UPDATE: Senior Executives Flee 38 Studios

[Andy Chalk]

UPDATE: Senior Executives Flee 38 Studios

38 Studios employees reportedly haven't been paid since May 1, and that's not the worst news.

The situation at attended a job fair [http://www.amazon.com/Kingdoms-Amalur-Reckoning-Xbox-360/dp/B0044SA70M/ref=sr_1_1?ie=UTF8&qid=1337872467&sr=8-1] in Rhode Island held by MMO rival Turbine.

38 Studios has also apparently lost two of its top executives: CEO Jen MacLean, whose John Blakely [http://www.linkedin.com/profile/view?id=14873&authType=NAME_SEARCH&authToken=K4uW&locale=en_US&srchid=01c9144c-9f2d-4732-80d9-5dd8e7273e16-0&srchindex=1&srchtotal=2&goback=%2Efps_PBCK_jen+maclean+38+studios_*1_*1_*1_*1_*1_*1_*2_*1_Y_*1_*1_*1_false_1_R_*1_*51_*1_*51_true_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2&pvs=ps&trk=pp_profile_name_link], the senior vice president of product development, who only joined the studio in January and was present at meetings with the Rhode Island Economic Development Corporation as recently as Monday.

The biggest blow to the studio's efforts to stay solvent, however, may have been dealt by a report that it could be legally ineligible to receive millions of dollars in tax credits because it's not actually incorporated in Rhode Island. State law specifically dictates that companies are only eligible to receive tax credits if they're "formed under the laws of the state of Rhode Island," but 38 Studios is actually organized under Delaware law and registered as an out-of-state limited liability company.

Despite 38 Studios founder Curt Schilling saying in March 2010, "I've never said or will say 'Give us tax credits or we bolt'," the company is now apparently desperate for nearly $9 million in tax credits, which it could then sell to another firm for cash to keep itself afloat for awhile longer.

Schilling also insisted on Facebook [https://www.facebook.com/curt.schilling.56] yesterday that Kingdoms of Amalur: Reckoning was actually a big success. "I wanted to clear up some misinformation around 38 Studios first product, Reckoning," he wrote. "Sales of Reckoning OUTPERFORMED EA's expectations and sold more than 1.2 million units in the game's first 90 days in the market." That statement came in response to comments by Rhode Island Governor Lincoln Chafee, who described the game as a "flop."

UPDATE: A source has told tweeted [http://www.joystiq.com/2012/05/24/38-studios-and-big-huge-games-lay-off-entire-staffs/] about it earlier this afternoon.

"Big Huge Games was home for my wife and me for our adult lives so far. I'll miss it terribly, but so proud," he wrote. "Good night and good luck."

Source: WPRI [http://www.joystiq.com/2012/05/23/38-studios-employees-unpaid-since-may-1/]

Permalink

 

[PingoBlack]

When CEO is the first to leave ... You can tell their business ethics is extremely high.
You can be either the captain or the rat when ship starts sinking basically.

This bodes very badly for employees and creditors though.

 

[Weaver]

a source has told Joystiq that employees at the studio actually haven't been paid since May 1

Damn, man. If my job missed a paycheque I'd be out of this shithole so fucking fast.

 

[Formica Archonis]

When CEO is the first to leave ... You can tell their business ethics is extremely high.

Standard for a career CEO. Not so much when the head guys usually started out as teenagers in the mail room and worked their way up, but these days CEOs hop from job to job with more abandon (thanks to their golden parachutes) than a temp worker in a high-churn business.

 

[PingoBlack]

Standard for a career CEO. Not so much when the head guys usually started out as teenagers in the mail room and worked their way up, but these days CEOs hop from job to job with more abandon (thanks to their golden parachutes) than a temp worker in a high-churn business.

Aye, I know. He slipped off quietly leaving behind all his staff.

As sad as it is ... You are right. It is standard. I sometimes wonder how much economic difficulty we would have if instead of this the CEOs got shot on the spot if they hurt their own employees and company.

You know, in stead of collecting the bonus and sailing off into sunset on their bonus yacht. In this case the victims are employees and whole population of Rhode Island. Epic.

 

[Scars Unseen]

Wow. This whole 38 Studios mess looks like a bunch of people trying to ice skate on a pond in spring. It's all absolutely hilarious until you notice the people drowning.

 

[xxcloud417xx]

And yet we still have a $59.99 price tag on Kingdoms of Amalur Reckoning. Steam sales have saved companies before, read up on Amnesia The Dark Descent dev Frictional Studios and how Amnesia almost didn't happen (article was here on the Escapist actually).

I really have no pity for them being greedy even during a crisis. What a mismanaged mess 38 studios is.

 

[Formica Archonis]

As sad as it is ... You are right. It is standard. I sometimes wonder how much economic difficulty we would have if instead of this the CEOs got shot on the spot if they hurt their own employees and company.

You know, in stead of collecting the bonus and sailing off into sunset on their bonus yacht. In this case the victims are employees and whole population of Rhode Island. Epic.

Well, the problem IMHO is that the CEO's job isn't to keep the company running, it's to maximize shareholder value. The CEO answers to the Board of Directors and their main metric is stock price, which is determined by whatever the madding crowd on Wall Street is willing to pay. One way to get that is to destroy the company's long-term survival for short-term gain: Sell off useful IP/patents, reduce cost and quality of product but sell it at premium prices (trading good reputation for money), fire skilled but expensive people, etc.

Alternately, if you want the opinion of someone who's not some random schmuck on the Internet, one fellow posted Warren Buffet's opinion [http://www.steverrobbins.com/articles/buffettceo.htm] on bad CEOs, from 1988.

 

[newwiseman]

Trying to make an MMO following Reckoning was a bold and stupid move. They should have made at least one more Amalur title to build the brand and make some real capital. Refine the game play mechanics and make the "Classes" that can be made more distinct. Basing what they would make off of what they had already done could have made a lower cost high quality new game in the franchise.

MMOs are time and money pits that cost millions in development and hardware before even the potential to make a dime.

 

[elilupe]

And yet we still have a $59.99 price tag on Kingdoms of Amalur Reckoning. Steam sales have saved companies before, read up on Amnesia The Dark Descent dev Frictional Studios and how Amnesia almost didn't happen (article was here on the Escapist actually).

I really have no pity for them being greedy even during a crisis. What a mismanaged mess 38 studios is.

How exactly is keeping their triple-A game $60 while they crumble being greedy? Sure, maybe a sale for Amnesia helped, but that was for a tiny little indie company that didn't spend millions to make their game. If 38 lowered the price on their game, how in the world would that help them make back millions of dollars?

If you are saying that the current spending structure of all AAA game companies(spend hundreds of millions dollars on great graphics and polish and hope to make all of it back in the short-term, or else go broke and close) is deeply flawed and that should change for the whole industry, I completely agree, but please don't accuse the company of being greedy for keeping their game at almost the lowest price they can while still making a bit of profit.

 

[Baresark]

He says it was a commercial success, but it is not any kind of success if you did not recoup your investment. If they at least made their money back they would not be having problems paying their employees. Or perhaps it was a mistake to take a massive loan like they did. Either way, his assessment is a bit lacking. It's shame too, it was a pretty good game. Though it was easy to outline some of the bad spending from day one. Todd McFarlane to artistically design a completely stereotypical world, and RA Salvatore to engineer a story full of Stereotypical fantasy tropes.

 

[Riff Moonraker]

I really hate to see this. Sure, Kingdoms had its flaws, but I enjoyed the game. In fact, I am still playing it to finish the last achievement on the thing. It had alot of promise for future titles, and now to see this.... its kind of sad for the consumers, in my opinion.

 

[Freechoice]

or the mourning attendance at a WoW funeral.

Like this?

Captcha: Alive and kicking

BAHAHAHAHAHAHAHAH

 

[Chemical Alia]

Well, it looks like 38 Studios laid off its whole staff today, and Big Huge Games is closing as well. That's pretty awful.

 

[xxcloud417xx]

And yet we still have a $59.99 price tag on Kingdoms of Amalur Reckoning. Steam sales have saved companies before, read up on Amnesia The Dark Descent dev Frictional Studios and how Amnesia almost didn't happen (article was here on the Escapist actually).

I really have no pity for them being greedy even during a crisis. What a mismanaged mess 38 studios is.

How exactly is keeping their triple-A game $60 while they crumble being greedy? Sure, maybe a sale for Amnesia helped, but that was for a tiny little indie company that didn't spend millions to make their game. If 38 lowered the price on their game, how in the world would that help them make back millions of dollars?

If you are saying that the current spending structure of all AAA game companies(spend hundreds of millions dollars on great graphics and polish and hope to make all of it back in the short-term, or else go broke and close) is deeply flawed and that should change for the whole industry, I completely agree, but please don't accuse the company of being greedy for keeping their game at almost the lowest price they can while still making a bit of profit.

Profit? They stopped making profit the second their company started to tank.

I don't care who you are and what industry you work in. If you are so far behind in recouping your cost for a product you make that product as attractive as you can to the consumer by lowering the damn price and hoping that it sells soon so you can move on. The advantage that 38 has being a game developer and selling an unlimited amount of software as a product is that they can reduce cost and still make a profit. The price tacked on to software isn't the same as any other commercial good. You don't buy a game at cost and resell it to the consumer with a certain markup like you do with physical goods. The digital market has an infinite amount of product available with one single larger development cost.

It's essentially the difference between saying you got 100 couches for $500 apiece and need to sell them at markup to make money, and saying the game cost $20,000 to make and can sell an infinite amount of digital copies at whatever price you set it to. They have the freedom to sell the game at whatever price they want, the only thing that changes is the amount of units they need to sell in order to recoup cost, not at how much they sell it like with physical goods. This applies to any digital product despite the cost of development too just on a different price scale.

Will a sale price recoup all the money they owe at this point? Probably not, but doing nothing is getting them no money either so you may as well drive some business and grab whatever you can at this point.

 

[Andy Shandy]

Okay, I know on the other news report about something to do with Pachter talking about the Kingdoms of Amalur IP, I predicted that we'd need a 21 gun salute for the company, but I didn't expect it to happen this quickly. Not a time I would want one of my predictions to become the truth.

 

[ArkhamJester]

And yet we still have a $59.99 price tag on Kingdoms of Amalur Reckoning. Steam sales have saved companies before, read up on Amnesia The Dark Descent dev Frictional Studios and how Amnesia almost didn't happen (article was here on the Escapist actually).

I really have no pity for them being greedy even during a crisis. What a mismanaged mess 38 studios is.

FYI, its the publisher that sets the prices not the developer, and considering the publisher is EA, who has made it clear it is not bailing 38 out in any way, yeah things look bad...

 

[HobbesMkii]

http://bostonglobe.com/business/2012/05/24/curt-schilling-studios-lays-off-all-staff/G3eE1ygyIWl7JULNX045aO/story.html

And there goes the rest of the staff.