Let's start this discussion by defining the term that will be used throughout this post. Burn rate is the rate per month that a company spends money. This covers all expenses for this company, including rent, payroll, employee benefits, utilities, etc. Usually, this burn rate is split up between projects if a company is working on multiple projects, and is generally quoted on a per-head basis. For example, a company with a burn rate of $100,000 per month and ten employees is said to have a burn rate of $10,000 per head.
Now, I'm not going to be giving specific figures at all, but I'm going to try to lay out what was going on.
When we started on "SiN Episodes" in 2005, we were working on two other projects: "25 To Life" and an unannounced project. As a result, we were able to split the company burn rate between three seperate projects, two of which had milestone money coming in on a fairly regular basis.
At the end of 2005, "25 To Life" was supposed to be ending, and the staff on that project was supposed to split between the unannounced project and "SiN Episodes." However, the unannounced project was cancelled, so everyone in the company moved onto "SiN Episodes." This increased the burn rate significantly, because instead of only having 15-20 heads on the project, we had almost 40 heads on the project. However, it was helping bugs get fixed faster and helping to improve the overall quality of the project.
While this was going on, upper management was trying to sign other deals to work on concurrently with "SiN Episodes." Especially near the end of the project, we had many people who weren't being used to their full potential who could have easily worked on other projects. Unfortunately, having to continue to cover that burn rate led to cost cutting in other sections, like the five-figure testing budget and the even smaller marketing budget.
We were in final negotiations on one project when "SiN Episodes" went gold, so 15 people started working on "Episode 2," and the rest started getting up to speed on the new technology that this other project would require. "SiN Episodes" was selling well enough to fund those fifteen people during the development process. However, there was still the matter of these other 25 people. If enough money is coming in to cover the burn rate for fifteen heads, but your burn rate is forty heads, it isn't a good thing. This is definitely the case when you start talking about critical path items that cannot be shortened by throwing headcount at it, like the code merge.
Several project deals fell through. After five months, when a short-term development deal came along that didn't fall through, it required almost everyone in the company. The few remaining individuals were working on either new pitches to get additional projects, or trying to get alternate sources of funding to finish "SiN Episodes."
Obviously, the ending of this story wasn't a happy one. Ritual was acquired by MumboJumbo, and all signs point to the untimely death of the series. The sad part of this was that the first episode was a success. It sold well enough to pay for the burn rate for the team for the second episode...but not well enough to cover the remainder of the team. It's ironic that for all of the companies that died because of a commercial failure, this one was mortally wounded by a game that could have been considered a success in spite of itself. (Minor update: This may be premature, but my prediction on the fate of "SiN Episodes" may have been off by a small factor. Remember, I've been gone for eight weeks...)
Many people wondered why I was so harsh on the warez monkeys who grabbed illegal copies of the game. Well, if all of the people who pirated the game and contacted Ritual for tech support had actually purchased the game, it would have paid for the burn rate for two additional people from ship to date. That alone may not have changed the tide for "SiN Episodes," but it would have made the landing a lot softer for a few people...myself included.