May 27th, 2008 by Arjan Olsder Posted in Companies & M&A | 10 Comments »
We received a letter from Lewis MacDonald which went to all Telcogames customers as far as we can see. It explains the takeover of Telcogames by Mobile Entertainment Distribution Limited.
21st May 2008
Dear Sirs,
RE: Mobile Games Distribution Agreement
We write to inform you that on 14 May 2008 (“Transfer Date”) Mobile Entertainment Distribution Limited (a company registered in England with Company Registration Number 06572731 and registered office at 77 Oxford Street, London, W1D 2ES, United Kingdom) acquired the business, book debts & assets of Telcogames Limited as part of a re-structuring and sale of the business.
Following the acquisition of the Telcogames business, Mobile Entertainment Distribution Limited has assumed all benefits due to Telcogames Limited. If you are a Telcogames Limited customer, any outstanding payments invoiced to you by Telcogames on or after 17th April 2008 are now sums due to Mobile Entertainment Distribution Limited and payment of such sums should now be made to the bank accounts listed below or by cheque made payable to “Mobile Entertainment Distribution Limited”. Similarly, any future payments owed by you will be invoiced by Mobile Entertainment Distribution Limited.
[Lots of bank info]
If you have any queries please contact Darren McCarthy on +44 207 268 3406
The purpose of this letter is simply to notify you of the above and to assure you that in all other
respects the business will continue unaffected. Mobile Entertainment Distribution Limited T/A
Telcogames will take your continuing business relationship with it as acknowledgment and
acceptance of the transfer of the Business as described in this letter.Yours faithfully
Lewis MacDonald
Chief Executive Officer
One of the most interesting pieces of the letter was “Mobile Entertainment Distribution Limited […] acquired the business, book debts & assets of Telcogames“. As you can imagine we where thrilled to read that the company took over the debts, but at the same time our alarm bells rung as we suspected that it might not be that easy for developers to get their outstanding money back.
So right after we received this letter we called Lewis MacDonald himself. As he didn’t pick up the phone we went to Darren McCarthy who was listed as the contact person for matters around this letter. Darren explained to us that they only took over book debts after the 17th of April and that developers should still hope that Menzies will get them at least part of the outstanding money.
To be continued…
There is an update on this story, please go here
How funny is this – collecting money but not given it to the developers and publishers.
This whole thing is a bad joke!
I wonder how many distribution partners these crooks will continue to collect royalties from, for content providers who have since cancelled their contracts with Telco…?
They may have succeeded in phoenix-ing the company, but I’m afraid these fellows have their cards well and truely marked. Noone but newbies and fools will touch them now.
When’s the next operator drinks? please tell me they’re attending, wouldn’t miss that one for the world!!!
The company downfall was in its accounting and reporting, it is standard practice to report sales to developers BEFORE payment is collected from sales channels. This led to an ongoing black hole of unpaid invoices both to TelcoGames and to developers. Unfortunately due to the nature of having shareholders is that you often have to pretend things are ticking along nicely. The company’s solution to the black holes was to employ more high-paid commercial figures to resolve it, unfortunately the problem was nigh on unresolvable and the balance was shifted in the company from many good sales and technical staff to a skeleton team with a vast number of high profile Senior Management.
Victims of their own success? No, but fly by night shady characters certainly not.
There’s a lesson for everyone in the industry here, not just aggregators but sales channels, operators and developers alike. Let’s just hope the long term impact on the industry is minimal.
To Matt :
Absolute RUBBISH.
These idiots funded expansion of their business into non-core areas using the proceeds from content they have distributed without ring-fencing the suppliers proceeds.
Specifically they wasted a vast amount of capital on their development studios – not only the purchase but the ongoing staff costs of FatHammer and other “deals” they performed.
To also prove their “shadiness” they executed invisible arms length agreements with “other branches” of Telco – TG GmBH and Telco Asia – which they then used as an excuse to avoid paying royalties from these regions.
These guys are con-men of the highest degree.
Not sure what you’re talking about there Matt and John’s spot on, also not quite sure where any confusion can possibly arise here. TG have been taking content from partners, selling into channels, not paying out partners and buying developers within a ‘TG Group’ umbrella with their proceeds… quite easy to grow a company that way and even easier to set aside funds to establish a phoenix while you’re doing it.
And the operators like o2 UK, Orange UK knew that they rip of the developers and such companies were sending developers to TG also after they knew that the developer will NEVER see any money. In my opinion they are part of this scandal and perhaps the industry will find this out soon.
The only thing the operators can do is paying the developers directly. But they still want to cheat the developers cause thats what they are doing for ages already.
Normally the developers should boykott the operators/partners they worked with cause they are part of it.
Regards the last post, I brought this up with Orange at least quite some time ago and got stuck in an endless loop as a content developer between Orange an Telco oddly enough?, so I guess have to agree with all that pretty much from first hand experience.
Telco burned the developers cash to expand their own business too rapidly and that made the black hole that ate them up and developers cash.
Personally I’m not owed much money from them as I only had one title live under their distro channels (as a test run thank the lord) and am not going to chase it for the record either, as it’s not my worth my time. I do however feel the pain of many others content developers and suppliers here.
I personally would never with them again whatever the outcome and am happy to print my name in public to this end.
Also to underline even if Telco had invoicing issues (2 years come on that is just incompetence!!!) – they took 50% rev share on the content – and the “devs” put up with that because they would expect a publisher/distributor to either “strongarm” the smaller players into paying promptly OR (SHOCK HORROR) use a factoring agency to take over the cash-flow – typical cost 5 – 6% of invoice value.
Telco avoided paying their devs over a long period through obsfucation and delay tactics.
It doesn’t matter which way you cut it Telco were one or more of the following:
1. Incompetent
2. Negligent
3. Crooked
Obviously Menzies did not believe 3. – but then Menzies were bought in by the Telco principals – so there is no surprise that they are acting their favour.
On the other hand if they are not “3” then both 1 and 2 should disqualify them from running another company.
@matt
TG was build to rip of the developers. Operators and Handset manufacturer like SonyEricsson are still using TG to rip of developers.
TG had problems for over two years and a lot of information is still not offical.
Lets see when some real hot topics are offical. Perhaps some information why operators are still working with this the cheaters from TG now MED.