Collapse of 38 Studios sticks some devs with second mortgage

I live in Rhode Island. From what I hear locally the state set aside 125 million to entice companys to come to RI and create jobs. 75 of the 125 goes to 38 studios. Chaffee was not a fan of the deal and with the aid of his lawyers tried to stop it from happening. The deal also predates the start of Chaffee's term in office(he became governor in 2011).

Reading this report really really left a sour taste in my mouth. KOA was a good game that could have been improved if it got a sequel. There were a lot of great talent in the Studio and it really sucks this entire incident happened. I really really dont know how it led to this but whoever is at fault here should pay.

That's sad cause KoA was a pretty decent game, but honestly if you needed to sell 3 million to break even that's bad business modeling/planning for the higher ups at 38.

I saw this type of s___ coming at the start of the current (7th) gen.

When game development costs got so damn high that a game needs to sell 2 million copies just to break even the industry was in deep, deep trouble. And MMOs probably have the most astronomical of budgets due to constant online servers, maintenance and added content.

"$75 million dollars is a ton of money to have to make a game, but in terms of making an MMO, it is like trying to down an African bull elephant by throwing copies of uDraw at it. It isn't going to happen—ever.

If you want or are crazy enough to want to make an MMO, you need to have around $180M for development and another $80 million to support it over the next six months post-launch to develop more content."

--Kevin Dent

So ridiculous. I can't believe how unfair it is to these guys that they're the ones getting the end of the stick. Seriously hope they pull together for a class action against Curt or something, this entire thing reeks of corruption and politics.

38 Studios is going to have to liquidate everything to be able to pay enough back to Rhode Island tax payers. Reckoning wasnt a bad game at all, there is alot of room for growth if another development team were to take hold of it.

sounds like something EA would do....

Ah, nothing like private equity subsidized by public money. This SERIOUSLY needs to be looked into. Why are the taxpayers on the hook for risky PRIVATE enterprise? 38 Studio's wasn't owned by the municipality, yet? Schillings bragged how it was easy for him to get investors lined up to pool money, its admirable that he put his own money but this, the people involved, the P/E company and local political officials should be under investigation.

I've seen the game, it looks great, but I think it was released at a really bad time. Everyone was still playing Skyrim (most people still are) and waiting on Diablo 3. I think if they waited a little while after Diablo 3 was released (two, maybe three months) it would have sold better. Anyway, this is seriously awful. I feel bad for the developer, Rhode Island, and the industry. Someone has to pay that money back, and it's gonna end up being the tax payers.

What are ~500 people doing there anyway? Much smaller teams have put out much better products in half the time at a fraction of the cost.

Something's fishy in Rhode Island. It looks like everyone from the Govenor down saw a potential cash-cow and milked it dry. Schilling sounds like he just pumped cash into it, hoping it would fly. I don't blame him, he got soaked by greedy liars.

Rhode Island taxpayers out $90 mil?

This is a whole new way to set the industry back - good stuff, 38.

This is ridiculous, who was in charge of this mess.

i like the game they did a good job of it but greed will most likely be the reason why this company failed. i bet the boss is sitting in a pile of gold while the rest of the employees are out of work,

Whoaaa. The home thing is a big deal, hope the employees and their families are okay in the end

Just a gut reaction, but I think Curt Schilling needs to give up his little fortune from his baseball career to pay back Rhode Island. While he may have been a great baseball player, he sure didn't do well being a business owner. Even if a lot of problems came from other parts of 38 Studio's leadership, it was ultimately Schilling's responsibility. Captain goes down with the ship, so to speak.

Is it just me, or is it now getting to the point that even their employees can't trust game developers now?

the game employees have been ripped off. If you cant profit with 1.2 million copies sold then you have done some seriously BAD managing and given a few people way too much money.

Game devs need to take this stuff to court. The governer and that dodgy dude Schilling need to pay and pay now.

well due to these unfortunate circumstances and the game itself getting decent reviews this game is surely to be a cult classic soon. and now that they arent pressing any more discs this is going to be a really rare hard to find game soon. Ill save my unwrapped copy and put it up on Ebay in a few years.

I hate hearing of developers losing their jobs. Making original IP's is becoming impossible nowadays, tough times all round.

I get the feeling that there is more to this than just some loan defaults... my gut says Rhode Island EDC pulled some wonky legal-sleaze and backstabbed 38Studios. We will have to wait for the investigation, and you know there will be one, to find out all details.

My best wishes to all the 38 employees and their families.

It's not your employer's responsibility to make sure your money is managed wisely. If you can even get a second mortgage on your home you are lucky.

Man, I feel so sorry for the employees... That just really sucks. Why did 38 studios start with such a massive title? Heck, they were even working on an MMO. Why didn't they just start with some smaller titles like some XBLA/PSN/Steam games and go from there? That could've got them a better foothold as developers.

Ok employees should never front the bill for their employer's failure ever. Even if it is a government or tax payer based loan its still not right. I don't know if that is even legal. I bet there is more to this story...

Since there's plenty of appropriate sympathy going out to the unemployed, I feel okay being the cold-blooded one. In a company of 400, you can be pretty sure most of them knew the business model was risky. If you take a job with an ambitious start-up, you take a fairly large risk of seeing your company go under. And if you relocate to work for this start-up, you're taking a more serious risk. Just like the private investors, the employees made their beds and are now lying in them. The only real victims are the taxpayers of Rhode Island, who weren't given a choice about taking the risk - moronic politicians made that choice for them.

If you read some of the twitter posts by ex-38 employees, you get the feeling that there is a lot more to this story. Seems like illegal activities, corruption and scams were involved.

The rise of indie gaming has begun!

The business plan called for 3 million JUST to break even? They deserved to fail with that strategy.