It’s due to tax breaks. NPR did a piece on it. https://www.npr.org/2022/12/17/1143901911/popular-titles-are-vanishing-from-hbo-max-after-merger
the relevant quote:
it's about these special tax breaks that these companies can take in the immediate aftermath of a merger. So the company expects to write off something up to $3.5 billion connected to content costs as a result. And part of getting that tax benefit means they have to pull some of these shows from the service
so it's essentially a perverse incentive at work.
Welcome to the USA, this country is one "scam" after another all the way to the top
Because we made it that way. And we can fix it, too. Will we?
We can’t fix it, the common people only have a marginal say in our government. Corporations have captured almost all regulators and all the offices needed to effectively control the nation. Politicians will vote based on whatever their donors want them to do, not what the actual citizens in their districts want
not what the actual citizens in their districts want
Most of them don't vote, so there's no reason for any politician to ever take their wants into consideration. That's really what needs fixing.
It's more an unintended consequence. Pretty sure the point of this is that you can buy a company and get some relief for bad assets they have. You can also use healthy assets to get a quick tax break, for things unlikely to make a ton of money.
The law needs to change. Artistic works that are written off for tax purposes must revert to the public domain permanently and immediately.
That would be nice and in line with the goals of copyright, so obviously it will never happen.
unintended consequence is the definition of perverse incentive.
A perverse incentive is an incentive that has an unintended and undesirable result that is contrary to the intentions of its designers.
Im not in the business, but i think they are playing the long game. People don't want to pay full price for an old game or a remaster. And unless there is a crazy fan base they won't get hyped about a remake of a game.
They want their new releases to not be competing with their older, cheaper games.
That would be an entirely new level of unethicality. Not only does it fly in the face of preservation, it's a stab in the back to the developers who trusted them to publish their game. Imagine having made a game that you're proud of and want to share with people, but you're not allowed to sell it or even give it away because the megacorp that promised to do the business side of things and let you focus on development turned around and decided it will be buried forever.
Yes that's true, but have you considered the shareholders? Those sweet, innocent shareholders...
That makes zero sense whatsoever.
People buy these from steam and other game stores. Not going to warner bros site and buying them.
Getting rid of fist puncher on steam to try and make your new game stand out and get bought when there's literally over 14,000 other games on the platform you're selling on makes no sense.
What does make sense is bullshit tax write offs you can abuse after a business merger.
Now they can compete with everyone else's games and lose.
This sort of makes sense but not for quite the same reasons. This may be an attempt to simplify their licensing arrangements so they can resell them or bring them in house. It's easier to cancel all the licensing agreements in one go so they can then make a fresh exclusive arrangement with a single company.
It's less about competing with the existing games (which they already control through licensing) and more to do with being able to sell or use the licensing cleanly without worrying about pre-existinf commitments.
Like, for each new game either you do legal compliance to make sure you're not breaching your previous agreements OR you cancel all the agreements in one go and you never have to bother worrying about it. Saves money but also makes you the sort of company businesses will be wary doing deals with. But they probably have a deal with a big publisher lined up or intend to take the whole thing in house.
If I'm not mistaken, Steam will still keep the games on their servers. Sure, you can no longer buy them, but I'm pretty sure if you own the game you can still access it, and steam keys from the grey market should still work.
Copyright, licensing, and derivatives.
Many games, like GTA San Andreas, had licensing deals fall apart over time, and certain assets (like music) were removed and replaced.
When a game gets sold, the publisher has to figure out who all has to get paid, which means you're paying for people who work in accounting figuring out where all this money is supposed to go.
In other words, sometimes it's a lot cheaper to just not sell the game anymore.
GTA being a bad example with its popularity, but in another instance where assets need to be replaced, if its an unpopular game, easier to just delist it than pay someone to work on it and replace assets. Further, when you no longer have to pay other people for their involvement in the game or for licensing, suddenly you have fewer people you have to pay to do the job of figuring out where all the money goes.
Delisting frankly cuts costs across the board.
Based on what they've done in the past, they're going to write it off on their taxes when though the titles aren't even games that they own.
Corporations don't always have to make sense it looks like during a meeting they concluded that games don't generate significant profit so they decided to exit that entire market. They don't want to have any employees to look over the account, or having to update is something or have any lawsuits (perhaps have offended someone, or formatted computer), I am not saying those could happen or make any sense, but essentially execs say they don't want to have ANY liability and the lower employees comply the best they can.
Execs don't care about users, to them this is just business.
If users were priority company for example could just make the games public domain, but that would be too much work, and no way back if (in very unlikely case) they wanted to bring the games back.
Taxes. When you have products sold you have to pay taxes on their commercialization and on the revenue they produce. By removing all sort of properties, from games to movies and series from distribution, WBD can write them off and thus reduce the tax amount they have to pay on them. This is just Warner addressing an internal liquidity and budget issue. They've been using this strategy for a year now because they were, according to them, short of cash. By removing old properties that are no longer selling well, they reduce the tax burden for more recent and profitable products. This of course sucks for users and consumers who can no longer access them on streaming or buy old games. But it effectively reduced their operating costs.
I see "taxes" a lot but I have never seen someone explain the mechanism by which this is supposed to work.
The only thing I can come up with in my head is that they have capitalized the development costs and are currently depreciating the resulting asset. And that by cancelling/delisting the games it may allow them to immediately depreciate the rest of it, thereby recognizing a large expense for the current tax year, reducing profit, and therefore taxes.
Is that how this is supposed to work?
Pretty much. The delist is presented as a big operating "loss" to tax authorities. An asset that they will no longer have and will no longer make them revenue. The only thing they are retaining is the copyright. This was their 2022 strategy.
But it is also about cost vs. revenue in the mid term. If it cost X amount to keep a property in a streaming service (servers, programmers, bandwidth, etc.) But it brings in less than X in revenue, that revenue still has to pay a lot of passives (residuals, licensing, fees) and taxes. Then that property is a net loss for the company and other products have to pick up the slack to pay the full X costs. By delisting the whole company runs a financially healthier profit. They over spent and the most recent merger was left holding the bag of debts.
The delist is presented as a big operating “loss” to tax authorities.
I have absolutely no fucking idea how taxes work. But this sounds to me like I have insurance on my hand and I sit down one evening with a knife and cut off my hand and then go to my insurance company, showing them my bloody stump: "gib money!"
wtf.
Not exactly. You don't pay taxes on your hand. And if you intentionally harm an insured good you void the insurance.
It's more like, suppose that you get married. You and your partner each own a house. Since you're joining into a single household, you now technically belong to the next tax bracket as your net worth is both houses combined, so you pay more taxes. Your expenses are also the sum of the maintenance of both.
You think, since you're only going to live in the one house to rent the other. But as it turns out, almost nobody wants to rent your house, the price people are willing to pay doesn't cover maintenance and property taxes, plus you also have to pay income taxes on the rent. The whole ordeal isn't profitable.
So instead you sell one of the houses. Overall you paid less on administrative and sell taxes. From now on you don't have to pay maintenance or property taxes anymore. And your net worth in properties falls back to the previous tax bracket so you pay less taxes overall. Additionally, for this tax season only, you get to write part of the value of the house as a net loss, arguing you sold the house under value. So the cash you get in hand is not revenue and isn't taxed and your final tax is further reduced by the loss of net worth.
Now you have a cushy lump of money to sit on, and in the future you and your partner are no longer burdened with the costs of the second property.
when you do a merger there are weird special tax laws that apply temporarily
This. And layoffs.
Delisting is the end effect. They might have other contractual obligations that cost them money to license the game.
It sounds more like they're trying to close adult swim games.
And on top of the tax breaks everyone's talking about, they also don't have to keep developers, community staff, or support on the payroll anymore.
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