Ottawa's Fuel Industries looks to recharge after insolvency, founder gone


A former Ottawa technology star has dimmed after a series of business decisions failed to pan out.

Once an inspiration to other Ottawa-area software firms, Fuel Industries recently found itself insolvent and has now been acquired by one of its creditors, Chou Associates Management Inc.

Founder Mike Burns is out as chief executive and chief creative officer and no longer has any involvement the company.

“The old company has become insolvent; however, much of the assets, expertise and staff are becoming something new,” said Tracy Chou, principal at Chou Associates Management and new chief executive at Fuel.

“We are structuring the business to suit the present market, while retaining as many jobs as possible. The new company has strong financial backing and a great outlook.”

Fuel now employs about 30 people and has moved out of its 20,000-square-foot warehouse into some extra space in bitHeads Inc. offices at the Carlingwood Mall.

It’s been a remarkable fall for the firm.

It was founded in 1999 by Burns, a former animator on the iconic Canadian TV show The Raccoons. It had six employees in the beginning; that count peaked at roughly 150 workers globally in March 2016. The company had offices in Ottawa, Los Angeles and Seattle.

The Ottawa employees were housed in a sprawling, custom-designed warehouse near the Parkdale Market, filled with video game consoles, arcade and pin ball machines. The chic, upscale space featured glass-walled offices, a recording studio capable of capturing sound in THX 7.1 audio — a certification required by the movie industry. It also had a 5,000-square-foot Hollywood-style green-screen room.

Its client list included Microsoft Corp., which partnered with the Ottawa firm to release the game Tinker to users of the Windows Vista operating system and where it replaced stalwart offerings such as Minesweeper, and with McDonald’s, DC Comics, NASCAR, Intel Corp., TV network Nickelodeon, where it created a SpongeBob SquarePants game, and even Lucas Arts, where Fuel helped to create an online Star Wars-themed title called Ewok Village.

The Ottawa-headquartered firm worked with some of the biggest technology and entertainment brands on the planet.

McDonald’s was one of the business’s key clients. Fuel was making interactive video games based on characters that had been licensed for Happy Meals. Kids who bought happy meals obtained CD-ROMs or online codes enabling them to play. One promotion in 2008 saw 235,000 Fuel-made games shipped to McDonald’s restaurants across Europe daily during the Happy Meal giveaway.

But, in recent years, the firm’s focus shifted from advertising-driven, branded entertainment and game offerings to original offerings and games. In an interview in 2010, the company’s former chief executive, Burns, explained the push to develop its own properties.

“We’ve been building brands and creating incredible properties for other people and making them rich for years,” Burns told Postmedia at the time. “And we finally said: ‘We have the skill set and the talent to build our own. Why don’t we?’ We are watching the revenues and seeing where these guys are playing and it’s just silly for us to sit there and collect our 20 per cent margin as a white-label services company while these guys are raking in millions.”

It was also in 2010 that Burns moved his family from Ottawa to Los Angeles to spearhead a new corporate office that would focus on business from Hollywood.

The company launched a Facebook-based game called Toy Factory, which was a lot like Farmville but instead of farming animals, the player builds toys. It partnered with another Ottawa firm called PlayBrains, to release a PS3 and Steam (PC) game called Sideway. A children’s iPad-based book series was released. Called Leafy Landings, it followed the adventures of a group of bugs.

Fuel was one of four companies to found the Ottawa International Game Conference in 2011, which aimed to bring together video game designers in the nation’s capital and help those businesses better collaborate with one another on projects.

There was also an attempt to tailor Fuel’s content to specific demographics. One of the firm’s earliest attempts at publishing its own content saw the release of a website called All Girl Arcade, which aimed to attract preteen girls as its key audience.

In 2014, acting on a tip he received from another video game enthusiast, Burns set off to prove one of the biggest urban legends in the video gaming world. The rumour was that in 1983, facing bankruptcy, Atari had truckloads of old E.T. the Extra-Terrestrial video game cartridges taken out to the middle of the desert in New Mexico, covered with concrete and left to rot. E.T. was a critical and financial failure credited as being one of the reasons Atari’s once great gaming empire crumbled. E.T. is still considered to be one of the worst video games of all time.

Burns partnered with Microsoft and two-time Academy Award-winning producer Simon Chinn and Emmy-winning producer Jonathan Chinn and director Zak Penn, who is better known for his screen writing skills for movies such as The Avengers, The Incredible Hulk and X-Men: The Last Stand. The dig, which ultimately proved successful, was filmed and broadcast to Xbox owners over Microsoft’s Xbox Live game console.

Looking back at each of the initiatives, Burns admits that they didn’t achieve the levels of success he would have liked, which forced purse tightening. In the end, the various initiatives and Burns’ relocation to California, proved to be too much for the Ottawa firm to handle.

“We have had a lot of business struggles since losing McDonald’s as a key client. Fuel has also gone through major leadership changes recently, and it’s been hard for me being on the other end of the continent,” Burns said Ina statement.

“There was also some directional differences along the way and we made a few investment choices that failed to give us the return we anticipated,” he said. “Most of all, the market has changed a lot for a company like Fuel — clients are focused more on smaller direct to consumer conversations through platforms such as Instagram and are doing less large interactive branded games and large interactive experiences which is where Fuel built their reputation. Fuel needed to slim down, become more nimble and attack the market differently than before.”

Chou became involved with Fuel in February 2015. Her firm provided the company a much needed loan so it could continue operating. But, it wasn’t enough. With cash running out, business slowing and no apparent interest in buying the firm, Fuel began bankruptcy proceedings in July. Chou and her firm bought out the remaining assets of Fuel from the other creditors on Aug. 4.

The firm’s new chief executive, has big plans for the company. She wants to sharpen the business’s focus and get back to the advertising-based games and online experiences that made Fuel famous. From smaller offices with a smaller staff, Chou believes she is well positioned to help Fuel fight its way back to the top.

“We believe in Fuel’s business model and think it has a very bright future,” she said. “We are excited to work with the many talents on the team. And together, with our business expertise and Fuel’s creative and technical talents, we fully expect to rise from the ashes.”