Bottom Of The Ninth: 38 Can’t Pay State Or Employees

By Nathan Grayson on May 18th, 2012 at 12:00 pm.

So, uh, Kickstarter?
When we last glanced in Kingdoms of Amalur: Reckoning developer 38 Studios’ direction, trouble was afoot – but it was tiptoeing, perhaps while disguised as some form of shrubbery. Now, though, things have taken a whiplash-inducing turn for the worst. In short, Joystiq reports that former baseball star Curt Schilling’s unlikely venture has borrowed a total of $75 million from the state of Rhode Island – with a $1.125 million payment due on May 1. 38 – possibly now named after the amount of money in its bank account – couldn’t pay. Today, however, the company gave it a go anyway. Unsurprisingly, that didn’t end well.

Here are the cringe-worthy details, straight from the office of Rhode Island Governor Lincoln D. Chafee:

“A check from 38 Studios was hand-delivered to the Rhode Island Economic Development Corporation at approximately 5 o’clock this evening. However, upon learning from the Chief Financial Officer of 38 Studios that there were insufficient funds to cover the payment, the check was returned. The EDC remains willing to accept readily available funds.”

But it gets worse. 38 also couldn’t make payroll this week, and contractors and temps – in other words, anyone who wasn’t a full-time employee – was given a pink slip. Moreover, in the increasingly likely event that Schilling and co can’t muster the necessary funds, Rhode Island will actually assume ownership of their IPs, as 38 used them as collateral when it originally secured the loan.

The studio, meanwhile, hasn’t actually made an official statement, which – in addition to painting a less-than-promising picture – shrouds the future of Rise of Nations/Legends developer Big Huge Games in question marks. I will, of course, attempt to get in touch with the 38 subsidiary, but odds are, we’ll have answers to all these questions pretty soon – one way or another.

Could Rhode Island end up with a state-owned game studio?

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98 Comments »

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  1. Metonymy says:

    Rise of States, Revolution Edition, re-enact the civil war, or start the second one!

    An MMO taking place entirely inside the state of RHODE ISLAND

    This must seem surreal to you guys on the Island of White Cliffs. RI is so inconsequential that it defies description or explanation, but if any government institution could properly care for a non-mainstream arrangement of virtual potential, it would be one that flies completely under everyone’s radar.

      • Ultra-Humanite says:

        That’s a pretty useless article you linked there. It’s 3 paragraphs long and gives no actual evidence of Rhode Island being a corrupt state, unless you count pointing out 3 individual politicians in 25 years. I’m currently struggling to identify any state that hasn’t had 3+ corrupt politicians in the past 25 years.

        • PopeJamal says:

          In his/her defense, Rhode Island is only like 4 square miles…

          AND

          they just got enough citizens together for two full teams, so now they can play a game of (American) football!

          With 2 people left over to watch in the stands!

    • Zenicetus says:

      Yep, it’s a tiny state, but it does have the Rhode Island School of Design, probably the best fine arts college in the USA. Maybe the state can give the Amalur assets to the RISD kids to develop as a class project.

      • Solrax says:

        That would be amazing! And it’s true about RISD, I’ve worked with people from there, they are fantastic. The Talking Heads came from there!

    • ineffablebob says:

      “An MMO taking place entirely inside the state of RHODE ISLAND”
      We’ve already got one of those.

      http://wiki.cohtitan.com/wiki/Paragon_City

  2. adonf says:

    Is a pink slip actually pink or is it just a way of saying they got laid off? (When I was “let go” in the US I was just told to go home and look for a new job, no slips were involved.)

    • Hoaxfish says:

      I believe a pink slip is that tax document you get so you can show it to your next place of work or something, rather than a specific colour scheme for “you’re fired” notices. And that it is physically pink.

      edit: turns out I’m wrong

      • impish says:

        “in Belgium the equivalent is known as a C4.”

        They don’t mess around in Belgium.

      • trjp says:

        In the UK it’s a P45 – just for Wikipedia-like interest…

        Last one I got was greenish

  3. nasenbluten says:

    I don’t see those millions anywhere on Amalur, it was decent but nothing extraordinary.

    Related: http://www.youtube.com/watch?v=BZ_6PkeO_g8

    • Kolchak says:

      Apparently they were working on an Amalur MMO. That’s the only way to explain it because the first and what looks to be final game could not have had 300 people working on it.

      Seems like a sad story of a business trying to expand too quickly. I hope those employees get new jobs soon.

      • Shuck says:

        Yeah, the RPG was made by Big Huge Games, altered from its original vision to be in the “Amalur” game-world as a precursor to the MMO being built by 38 Studios (which hired all the hundred of people). I don’t know quite what they were thinking – MMO budgets can easily exceed $100 million (as I’m guessing it would have here) and they don’t seem to have had the money for it. They apparently were counting on the RPG selling well enough to provide the rest of the funds, which obviously didn’t happen. Given the poor sales, it couldn’t have paid back its dev costs much less kept the parent studio afloat.

        • MadTinkerer says:

          Well now this all finally makes sense. I couldn’t figure out why mediocre success of one product could kill a studio so quickly, or why they couldn’t make at least minimum payment given the adequate sales. But this information paints a rather different picture altogether. There’s an important lesson about hubris in all this.

  4. Orija says:

    Is that how the American barbarians spell ‘cheque’, sheesh.

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      stahlwerk says:

      cheques and balances, am i rite?

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      Morlock says:

      “freedom bills”

    • Subatomic says:

      I’m more amused by the fact they still *use* cheques/checks. Seems so early 90s to me…

      • DazedByTheHaze says:

        Early ninties … financial criminals still get wet pants when they think about that time. The time when only the rich had access to digital financial data and everybody else had to walk into a bank to “check if the cheque” has money behind it. And where you could actually blame “damn computers” who lost the payment on the way… “I paid, I swear!”. Anyway, this whole thing sounds pretty stupid from the start? Give millions of dollars to a baseball player … to make a video game. Fail.

    • trjp says:

      Check was original spelled “Check” in the UK too – it derives from a system whereby the finances of the state were laid-out on a ‘checker’ board – where the squares (checks) represented different areas in which money was to be spent (and moved around as various people gained or lost favour in court).

      French for a checker board is (or was at the time) Exchequer and thus the man in the job of allocating the money became the “Chancellor of the Exchequer” (remember that most of the posh/rich people in the UK were French from the 11th Century onwards cos they’d invaded and taken over the place – see also how food has French names like Beef, Mutton but animals have English names like Cow and Sheep).

      Spelling Check as ‘Cheque’ is just a posher/alternate form of the word which took off in the UK but not elsewhere.

      Note also that ‘Check’ as in ‘the bill’ in a restaurant has a totally different derivation – almost certainly related ‘hat check’ as once you’d finished your meal, you’d return your ‘hat check’ token to get your hat back.

      For this and other brilliant stuff – read this – http://www.amazon.co.uk/The-Etymologicon-Circular-Connections-Language/dp/1848313071 – often on Kindle for just 99p, you’ll learn LOADS.

      • dontnormally says:

        cough pwnd cough

      • Orija says:

        Woah, the spambots are unbelievably advanced nowadays.

      • Phantoon says:

        It’s another example of how the British changed their language, not the Americans.

        AS IN YOU ARE WRONG, LIMEYS.

  5. frightlever says:

    That 38 Studios dream-team should have included an accountant.

    Sports star loses shirt in business venture – not shocking.

    I am sorry to see it come to this. Amalur was decent, but even if it had been extraordinary, how did they think they were going to re-coup those kind of costs? The MMORPG? Years later and many more millions down the line?

    • Shuck says:

      “Sports star loses shirt in business venture”
      Ironically it appears that he’s walking away with his millions intact. His initial investment in the company was repaid by the government-backed loan of $75 million. (So much for his stance against “government handouts.”)

      Of the huge amount of money they’ve gone through, presumably the vast majority of it was towards the MMO. (Big Huge Games apparently was pretty close to being done with the RPG that ended up as “Amalur” before they were bought by 38.) The problem is that the kind of money required to make an MMO is so huge and they didn’t have sufficient funds – counting on the RPG keeping them afloat was wildly optimistic (especially since it doesn’t seem to have paid back its dev costs).

      • Joshua Northey says:

        I am not 100% sure that is right.

        I am pretty sure he gave them a bunch of initial starting capital. AT some point he also gave them a $4mil loan, and that was repaid, but that is nothing compared to his equity stake which I heard was in the $30-40 mil range and is likely now worthless.

        “I am just going to hire all the best people I can find” is rarely a smart way to start a fledgling business.

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      drewski says:

      They did. That’s how they know they’ve got no money left.

  6. Mordsung says:

    Curt Schilling is a die-hard Republican who has consistently come out against any form of government assistance and believes devoutly in the idea of being “self-reliant”.

    So feast upon this delectable irony.

    I do feel sympathy for the employees, but watching Schilling be forced to eat a plate of crow is just too much fun.

    • AmyRabbit75 says:

      Not to get too political, but I’ve often found that people like Curt Schilling are strongly against government assistance when it goes to other, “undeserving” people. So I doubt he’ll eat any crow or lose much sleep over this.

    • TariqOne says:

      Curt Schilling don’t need no government regulation. He’s perfectly capable of blowing tens of millions of dollars of public money without your “rules” or “oversight.” He’s an investor, man. A job creator. So keep your laws off his body, bro.

      And if his hare-brained scheme to make bazillions on a generic fantasy MMO using public money somehow — SOMEHOW — goes bust, well then, we need only look to that socialist in the White House and his job-killing policies. If it wasn’t for that damned health care law this Amalur thing woulda been huge.

    • Electric Dragon says:

      I believe Maryland State Senator Clay Davis summed it up rather well: “sheeeeit, I’lll take any m-f-ers money if he givin’ it away!”

      • TariqOne says:

        Honestly I can’t believe how stupid Rhode Island was here. I gather what they did was essentially to provide an investor guarantee on a return, floating bonds to private capital, then shipping the money to 38. When 38 can’t pay the funds back, RI is still on the hook for paying the bondholders back over time with expected returns, to the tune of something like 115M when all is said and done.

        If the free market is so great, why doesn’t the private capital just invest directly in 38? Oh right, they’re not dumb. Better to invest in 38 with an ironclad government guarantee. Christ, what a dumb move.

        • Joshua Northey says:

          It was simply a loan guarantee, ED groups do it all the time. 38 wanted X amount from the bank, bank says “no way you are crazy”, 38 goes to state, state tells bank “we will pay you back if they cannot”. Bank says “ok it is your funeral”. Then 38 spends the money and goes bankrupt. Story over.

          It is a pretty standard practice, but typically they are not nearly this large especially for a startup.

          • TariqOne says:

            As I understand it, the RI EDC floated tranches of bonds to private investors, on which they have an obligation to pay a certain return no matter what. The EDC then took the capital and gave it to 38. The idea was that 38 would then pay back the EDC at an agreed rate, which was somewhat more money than the EDC was obligated to pay the bondholders.

            RI wasn’t simply acting as a co-signer on a line of credit. It put together a pretty sophisticated deal that obligated the state to pay investors/bondholders an ironclad return over time, even as it forked over all the cash to 38.

      • Mordsung says:

        It’s too bad whoever cleared this in Rhode Island wasn’t a nerd.

        “So you want me to fund a studio that’s going to make a game written by a mediocre fantasy writer, designed by the guy who was involved in the worst of the Elder Scrolls games, and artistically driven by a guy who has only ever done one comic book that was well received?”

        Salvatore and McFarlane look good on paper, but there’s a reason why Drizzt is the most mocked character in fantasy (okay, maybe next to Frodo) and why you can’t think of anything other than Spawn when you think McFarlane… or maybe his action figure line, which were admittedly pretty cool.

        Follow this up with Ken Rolston and I don’t think any nerd would have seen this as favourably as others did.

        • Jason Moyer says:

          He was also the lead designer on the best Elder Scrolls game.

          • Arglebargle says:

            Downward trajectory though…..

          • Mordsung says:

            Unfortunately, I found Morrowind’s combat system to be so horrendous it made the game next to unplayable for me.

            Yes, the world was amazing, but trying to combine action combat with background dice rolling is an abomination.

            Either it’s action combat, or it’s dice rolling combat, both in one system is just bad.

            Of course, I happen to have a fervent hatred of RNG (Random Number Generator) and think it needs to be purged from as many RPG systems as possible.

          • Sheng-ji says:

            Not wanting an argument, more wanting to hear more of your opinion, why don’t you like RNG? Personally I find games with no element of luck to be entirely too predictable, it’s always nice to have an unexpectedly tough battle because of a few bum “rolls”

          • Mordsung says:

            I dislike RNG because RNG always favours the less skilled individual.

            And yes, this is much less of an issue in a single player game, but I also like to challenge my skill as a player in SP games and I hate winning or losing based on a lucky crit, or a lucky block or dodge.

            This is doubly so, if not triply so, in an MP game.

            With no RNG, there’s no excuse for losing, and the first step to becoming better is realizing that your failures are your own fault.

          • Phantoon says:

            You can get a mod that makes it so you always hit. You have only yourself to blame here- and to quote, you, “and the first step to becoming better is realizing that your failures are your own fault.”

          • Sheng-ji says:

            I see what you’re saying! I do like that type of game too, I guess RNG disconnects player skill and character skill – so the mage can’t melee his way through every enemy just because the player is good at the game.

            I think the skill behing RNG games is in setting up your character in the first place, choosing the appropriate skills and then revelling in your great choices (or sweating and fleeing because of bad ones)

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            drewski says:

            I like RNGs in RPGs, because I don’t play RPGs to be physically skilled at combat. As long as my character is good, it shouldn’t matter how crap I am at learning the combat system.

            And wow, my character in Morrowind was a badass.

          • Ashen says:

            And after that, he became lead designer for the worst Elder Scrolls game.

        • MaXimillion says:

          But the graphic design of Amalur WAS good, as was the combat system (a tad repetetive over that long of a game though). The world itself had several interesting things too, like the way the fae worked, that it was at least better than your standard generic fantasy world. It was the MMO-style questing and NPC’s in a single-player game, and the terribly boring story that brought the game down, and neither McFarlane or Salvatore were involved with those as far as I can see.

          • Mordsung says:

            The art style wasn’t my thing. I expect darker from McFarlane and felt they dropped the ball on that.

            The art style was one of the stronger elements of the game, but still a waste of McFarlane’s talents and strengths.

            I honestly didn’t play the game enough to know if Salvatore’s story work was decent, my point was just that “RA Salvatore!” sounds great to investors, who see his top selling books, but to someone who “knows fantasy” Salvatore is more considered a good, but not great, writer. And I say this as someone who actually enjoyed what Salvatore books I’ve read.

            Speaking of which, did he ever write any books that expanded on Drizzt’s father? He was my favourite character in Homeland.

          • Zenicetus says:

            I played the demo, and one of the main reasons why I didn’t buy it was because the art style was so reminiscent of the graphics in WoW. I’m sure I wasn’t the only former WoW addict who took one look at the Amalur style and said “Wait, haven’t I already spent way too much time looking at all this?”

            Which is to say, yeah… it was polished, but not exactly original.

          • fish99 says:

            To me the term ‘MMO style questing’ suggests WOW style quests where the quest dialogue is text only, which no one reads, and where every quests is just collect 30 item x. I’ve played a lot of Amalur now (59hrs) and it’s far better than that, it’s fully voiced for one thing, and there has definitely been some fun quests along the way (and some dull ones). There’s been a lot of multi-stage quests, and some you could complete multiple ways. What lets the quests down is the writing and voice acting.

      • Joshua Northey says:

        exactly. ;)

    • Ultra-Humanite says:

      Yes, he identifies himself with the Tea Party, which brings along so many levels of comedy. A prominent, outspoken member of the Tea Party, begging for a government handout so he can keep making video games. Curt Schilling is fucking pathetic.

  7. AmyRabbit75 says:

    An Amalur Steam sale in the near future to raise quick cash?

  8. f1x says:

    I have one question, just because I’m ignorant

    Isn’t this actually their own fault?,
    I mean the game didn’t perform extremely well, but that should be actually the publisher’s problem, they should’ve recieved a budget and all, benefits from the game should be a minor thing for the studio
    they also asked for a credit, maybe the miscalculated or they spent too much? I dont know, guess paying Salvatore and McFarlane took a good clunch of money…

    Anyway, I say this because I’m clueless about how game studios work

    • kyrieee says:

      I’m not sure that EA funded KoA, I think they may just have marketed and distributed it. When the publisher does fund the development though, the developer sometimes won’t get a cut of the revenue until the publisher has broken even.

    • Shuck says:

      The whole thing is confused by 38 having bought Big Huge Games and the RPG they were nearly done with at the time, re-setting it in the “Amalur” world while simultaneously working on their MMO, which is what took the majority of the funds. MMOs are hugely expensive, and they obviously didn’t have the money to finish it. It looks like they optimistically hoped profits from “Amalur” would carry them. I’d also say that whoever was in charge of the budget hadn’t made an MMO before and underestimated the costs.

  9. TariqOne says:

    “[C]ontractors and temps … was given a pink slip.” How dare you make an error, RPS.

  10. BobbyKotickIsTheAntichrist says:

    That’s what you deserve when you throw that much money into a terribly bland turd of a game.

    • Sheng-ji says:

      It’s a bit unfair to call it a turd. Bland is as maybe but it was decently average.

    • Hmm-Hmm. says:

      How do you know what their MMO is supposed to be like?

      Eh?

  11. bigdeadbug says:

    I got the feeling it should have been better than it was, considering the fuss around it anyway.

    The worst part of this whole thing (apart from the job losses ofc) is it only serves to make investors wary of new IPs even if the issues tend to stem from the game itself.

  12. Network Crayon says:

    How exactly does one go about borrowing $75 Million off the state to make a computer game anyway? I already know the answer of what would happen if i went to my local council and asked for a fraction of that to make a game… or make anything for that matter. $75 Million is a distgusting ammount of money for any goverment to cough up, especially for a game. That’s enough money to keep charities running for years right? utterly insane.

    • nasenbluten says:

      It is seriously disturbing. The politicians involved took it as an investment, it failed miserably and now the taxpayers have to pay for their mistake.

      • Brun says:

        Investing in a single video game is a terrible idea – anyone who’s taken a cursory look at the industry knows that MOST AAA-level video games are not profitable. They were essentially betting that KoA would be one of the blockbusters that doubled or tripled its budget in returns.

    • bowl of snakes says:

      Charities and business loans are apples and oranges dude. The state wants the company to locate in their area and give people jobs, and ideally the state gets paid back plus interest AND has a nice new local high profile employer. It was pretty weird to hear about it with a risky thing like a game studio.

      • Network Crayon says:

        Yeah, i suppose i can think of examples of that before. the car industry etc… I think it’s mostly the amount of money procured from the state, on whats ultimately a massive punt, in the games market especially. It’d make more sense even if the game was half way educational or nationallistic like an army game. not a flippin fantasy elves’n’unicorns adventure? (not that theres anything wrong with that)

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          drewski says:

          $75m sounds like a lot of money but for a state, it’s relatively small change – Rhode Island’s annual budget is almost US$3b, so their gamble on 38 Studios was about 2.5% of revenue. To kickstart a company promising at least 450 jobs, plus a permanent studio in a potentially massive market, with the promise of many more jobs and nice taxable profits in the future, not to mention the 20% return on investment 38 Studios would have paid RI if their games were successful, means it apparently seemed a gamble worth taking.

          Best case scenario – 450+ new jobs, successful company investing in your state, 20% profit on invesment.
          Worst case scenario – 2.5% of your budget blown for a short term employment boost.

          Not the worst investment I’ve seen. Not the best, either…

          • Joshua Northey says:

            I doesn’t “sound like a lot of money”. It is a lot of money. That is basically half the states economic development money on ONE project. Most states spread that out among hundreds.

            And it was a risky and foolish project on top of that.

            Not to mention the normal subsidy rates are something like $10-20,000/job created (less for jobs stolen) not $150,000/job you find here. ANd the idea that luring one brand new studio to Rhoda Island is somehow going to make it a game development mecva is just farcical. The state was sold a bill of goods, and not a particularly appealing one and the idiots took it.

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      drewski says:

      The same way one borrows $75m from the state to make any investment.

      Lobbyists.

      • Joshua Northey says:

        Don’t forget campaign contributions and hiring of legislators into cushy jobs after they leave office.

  13. Blackcompany says:

    Feel sorry for the rank & file. But this team could have done so much more.

  14. Necron99 says:

    Two things to say about this…
    1) I didn’t buy it because it looks like WoW, and WoW is ugly. I wont buy ANY game that imitates WoW’s art style. (that means you too Rift). I am SO SICK AND TIRED of seeing art styles where a character is swinging a 10 foot long 2 foot wide sword while wearing a car for armor. Its dumb. Lose the massive shoulder armor graphics and lets get weapons back to proper proportions, please?
    2) I wont EVER buy a game that is released at 60$. Just a few short years ago, we paid 50 bucks for a game and that 50 bucks had to pay for the box, the DVDs, the manual, the shipping and the overhead at the store (employees, space, electricity etc.) Now, we digitally download games bypassing all the extra costs and obligations. If you cant make a profit after taking all the other financial liabilities out, you deserve to go the way of the dodo. I understand, consoles are still limited to the old school methods, they are SO 5 years ago after all. Lower the price. Maybe more copies sold for less will equal more profit than fewer copies sold for more =) 60 bucks for a new IP is just DUMB.

    • bowl of snakes says:

      I call that art style ‘Post-WoW Generic’

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      Morlock says:

      Same here. Character design and animations turned me off. I feel guilty because I know the lead developer personally and felt that I should support him. However, we are not really close.

    • Goronmon says:

      Distribution costs are pretty minimal compared to the cost of paying all the people who worked on the game itself. I would be surprised if even $5 of a $60 game was paying for the cost of distribution said game. And games are getting more expensive to make as time passes so saying “but years ago it was cheaper” makes no sense.

      • Lowbrow says:

        A lot of the production costs in modern games are wasted effort. Like voice-acting. The type of people that are interested in the dialogue do just find reading it, and the type of people the voice-acting appeals to are the most likely to skip it. Sometimes the VO even DETRACTS from the game, like the repetitive twittering (literally, in one case) of my followers in Diablo.

      • Necron99 says:

        No one said “years ago it was cheaper”. What WAS said, was years ago there were 5 other forms of “middle men” and now there isn’t. Therefore, profit should be better.

    • fish99 says:

      I don’t get PC games prices in the US. In the UK the industry seems to have recognized that selling games cheaper is better than having everyone pirate them, and the result is you very rarely pay more than £30 for a PC game, and often under £25. I got an Amalur origin key off ebay for £20 (~$31) and for that price it’s a steal IMO.

    • Oasx says:

      First of all Rift looks nothing like WOW, secondly i would argue that neither did Amalur, there were some similarities in the colors and animations but overall i don’t see much of a comparison

  15. Strangerator says:

    I remember at some point before release, I saw this video interview with Ken Rolston. When asked what his favorite thing about Reckoning was, he said it was the mage chakram-throwing animations. He then began to pantomime this in an overly excited way. This was not a good sign.

    The first game any studio makes needs to be a respectable game. By respectable, I mean an honest attempt at making a game that changes things. A game that challenges some particular trope of gaming, and treats the gamer with respect. Your first game should not make its end goal “broad appeal for everyone”. It is better to have it focused, tight, and dare I say, a bit impenetrable in some ways. You have to get a rabid fanbase who will spread the word, that your game is the best game ever. It happens at the game level, by creating a good game. The world wrapped around the game will eventually gain prestige as a by-product.

    Amalur’s problems as I see it:

    Way too high a budget for a new IP. You really didn’t need to spend so much money creating a rich world that does not yet matter. Just focus on the basics and save millions. Then do a few really different things to get attention.

    Too accessible, appealing too broadly. By spending so much money they kind of forced themselves into this position to even have a chance. But broad appeal, accessible games have a very simplified term in the gaming community, MEH.

    • Joshua Northey says:

      Well said.

    • RegisteredUser says:

      I’m pretty sure almost anyone here could come up with at least 3 game titles that were 1. excellent 2. loved by fans 3. quirky and different and utterly financially(or at least studio dying/disbanding/discontinuing afterwards) failed because they weren’t Manly Manshoot Part 9000: Now chesthighwallier!

      Sadly.

  16. Tei says:

    I feel sad things got a wrong turn: kids, dont make developing software your life.

    • Brun says:

      There’s nothing inherently bad or risky in developing software – video games are just a particularly risky subset of software development.

  17. siliciferous says:

    Well look at that. Curt has friends that get to decide how to spend public money. That is the only reason this loan was approved and all this money got to be squandered.

    http://www.boston.com/business/technology/articles/2012/05/18/high_risk_video_game_venture_has_rhode_island_curt_schilling_reeling/

  18. Pointless Puppies says:

    As sad as this is, I can’t help but feel 38 was in over its head. Considering that Amalur, their first game, was an RPG they bought from Big Huge and refitted to their universe as their “first” game, and considering their second game was an enormous MMO, they definitely bit off more than they could chew.

    I know Amalur was made as an “intro” to the MMO, which is fine, but what I don’t understand is how they expected that game to make enough of a profit to help fund the MMO proper. It’s a new IP, and everyone in the industry knows that unless it’s coming from a very well known developer, new IPs don’t sell gangbusters. Hell, they’d be lucky to turn up a significant profit, if one at all. I think they overestimated their market performance and expanded way too freaking quickly for their own good.

    Shame, because I always hate it when a new developer gets shuttered for trying to bring a new IP to the industry. God knows gaming needs as much originality as it can get.

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    Jackablade says:

    Generic or not, I did appreciate the option to slaughter NPCs en masse in Amalur. It kept me amused almost until the end of the demo.

  20. Ghazi says:

    Something seriously wrong here. 38 Studios released a game in February, from which it must have earned something, but three months later it struggles to make a c.$1m interest payment. It appears to have no prospect of significant further income until Copernicus launches, supposedly next June. However, another interest payment is due in November and next year it has to start paying off the principal as well. (The expected installments needed in 2013 are reported as totalling around $12m). The Governor says nothing more will be coming from Rhode Island, which we are also told has the studio’s IP as security for the guarentee on the $75m loan. So who is going to lend the unsecured millions needed just to service the existing loan? Their only prospect of repayment is the notional future success of a game that, since it has stopped paying salaries, the studio apparently doesn’t have the funds to finish. Or am I missing something?

    • Jimbo says:

      No, they’re fucked.

    • Premium User Badge

      drewski says:

      They probably borrowed against the revenues of Amalur to keep running their company as they got close to release, used the cash from Amalur to pay those loans back, then couldn’t find anyone to extend further finance on the promise of cash from Copernicus.

      If it was just the $1.1m needed to pay RI, they might be able to get it, but few are going to extend, say, $25m to get Copernicus to launch after seeing how much everyone is struggling in the MMO market.

      Maybe one of the F2P mobs can come in and take it over.

  21. Josh W says:

    This is rediculous, one of the things I hate about leveraged buyouts:
    Some random company is share-owned, then someone who can blag a load of loans off people comes in and takes it over with a company designed basically to hold the loan, their inflated expectations don’t come true, and the new company is basically the old company plus rediculous debts, and the blagger runs off somewhere else.

    It means that perfectly good companies can get infected by hype machines, and then left holding the consequences.

    I wish there was some way to just have subsidiaries pop out of the structure in this situation, so that the people who work in them could avoid being “liquidated” to pay off this other guy’s debts, and people would be less willing to give the “investor” loans in the first place.