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Reckoning dev lays off entire staff - Report

[UPDATE]: Source says beleaguered 38 Studios and Big Huge Games sent out pink slips to all employees, believed to number close to 400. Rhode Island governor calls Kingdoms of Amalur a "failure."

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It appears 38 Studios and its subsidiary Big Huge Games are no more. The Verge and Joystiq heard from sources today that all employees at Curt Schilling's Providence, Rhode Island-based and Maryland-based development studios have been let go. The company put out just one game in its lifetime, February's well-received role-playing game Kingdoms of Amalur: Reckoning.

All 38 Studios staffers are out of work, according to the report.
All 38 Studios staffers are out of work, according to the report.

38 Studios employed 379 employees full-time as of mid-March, according to a report from last week. Employees at the company had not been paid since May 1 and lost health care benefits today, according to Joystiq. As of press time, 38 Studios had not responded to GameSpot's request for comment on the matter.

Troubles at 38 Studios first came to light earlier this month, when reports from the Rhode Island government indicated that the company had failed to make a $1.125 million loan payment to the state's Economic Development Corporation. The studio eventually made the payment, but it also enacted a round of unspecified layoffs. The company's CEO, Jen MacLean, left the studio in March, with senior vice president of product development John Blakely heading out just this month.

The fate of 38 Studios' massively multiplayer online role-playing game Project Copernicus is unknown. Rhode Island governor Lincoln Chafee recently revealed the title was being readied to ship in June 2013. If 38 Studios decides to sell its Amalur intellectual property, it can expect to get $20 million for it, according to one industry analyst.

38 Studios purchased Big Huge Games from THQ in 2009. It is unclear what will happen to the Kingdoms of Amalur: Reckoning sequel that Schilling confirmed was in the works earlier this year. The original sold 1.2 million copies during its first 90 days, outperforming publisher Electronic Arts' estimates, according to Schilling.

[UPDATE]: In a press conference this afternoon, Governor Chafee explained that the state had not been informed of the pending layoff of 38 Studios' entire staff. In explaining how the studio hit the skids seemingly overnight, Chafee explained, "The game failed. The game failed." He added that Kingdoms of Amalur: Reckoning would have needed to sell 3 million copies just to break even.

Additionally, Rhode Island's WPRI has a copy of the mass layoff email that was sent to 38 Studios employees. It reads:

The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012.

Got a news tip or want to contact us directly? Email news@gamespot.com

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N0tYrBeezin

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Edited By N0tYrBeezin

@TrueGB RI owns the IP, not EA. They can always try to buy it from RI though.

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WiredDreemz

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Edited By WiredDreemz

As mentioned, this is a new IP! If Schilling said the game outperformed EA's expectations, that would imply they were happy with the number of copies sold. I mean it's not like the game won't continue to make money more than 6 months down the line (although admittedly it won't be as much as what it would be when it was first released). To me, it seems as if the investors were over optimistic about the ease of financing a game in an industry such as this, and the expected ROI!

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firehawk998

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Edited By firehawk998

Man I really dont know what the hell happened with 38 Studios with the Rhode Island Loan scheme, Kurt Schilling,etc. KOA was a good game that had huge potential to a RPG franchise. Its really sad to see for a external factors man talented people lost thier jobs. I really hope they recover and land on their feet.

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bongsyas_23

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Edited By bongsyas_23

3 strikes you're out shilling

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Ogridum

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Edited By Ogridum

Problem was the piracy.

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bgranli

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Edited By bgranli

@Ogridum You can't blame everything on piracy (unless you're a corporate douchebag that is).

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MN121MN

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Edited By MN121MN

So which do you think would be interested to buy Project Copernicus and the intellectual rights of Kingdoms of Amalur Reckoning?

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macca366

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Edited By macca366

If you had to sell 3 million copies of an entirely new game IP, just to break even, why would the rhode island government have given a 75 million loan or whatever it was to bring the company over in the first place? And I hope the employees still got paid for all their hours of work prior to when the last payday was scheduled

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maxwell97

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Edited By maxwell97

@macca366 That's how government job creation works. They don't know or care about the viability of the company, they just want to say "look at these 400 jobs we created, vote for us!" If the company had a sound business model, they wouldn't need state financing in the first place.

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ravenkiller

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Edited By ravenkiller

this is what happens when ppl play 1 game every year (hint hint COD).

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bgranli

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Edited By bgranli

@ravenkiller You can't blame the consumers for this.

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FallenOneX

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Edited By FallenOneX

What sucks even more is that a lot of them were probably just recently hired to work on Project Copernicus.

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darksaber519

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Edited By darksaber519

i really want the studio to get money they deserve it and the made a really great and fun game to play

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DubYew

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Edited By DubYew

Great studio with some of the most creative minds involved in gaming, but at the end of the day it's all about the $$$. Terrible news.

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Gomtor

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Edited By Gomtor

This was actually a good game with two great DLCs.

Either they don't have financial experties in the company (when some people see the money they forget about creditors and buy nice cars etc.), or

EA ran away with their money.

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yomonkey

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Edited By yomonkey

if this game tanked so hard why is it still $60 just about everywhere? I would give this game a try if it dropped to $30-40.

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FallenOneX

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Edited By FallenOneX

@yomonkey

That's a whole 'nother ball of wax. You do have a point though. If XBL and PSN can deliver games that are priced (mostly) fairly, why can't they do the same with retail products?

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Kungfu_Kenobi

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Edited By Kungfu_Kenobi

Three million copies?

How does someone get into a position to make a AAA game like KoA without knowing that's an impossible target?

How does this happen? I'd like to know because I want a piece of that action.

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Kungfu_Kenobi

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Edited By Kungfu_Kenobi

@TrueGB

So when he says "KoA needed to sell 3 million copies to beak even" we're talking about the operational costs of 38 Studios -including MMO development-, and not /just/ the costs of developing KoA?

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maxwell97

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Edited By maxwell97

I feel sympathy for the people who did good work and saw the company fall out from under them. That said, I'm very happy that this company imploded in a very public and embarrassing way. Hopefully it will teach a lesson to a few politicians - stay away from investment in business. If the people of your state aren't investing their money in a business voluntarily, there's probably a good reason for it.

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zaiwen

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Edited By zaiwen

of course its a failure, just like every slow paced, western so called "RPG" out there... it's more of the same... if not FPS, its the same old style of RPG time & time again... not to mention your overly hyped "record breaking" yearly rehashes haha... good riddance if you wanna sell upwards if 3m, then take a chance & do something different & not the same old boring formula you see on every western "me too" games out there... serves yall right

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Darkeus

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Edited By Darkeus

Something is not stirring the Kool-Aid here.... Where is the money? Why was Curt saying that he had not seen the sales revenue from EA? How was the Rhode Island government really involved.This just seems very fishy for a game that sold above publisher expectations.... Somebody has ran away with some money.

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Darkeus

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Edited By Darkeus

@TrueGB Could be. But that is just an example of the dirtiest business practices. And that is true that he may use the money to get out of the mess but Curt is on record saying he has NOT seen the money from Amalur sales. So either he is lying or EA is being dirty like they always are.

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Briantb_2008

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Edited By Briantb_2008

Dont really like hearing about this but it happens. How can the governor of Rhode Island call it a bad game. I didnt but it but I never heard anything bad about it ethier. Maybe a failure in making the money needed to help the company.

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payne6705

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Edited By payne6705

this is horrible news

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jack00

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Edited By jack00

If games were released at a more resonable price then yeah I would of picked up this game at launch. Now I waited to see it at 39$ before buying it, which it did, but other games came out during that time and now I am passing on this game. Maybe i'll get it when it will be 19$.

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captainwonton

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Edited By captainwonton

It's our fault as gamers really, look at the numbers on that awful resident evil game, on the repetitive first person shooters, look at how we tolerate Capcom for what they did on sf x Tekken, look at how we behave when developers try something different.

We really need to change now or our entire memories and that we thought was great about gaming, will die forever.

ps: Buy this game, just to make a point, and because the combat is just awesome

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bgranli

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Edited By bgranli

@captainwonton You could argue that part of the problem is with ignorant gamers. But 38 studios can thank themselves for this farce. Developing an MMORPG, a AAA RPG and buying Big Huge Games... before releasing a single game!? WTF?! They already started developing a sequel to Amalur, even though they had huge financial problems. WTH is going on here?

If you follow the market and sales data just a little bit, you know that expecting to sell 3 million+ on your first game with an original IP is kind of ridiculous. Even Michael Pachter would know this :P

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Unfallen_Satan

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Edited By Unfallen_Satan

One of these days I hope to see a detailed breakdown of the cost of making a video game. 3 million copies just to break even, at $50-60 a copy? Where did the money go? I think the residents of Rhode Island, whose tax dollars are compromised in this sad story, deserve a detailed explanation of exactly how much of their money has been lost and exactly how it was lost.

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Unknown635

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Edited By Unknown635

@Unfallen_Satan I was browsing comments and I actually never post... But since I'm a business minded person, here's the breakdown. famekiller is right that not all $50-60 goes to the company. Little goes to a company like Big Huge Games. And think about the costs involved. Do the math on paying payroll for 400 employees, taxes(also for 400 employees), lease(or whatever the building is under), utilities, marketing,and general assets(the equipment needed for rendering, design, etc.) for a company that size, for let's say only a measly year (games in production generally take much longer) without a single dime of profit until the game released. No offense, but even at them getting $30 a game, which I can't say for sure but I imagine is way lower than that, it really would take 3 million copies to break even. Just saying, there's a lot more costs involved in something like this than just burning a DVD of the game and putting it in a case.

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Unfallen_Satan

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Edited By Unfallen_Satan

@Unknown635

I hear ya, but your statement is still too general, not unlike something the good governor might say. I want to see just how much are paid to employees (special attention to distribution of salary), used for operating costs (rent, utilities, etc.), equipment, licensing (cost and justification), loans (at what rate and for what purpose), marketing, and anything else associated with it. I am strongly opposed to these general claims that "if you think about the kind of cost that goes into making a game, you'll see the the numbers are reasonable." Only the people who used that money can say just how they used it.

Most games do not sell 3 million copies in 3 months. Even the publisher EA forecast a sale of less than 1.2 million in this period. Clearly someone somewhere made a big mistake, which could have been an honest one, but the people of Rhode Island at least deserve to know the truth.

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Ghost345

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Edited By Ghost345

@Unfallen_Satan I wish there was a manual or some kind of layout or class that breaks down how games are made. From Ideas to physical representations. Or even how things work in the industry in general. An all encompassing layout of what everyone does , money, etc. Just for any game I guess.

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Unfallen_Satan

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Edited By Unfallen_Satan

@Ghost345

There has got to be a book on the subject. If not, some industry veteran should write one on her experience of making games. It will make interesting reading.

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famekiller

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Edited By famekiller

@Unfallen_Satan I agree Satan. Even at say $30 a game (gotta give the middle man his cut) that's $90 Million. I think someone's had their hand in the cookie jar and are now jetsetting around with a fat wallet. Seriously...$90 Million + to make this game?

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Unfallen_Satan

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Edited By Unfallen_Satan

@famekiller Good point about the middle-man. I think that chunk should be considered separately from the cost breakdown I wanted; definitely not $50-60 per copy back to the company. Thanks for setting me straight.

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godfather830

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Edited By godfather830

@Unfallen_Satan

Well, they have 400 employees. If the average salary is 50k, then that alone is 20 million dollars PER YEAR, just on employees. Add in the cost of the studio, hardware needed, interest on loans, marketing and advertisement, licensing agreements, etc....

Finally, don't forget they don't get the full price of the game. Much of it goes to publishers. Not hard to see where the money went.

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deactivated-60889f10c3b8e

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The vanilla questing put me off buying the game, otherwise I probably would have purchased it. I'm sure plenty of others felt the same.

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megakick

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Edited By megakick

LOL this is common practice. Gamespot report when a company keeps all their staff after launch.

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Darius815

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Edited By Darius815

This really sucks. KOA was a great game in my opinion. Did reasonably well critically. I beat the main story and am still playing side quests. Hey at least we know we will get another COD or Resident Evil Racoon City(played the game..absolute garbage). 1.2 million isn't bad for a brand new IP.

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alberserk

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Edited By alberserk

it´s a great game , just stareted playing it yesterday!! something different besides a whole bunch of boring FPS out there!

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forever_blank

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Edited By forever_blank

I heard great things about the titles. A real shame.

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Vambran

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Edited By Vambran

I bought the game. It's okay , guess this means no more expansion packs or sequels.

Sad to think just cause a game did not sell gang busters it is considered a failure and 400 people lose their jobs.

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Jaxith

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Edited By Jaxith

I blame the self serving higher ups. ...These people deserve better, end of story.

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gameguy182

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Edited By gameguy182

I'm sorry I didn't buy your game 38!!!!! I swear me and my friend were both about to buy it but then, I don't know what happened... we just didn't. I didnt think you all where going to loose your jobs because of it! I thought you guys where going to straight up make an mmo.

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DeadlyVip3r

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Edited By DeadlyVip3r

@gameguy182 You can't loose a job mate.

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gameguy182

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Edited By gameguy182

@DeadlyVip3r lose... is that better... mate?

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