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Developer 38 Studios having financial trouble

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Sadly, we do a lot of reporting on game studios in financial difficulty. 38 Studios, parent company of Kingdoms of Amalur: Reckoning developer Big Huge Games, was unable to make payroll last week. It then laid off all contract and temporary employees. The studio also missed a payment deadline on its $1.125 million interest payment to the state of Rhode Island. It later hand delivered a check to the state, but that bounced initially. 38 Studios did eventually provide sufficient funds to cover the check.

The developer’s problems are getting quite a bit of publicity for two reasons. One of the company’s founders is former Boston Red Sox pitcher Curt Schilling.  The second reason goes back to 38 Studios’ origins. It was originally in Maynard, Massachusetts but moved to Rhode Island enticed by a $75 million loan. Keith Stokes, the state economic development corporation head who approved the loan, has resigned.

If 38 Studios’ can’t pay the loan back, Rhode Island would own all its intellectual property. The developer used all its IPs as part of the collateral for the loan. RI has probably had all of the video game business it can stand right now, and would likely auction those assets off.

Gov. Lincoln Chafee, who was opposed to the loan from the beginning, has pledged to help 38 Studios. He told WPRI he would do the same for any company in the state. Chafee has also vowed that RI won’t be buying into any other video game companies on his watch.

Reckoning got mostly favorable reviews, including one from our own Jenni Lada.  Right now it’s not clear how much money 38 Studios made off the game. The only other project it has announced is an MMO called Project Copernicus. Chafee made a point of announcing that game’s June 2013 release date after 38 Studios’ loan payment check finally cleared. I believe that’s the first time I’ve ever seen a state’s governor be the person to announce a game’s release date. That shows just what a political football – or baseball,  – this company’s future has become.

Read [Joystiq] Also Read [WPRI]

 

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