset would handle indies.

IGN notes Sanchez was also set to lead potential transmedia efforts, like Pictures' recent deal with Remedy and its franchises Control and Alan Wake. Interactive staff were reportedly unaware of this deal until the morning it was announced.

Employees became further confused and upset when Ellison reportedly said Verset discussions had "stalled out." Annapurna insisted to IGN that Gary never gave feedback on legal drafts, and later pushed back against the idea it had backtracked on the deal.

After the Verset deal fell through, several sources told IGN Ellison became more involved in Interactive's deals, projects, and budgets, much to their concern.

At the end of August, the 25-person Annapurna Interactive team signed a joint resignation letter, then left on September 6. Sources also told IGN that before the exodus, staff tried bringing alternate solutions (like Verset) to Ellison, but she had no interest.

Meanwhile, developers working with Interactive were reportedly unaware departures were happening until one or two days prior. Annapurna told IGN it had "no time" to contact everyone, while other sources argued there was "no guidance" on who to contact (or when and how).

At time of writing, Verset has a small website, which IGN believes is an indicator the now ex-Interactive staff are starting the venture on their own. After speaking with Sanchez, Interactive partners reportedly feel "confident" (but still confused and frustrated) their obligations will be fulfilled.

Currently, Annapurna is hiring to backfill the vacated positions, and working with outside agencies for further help. The company also affirmed it will continue developing its first in-house project, Blade Runner 2033: Labyrinth.

A spokesperson for the company told IGN it's "focused on moving forward. [...] If our inbox is any indication, a ton of developers continue to want to be a part of what we're building, and we look forward to seeing their pitches."

But they were also blunt in saying the entire situation was "a baffler."

IGN's full report on Annapurna Interactive's collapse can be read here.