A small-but-visible maker of premium physical game editions has gone to court accusing a high-profile publisher of cheating it out of millions.
iam8bit — the boutique company known for vinyl soundtracks, collector's editions and physical releases — filed a complaint in Los Angeles Superior Court alleging Skybound Game Studios committed fraud, breached contract, and misappropriated designs and trade secrets. The suit seeks roughly $4 million in real and punitive damages, plus attorneys' fees.
What the complaint says
According to the filing, the two companies entered a partnership in 2021 to handle physical distribution projects. iam8bit's lawyers say Skybound repeatedly failed to provide the monthly financial reports required by their agreement and "padded its expenses with millions of dollars in fake line items." iam8bit says a third-party auditor could not reconcile those line items because Skybound allegedly wouldn't or couldn't substantiate them.
The suit reaches beyond accounting. iam8bit claims it designed promotional and marketing materials for Stray's console launch (the indie 3D platformer developed by BlueTwelve Studio and published by Annapurna Interactive). Those materials — plus confidential details about iam8bit's royalty split with Annapurna — were, the complaint alleges, used by Skybound to negotiate a Nintendo Switch release deal that excluded iam8bit, while using "almost exact copies" of iam8bit's creative work.
Legal causes of action listed include breach of contract, fraud, conversion, unjust enrichment and misappropriation of trade secrets. Law firms representing iam8bit have said they are pursuing monetary and punitive damages; Skybound has not publicly commented as of publication.
Why this matters (to collectors and the industry)
On the surface it's a dispute about bookkeeping and marketing decks. But it speaks to a bigger dynamic: physical editions and console ports remain valuable leverage for smaller specialist publishers. A misstep — or an alleged misappropriation — can cost more than reputation; it can cost the revenue streams that sustain boutique operations.
Ports and physical releases are part of why this fight has teeth. The continued appetite for Switch releases and speculation about Nintendo's hardware future have kept demand for physical runs high, a trend that has shaped how companies negotiate distribution deals and special editions — even as the broader console landscape evolves with new hardware rumors and launches (/news/nintendo-switch-2-sales-surge) and developer planning for next-gen ports (/news/darwins-paradox-switch-2-2026).
The players in the background
A few names deserve clarification: BlueTwelve Studio made Stray, and Annapurna Interactive published it; iam8bit handled some physical distribution and produced a special edition and vinyl soundtrack. Skybound Game Studios is part of Skybound Entertainment, chaired by Robert Kirkman. The complaint centers on the business relationship between iam8bit and Skybound — not on BlueTwelve or Annapurna as defendants — though iam8bit alleges Skybound used confidential information about iam8bit's dealings with Annapurna to sideline iam8bit on the Switch release.
This is a civil case alleging misconduct; the court will need to sort through contracts, accounting records and the creative materials at issue. If the allegations are proven, the case could influence how boutique publishers protect their marketing assets and how partners audit and disclose expenses in multi-year arrangements.
For now, the filing has put a spotlight on the fragile economics that underpin physical editions and on how quickly partnerships can turn adversarial when royalties, ports and marketing IP are involved. Neither side has offered a public statement beyond the court paperwork, so the story will likely develop as filings and responses appear in court records.