Red 5 gets lifeline investment from Chinese giant

Shanghai-based entertainment group The9 has confirmed that it invested an undisclosed sum to developer Red 5 before the studio made layoffs.

Californian outfit Red 5 was said to have undergone a policy overhaul last month, terminating its MMO project and starting afresh on a different MMO – this time said to be aimed specifically at the growing Chinese market.

The transition saw a number of developers walk out of Red 5 Studios – while others were told to leave.

It was said that the company is now left with around thirty staff, down from a suspected 100, but Red 5 has made no move to confirm or deny this.

Red 5 was established back in 2005 by three former Blizzard employees, while its MMOFPS project was thought to have received substantial funding after securing an $18.5 million investment from Benchmark Capital and Sierra Ventures.

An anonymous source recently claimed that two of the company’s three founders have now left, as CEO Mark Kern sees the diminished company reorganised.

Yesterday a source told Reuters that The9 will invest an undisclosed amount into Red 5, while $100 million will be poured into Hangzhou-based developer Fire Rain.

The investments come after The9 lost the licence to operate World of Warcraft in China to NetEase earlier last year.