Game developers close their doors all the time, even more so in the current economy. Their stories seldom make ripples beyond the worlds of finance and technology. The involvement of baseball hero Curt Schilling and a huge loan from the state of Rhode Island made the failure of 38 Studios front page news in politics and sports.
38 Studios received a $75 million loan from Rhode Island’s Economic Development Corporation. After producing the RPG Kingdoms of Amalur: Reckoning, the developer began missing loan payments. This signaled financial trouble and as word rapidly leaked out, 38 Studios laid off all 379 of its employees May 24. Keith Stokes, the EDC head who approved the loan, found himself out of a job too.
Schilling blamed Rhode Island Gov. Lincoln Chafee for scaring off potential investors by fueling negative publicity. As the media grilled the former Boston Red Sox hero for mismanagement, he announced he had bankrupted himself investing his own money into the company. The pitcher even appeared in the ESPN documentary Broke, about athletes unable to handle their finances. He estimates he put $50 million of his personal fortune into 38 Studios. The developer still owes the state of Rhode Island more than $150 million, with assets valued at around $21 million.
Rhode Island has recovered around $830,000 through auctions of the studio’s assets. The most valuable thing 38 Studios had, in theory, was the Amalur IP. That won’t go up in a traditional auction. The state will sell it in a negotiated transaction. That assumes it can find a buyer. Kingdoms of Amalur: Reckoning sold 1.2 million copies in its first 90 days, but Chafee estimated it would have needed three million games sold to break even. That’s a huge task for an unknown IP.
Sadly, the game that came from all this wasn’t bad. Our Jenni Lada gave it a B+. You can check out her review here.
38 Studios planned a return to this world with the free-to-play MMO Project Copernicus. Schilling called the revelation that this game was free-to-play an “atom bomb” that would shock the gaming world in an interview with Boston Magazine. This (and the amount of money 38 Studios blew through) leads me to believe he’s passionate about the game industry but ultimately ill-informed. Free-to-play has become the model for most non-World of Warcraft MMOs these days. That’s more of a bottle rocket than an atom bomb.