38 Studios Pays the State But Not Its Workers

[Andy Chalk]

38 Studios Pays the State But Not Its Workers

The beleaguered 38 Studios was unable to make payroll this week and has reportedly fired all temp and contract workers.

The crunch appears to be coming to Curt Schilling's 38 Studios, which is "in the process" of making an overdue payment of $1.125 million to the Rhode Island Economic Development Corporation but, because of that, cannot meet its payroll obligations for the week. According to WPRI [http://www.wpri.com/dpp/news/politics/local_politics/38-studios-pays-edc-not-employees], employees at the studio "looked glum" but could not comment on whether or not they'd been paid this week.

Sources have told Kingdoms of Amalur [http://www.joystiq.com/2012/05/17/38-studios-doesnt-make-payroll/] developer has also terminated the employment of all temporary and contract workers.

It was revealed last night that Schilling, a former Boston Red Sox ace who founded the company as Green Monster Games in 2006, had asked officials with the Economic Development Corporation for more money to keep the studio afloat. How much he asked for wasn't revealed, and the RIEDC has yet to act on the request.

Rhode Island offered 38 Studios $75 million in loans to relocate from Massachusetts in 2010, nearly $50 million of which has thus far been granted. Why the studio is struggling so badly in the wake of the reasonably-successful release of Kingdoms of Amalur: Reckoning is a bit of a mystery, but the loan money is [or was] apparently being used to finance the ongoing development of its other project, an MMO currently known only as "Project Copernicus." If the company collapses, residents of the state will be on the hook for the debt, which with interest could end up totaling more than $100 million.

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[Amnestic]

*sigh* Another victim of the sweet seductive siren song of the MMO pie.

"Sources have told Joystiq that the Kingdoms of Amalur developer has also terminated the employment of all temporary and contract workers."

If all temporary and contract workers have been terminated...who's left?

 

[Albino Boo]

*sigh* Another victim of the sweet seductive siren song of the MMO pie.

"Sources have told Joystiq that the Kingdoms of Amalur developer has also terminated the employment of all temporary and contract workers."

If all temporary and contract workers have been terminated...who's left?

Contract in this case means people who aren't full employees of the company. They are usually working as interims, covering maternity leave or while waiting to recruit someone permanently.

 

[Frostbyte666]

Sad to hear but why are they trying to do an MMO if their financial situation was so unstable in the first place? Didn't they already change Amalur from MMO to hack-n-slash?

 

[cjbos81]

This just in, Pedro Martinez asks the State of Vermont to help fund his idea for a chain of jiujitsu academies.

 

[Treblaine]

Does everyone remember a few weeks ago a developer at 38-Studios was trashing on PC gaming was worthless due to piracy causing his company to go under, and boasting how going console-focused with KoA: Reckoning was the best thing ever?

So what the hell happened?

 

[Treblaine]

Well when you name your biggest financial gamble after a guy who barely got his life's work published before he died, what do you expect?

Doesn't everyone publish their LIFE's work before they die?

Some gets published posthumously, yeah, like the last thing they were working on before they died.

Who is this named after precisely?

 

[Scars Unseen]

Does everyone remember a few weeks ago a developer at 38-Studios was trashing on PC gaming was worthless due to piracy causing his company to go under, and boasting how going console-focused with KoA: Reckoning was the best thing ever?

So what the hell happened?

He was mistaken.

And possibly also broke.

 

[The Rogue Wolf]

*sigh* Another victim of the sweet seductive siren song of the MMO pie.

Allow me to expound upon this point.

What the hell was a six-year-old company with one released game that came out four months ago (that admittedly saw decent sales for a new IP) doing tackling an MMO project?! Just because every Tom, Dick and Nexon is doing it doesn't mean it's the smartest thing for a still-fledgling, barely-known company to jump on the bandwagon, regardless of Curt Shilling's love for the genre.

Their reach SERIOUSLY exceeded their grasp here, methinks.

 

[Kungfu_Teddybear]

If EA wanted some easy PR all they'd need to do is offer up the money to pay the employees and then watch as game news sites had something nice to say about them for once.

 

[gyroscopeboy]

The crunch

this always reminds me of Saboo from The Mighty Boosh:
"You know nothing of the crunch. How dare you even speak of the crunch. You've never even been to the crunch!"

 

[ultrachicken]

Words cannot begin to express my frustration at 38 Studios' funding of an MMO at this point. Kingdoms of Amalur proved they had great potential, which they then proceeded to shit on in favor of attempting to flood the market with another pointless MMO.

Whose idea was making an MMO, anyways? Anyone with the slightest business sense should have been able to figure out that was a shitty idea. If they had simply listened to the constructive criticism of Amalur and pumped out a sequel, consumers would be happy, reviewers would be happy, and their wallets would be full, perhaps enough to tackle another IP.

If EA wanted some easy PR all they'd need to do is offer up the money to pay the employees and then watch as game news sites had something nice to say about them for once.

Also, this. Missed opportunity there, EA.

 

[F4LL3N]

I'm not sure if I'm reading this right. If they've only received $50~ million of a $75 million dollar loan, why are they behind in payments? Shouldn't they receive it all before they have to start paying it back? Why don't they just borrow the remaining $25 million to pay the loan while they think of a plan (probably some stupid contract.) If they're popular enough, perhaps they'll do a kickstarter, since they seem to be an independent company. But for that to work I think they'd have to show us what MMO they're working on (which would likely be the kickstarter project anyway.) Well, it would depend on whether or not people are sick of companies using it, or if they actually like the kickstarter stucture of things.

After all, the less developers that sign up to EA/Activision, the better.

 

[Andy Chalk]

What the hell was a six-year-old company with one released game that came out four months ago (that admittedly saw decent sales for a new IP) doing tackling an MMO project?! Just because every Tom, Dick and Nexon is doing it doesn't mean it's the smartest thing for a still-fledgling, barely-known company to jump on the bandwagon, regardless of Curt Shilling's love for the genre.

Schilling's "love for the genre" is almost certainly what it came down to. He's got a big name, personal wealth and he was a well-known MMO fan - Everquest was his poison, I believe - even while he was pitching. And some genius at EA probably looked at it and figured that his fame alone would be enough to make it work.

And as a fan, Schilling very likely figured he knew exactly what it would take to make a truly great MMO, and then quickly joined the overcrowded ranks of people who discovered that things aren't nearly as easy as they looked from the outside.

I'm not sure if I'm reading this right. If they've only received $50~ million of a $75 million dollar loan, why are they behind in payments? Shouldn't they receive it all before they have to start paying it back?

The loan was being issued in increments, based on the studio hitting certain benchmarks, primarily (or possibly entirely) with regards to hiring numbers. The full amount wasn't actually set to be paid out until sometime in 2013, I think, although it was pretty heavily front-loaded, which is why most of the money has already been given. In fact, I've read a couple of reports stating that when the numbers were crunched, it turned out to be cheaper for 38 Studios to skip late-term hiring quotas and accept the penalties than to hire everyone it pledged to and get all the loan money. So naturally, that's what it did.

 

[DustyDrB]

They aren't getting paid for Amalur or for the MMO? I feel really bad about this if it's in the case of the former. As in, I'd probably donate a bit if they asked. Amalur is a damn fine game.

 

[wyrmslayer1991]

Aww come on. I really liked reckoning, and would have loved to see more of the franchise from the studio. Never gonna happen now. That MMO is going to be their end if they don't scrap it or switch it to a single player again like amalur.

 

[Amnestic]

What the hell was a six-year-old company with one released game that came out four months ago (that admittedly saw decent sales for a new IP) doing tackling an MMO project?! Just because every Tom, Dick and Nexon is doing it doesn't mean it's the smartest thing for a still-fledgling, barely-known company to jump on the bandwagon, regardless of Curt Shilling's love for the genre.

Schilling's "love for the genre" is almost certainly what it came down to. He's got a big name, personal wealth and he was a well-known MMO fan - Everquest was his poison, I believe - even while he was pitching. And some genius at EA probably looked at it and figured that his fame alone would be enough to make it work.

And as a fan, Schilling very likely figured he knew exactly what it would take to make a truly great MMO, and then quickly joined the overcrowded ranks of people who discovered that things aren't nearly as easy as they looked from the outside.

Not to shill (heh), but TotalBiscuit ended up talking about this sort of thing on his latest Mailbox video.


Essentially, sometimes we gotta remember that studios aren't democracies and they have project leads/bosses who can become over enamoured with their own ideas and don't have anyone they listen to to tell them 'no'.

In this case, it's quite possible that Schilling may have created and then killed 38 Studios, which is a shame since apparently Amalur had quite the potential behind it as a series.

Contract in this case means people who aren't full employees of the company. They are usually working as interims, covering maternity leave or while waiting to recruit someone permanently.

Makes sense. Thanks for the clarification. Feel sorry for all those people laid off though >_<