On December 5, 2000, Microsoft issued a press release announcing a preliminary agreement to buy out Digital Anvil, ending Chris Roberts' tenure at the studio he co-founded. According to the Digital Antiquarian, the Austin-based developer had struggled to deliver its ambitious projects internally. Its space combat game Starlancer only shipped in April 2000 after its design documents were handed over to an external contractor, Warthog, based in Manchester. Digital Anvil would complete just two games under its own roof before Microsoft shut down the studio in November 2005 following the release of Brute Force.
The Fragmented Games Studio
The buyout marked the end of a troubled era for Digital Anvil's initial software lineup. While Microsoft had invested heavily in the studio expecting a steady stream of original titles, internal development stalled. Starlancer required external help from Manchester-based Warthog to reach store shelves in April 2000, and other projects struggled to stay on schedule. Microsoft's December 2000 buyout allowed Roberts to exit the studio with substantial financial resources, while Microsoft assumed full control of the remaining game catalog.
A Pivot to Hollywood
With his buyout proceeds in hand, Roberts relocated to Hollywood in the spring of 2001. Rather than remaining in software design, he set out to make feature films. He initially established a production company named Point of No Return Films and pitched a script titled The American Knight, based on Origin Systems' 1995 flight simulator Wings of Glory. When mainstream studio backing failed to materialize, Roberts shifted strategies. In March 2002, Point of No Return Films morphed into Ascendant Pictures, pivoting away from direct screenwriting toward executive production, foreign pre-sales, and private equity assembly.
The German Tax Arbitrage
To navigate foreign film financing, Roberts partnered with Ortwin Freyermuth, a lawyer who had studied international copyright law at UCLA in the mid-1980s. Freyermuth had previously co-founded Capella Films after identifying an overlooked feature of a 1970s German tax code. The regulation allowed German investors to deduct 100 percent of their capital contributions to film productions immediately as total losses. For high earners facing Germany’s top tax bracket of 51.5 percent, these write-offs offset personal income tax liabilities regardless of whether the movie turned a profit. Because the original tax rule did not mandate that eligible films be shot in Germany, capital flowed into private German media funds that funneled cash directly into Hollywood productions.
Ascendant Pictures and the Buyback Loophole
When German authorities tightened the law in 1999 to require local copyright ownership, film financiers restructured their transactions rather than abandoning the funding mechanism. Hollywood producers began selling film copyrights to German funds while inserting contractual options to buy back the rights at a future date for a set price. In a notable 2001 deal, Paramount Pictures transferred the copyright for Lara Croft: Tomb Raider to a German equity fund for $94 million before leasing it back. By leveraging these international copyright and tax mechanics, Ascendant Pictures positioned itself to fund film slates without relying entirely on traditional American studio backing.
Digital Anvil was shuttered by Microsoft in November 2005 after completing just one final title, Brute Force. By that time, Roberts had established himself in Hollywood by navigating the back-room mechanics of foreign pre-sales and international tax shelters.
AI-generated editorial illustration; not a documentary photograph.
Source: Mr. Roberts Goes to Hollywood, Part 2: The Producer
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