Iam8bit has initiated legal action against Skybound Games, alleging fraud and breach of contract

iam8bit, a company specializing in merchandise, has filed a lawsuit against game publisher Skybound Games, alleging fraud and a violation of contractual agreements.

The legal action, initiated in the Superior Court of California, Los Angeles County, accuses Skybound of engaging in a prolonged accounting malpractice by failing to deliver correct financial documentation. According to the lawsuit, Skybound did not supply the mandated monthly financial statements and inflated expenses with dubious costs reaching millions.

iam8bit claims Skybound's unexplained expenses led them to hire an independent auditor, incurring a $4 million loss. Furthermore, iam8bit alleges that Skybound misused confidential information regarding its royalties arrangement with Annapurna Interactive, the publisher of the indie game Stray. This led to iam8bit being excluded from a deal concerning Stray's release on Nintendo Switch, along with accusations that Skybound replicated iam8bit's marketing materials.

In the lawsuit, iam8bit asserts, "Skybound covertly negotiated with Annapurna regarding a new version of Stray for the Nintendo Switch platform, without iam8bit’s knowledge," as reported by Law360. "Skybound concealed this transaction from iam8bit, misrepresenting its intentions and plagiarizing iam8bit’s work."

The collaboration between iam8bit and Skybound Games Studios began in April 2021, focusing on producing physical editions of independent video games. Established in 2005, iam8bit has gained recognition for its sale of video game vinyl soundtracks, apparel, and other merchandise. Additionally, since 2022, the firm has managed the Play Days segment of Geoff Keighley's Summer Game Fest and introduced its iam8bit Presents publishing label.

Skybound Games Studio, part of Skybound Entertainment, was founded by Robert Kirkman, known for creating The Walking Dead.

Inquiries for comments have been sent to Skybound Games Studios by GamesIndustry.biz.