Kingdoms of Amalur developer lays off entire staff

[Markbnj]

That's the Republican 'business friendly' politics they want, states competing to give businesses the most tax breaks and subsidies to locate there - gut other spending.

It's a sad story to see, it could have a chilling effect on other RPG publishers.

It'd be nice to see some limits put in place on states competing this way.

We see it all the time - forgiving taxes, guaranteed loans, building infrastructure from buildings to roads and utilities, and more. Just saw one giving $150,000 per job.

I used to live in RI more than 20 years ago. It wasn't what I would call a Republican stronghold at that time. It was, and from what I hear remains, one of the most corrupt, dysfunctional state governments in the country.

 

[BoberFett]

Leave up to you to make this political. You know it happens on both sides, but you just couldn't be straight about it, could you.

No way, this is completely the Republicans fault. Nevermind that New England is pretty heavily Democrat, the Dems would never have invested in Solyndra... I mean 38 Studios like this.

Goddam Republicans.

 

[zinfamous]

Wait a second here...

The state government issues bonds to a private company? And not a private company such as a Utility company or the like, but a video game development company that had never produced a single game?

Looking more into this whole thing, I am not surprised that the game was way over budget. They took a game that was well under development, and then decided to change it pretty drastically. This will always incur huge budget increases. It can actually double the cost to develop the software in some cases. And add the fact that they had as many employees as they did shows that the company was just poorly managed.

I feel extremely sorry for the employees, but the people running 38 Studios should never try and run a company again. IE: The CEO, CFO, and Curt Schilling. And it looks like the state knew something was going on when their scheduled payment check bounced.

Bingo: Curt Schilling, small government, ultra-righty libertarian, wants the state and taxpayers to be on the dole for his private company.

I hate to get political with this, but what a lying douchebag.

I wasn't following this story, but it came up the other day in random conversation completely unrelated to the topic of video games. I was like...wait, isn't that Curt Schilling's studio? And isn't he a flaming righty?

 

[orbster556]

Bingo: Curt Schilling, small government, ultra-righty libertarian, wants the state and taxpayers to be on the dole for his private company.

Just to be clear, I very much doubt Schilling is a libertarian; that his views on the optimal involvement of the government in the private affairs of individuals varies by policy is not altogether surprising. One party frequently favors economic intervention while decrying government involvement in the setting of social mores while the other denounces regulation of economic affairs while championing the inculcation of certain moral beliefs. The problem isn't unique to Schilling or even Republicans generally.

 

[Anonemous]

Looks like a great game. Too bad the studio closed.

 

[Stuka87]

I think you guys are wrong by making this political. Corruption goes both ways, regardless of where you stand politically.

And those of you talking bad about conservatives, stereotyping all as doing as these people did is wrong.

Now it is well known that Rhode Island has very low taxes. Hell the company I work for here in CA is incorporated in RI because California taxes are nearly triple what they are there. This is not uncommon. Although what the government of RI did on this occasion is wrong.

Keep the politics where they belong guys, in the political forum. And NOT in the gaming forum.

 

[The Boston Dangler]

Keep the politics where they belong guys, in the political forum. And NOT in the gaming forum.

like i said before, because of the things schilling has said and done, politics are very relevant to this topic.

 

[Ns1]

wow

Some of the hundreds of 38 Studios employees laid off yesterday were hit with a second round of bad news this week when they were told that homes they thought the company had sold for them hadn't been, and that they may be stuck with a second mortgage, Polygon has learned.

Several sources directly impacted by the mortgage issue confirmed the news today and a 38 Studios official, who asked to not be named, said the company is working to try and get to the bottom of the notifications and find a resolution.

One former employee said they discovered this week that their Massachusetts home, which they had been told was sold last year, actually hadn't been. The bank contacted them this week to ask why they mortgage wasn't being paid.

It is unclear how many of 38 Studio's 288 Rhode Island employees may be impacted, but it will likely only affect some of those who were part of the company's relocation program. The program, we were told, was used to help employees moving from Massachusetts to Rhode Island when the company relocated.

The bank notifications raise the specter of how the financing for the relocations was handled. If the company used state-backed money to finance homes or pay mortgages while the homes were being sold, it could mean that 38 Studios violated the terms of the agreement with the state.

Reached for comment this afternoon, state officials told Polygon they had no independent knowledge of the mortgage issue.

During an afternoon press conference today, Gov. Lincoln Chafee told a gathering of press that because 38 Studios didn't alert the state ahead of time about the layoffs the company is once more in default on the agreement.

Chafee spent much of the conference answering increasingly hostile questions and reminding the gathering that he opposed the deal, which was made under another governor.

He also said that celebrity may have played a factor in the state making the agreement, but that it never impacted his opinion on the deal.

"When I looked at him I saw a business man, not a baseball player," he said.

38 Studios laid off all 379 employees, 288 of them in Rhode Island, yesterday afternoon in a terse email. Sources tell Polygon that the company had not been communicating with employees, or paying them, for nearly a month prior to the mass layoffs.

Schilling's only public response to the financial turmoil that has embroiled both his company and the state of Rhode Island had been a tweet thanking people for sending "prayers and well wishes" to the team and families of 38 Studios.

Curt Schilling @gehrig38

Thank you to everyone sending prayers and well wishes to the team and families of 38 Studios.
24 May 12

Reply
Retweet
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A similar post on his Facebook account was met with a tide of well wishers including a number of former employees and John Smedley, president of Sony Online Entertainment who wrote, "Curt – the game you are building is amazing. Find a way. I'm sorry you're having a tough time right now."

The studio's financial turmoil came to light earlier this month when it first missed and then later made a $1.125 million payment to the state of Rhode Island.

Founded in 2006 in Massachusetts as Green Monster Games, 38 Studios was lured to Rhode Island in 2010 by a $75-million loan guarantee from the state. At the time state officials argued that the studio would bring hundreds of jobs and millions in tax revenue to the state.

While 38 Studios made its first partial payment, it then missed a $1.125 million loan payment to the Rhode Island Economic Development Corporation on May 1. During a series of meetings with the state, 38 Studios said it couldn't pay its employees and asked for more help from Rhode Island. The studio later delivered a payment to the state, but then said it couldn't cover the check. On May 18, it made good on the payment.

""When I looked at him I saw a business man, not a baseball player.""

Schilling, and the state, both continue to hunt for private investors for the company.

If 38 Studios remains closed, the state says it has the money to make the first year of payments on the loan from a reserve they set aside from the loan amount. But after that the state would then have to start making the payments to the bank.

The developer was working on a massively multiplayer online game codenamed "Project Copernicus." It released Kingdoms of Amalur: Reckoning through publisher EA in February. The game reportedly sold 1.2 million copies in the first 90 days, according to Schilling, and was positively received by critics. Last month, 38 Studios released a downloadable expansion pack for the game titled "Teeth of Naros."

Gov. Chafee dismissed the possibility of the state taking over the studio during a press conference earlier this week, saying it would be too costly to create and maintain an MMO.

The director of the Economic Development Corporation resigned earlier this month, two other members of the board have asked not to be reappointed, and yet another resigned this week. The state is also discussing asking for the resignation of other board members who supported the decision to back 38 Studios.

A slew of developers from around the country have been Tweeting that they are hiring in hopes of finding the hundreds of displaced employees jobs.

Catch up on the history of the studio and its deal with Rhode Island here.

 

[The Boston Dangler]

wow

holy shit! this guy is surely heading for the slammer, right?

 

[lupi]

read another article and it does indeed seem to be as expected that it wasn't nearly so much as the sales of the title didn't pay for itself, but they needed more than they got because of the $$$ hole the mmo project was creating to continue non-sales funding.

 

[Stuka87]

Yeah, I would not be surprised if criminal charges are going to be laid on some of the higher ups.

 

[Craig234]

http://38studios.com/jobs-at-38

 

[Craig234]

$29.99 at Amazon. DLC each $5.99.

 

[Markbnj]

Gov. Chafee dismissed the possibility of the state taking over the studio during a press conference earlier this week, saying it would be too costly to create and maintain an MMO.

That's pure gold right there.

 

[Via]

Something really stinks about this whole deal. I'd like to see some sort of investigation into the books of this company.

They needed to gross $180,000,000 on their first project just to break even? This story has "financial heist" written all over it.

 

[pontifex]

i can understand what RI is doing with this idea, but shouldn't they be doing this with more stable companies or industries?

so they entice the company to RI to provide jobs (which seriously, how much did that help with such a specialized field?) and then the entire company rides on this unknown product to do well and it doesn't, so now they everyone at the company loses their jobs and the tax payers owe 120-some million dollars?

lmao...i am horrible with financial stuff and even i know thats a bad idea.

 

[TehMac]

The real tragedy, other than the usual Leftist troll infestation on AT, is that Big Huge Games is gone, which means no Rise of Nations

 

[marmasatt]

RI guy here. This whole thing is pretty tragic. I lean to the right a bit which makes me stick out like a sore thumb in either RI or MA. I can see how those with an agenda could jump all over this, but perhaps we should refrain. First of all hindsight is 20/20 guys. You should have heard how this thing was being spun in RI. An up and coming business with plenty of financial backing (hypothetically) that was lured away from Ma to create 400 new jobs over $70K each in RI. It was a major score. Think about the climate 5 yrs ago. Not that it was much different but RI was 1st/2nd in the nation in unemployment at like 12% IIRC. This is really unfortunate. I mean it's not going to send RI into a tailspin anymore that we already are but it's terrible news. Almost 15% of the country is on food stamps. In RI for instance, one out of 8 people are on. So you are in line at the grocery store or bank, etc - keep that in mind.

Back on topic - what's unfathomable is that they could not pay back their very first payment? In the Providence Journal here this week we found out that he (Shilling) went to the state in April and asked for another 20 million. Basically threatening our current governor that if he didn't get the money, the doors would close in a month. He made the first payment last week and it literally bounced (he called and told the state there were insufficient funds in the account) and then paid it like a day later when the press was so bad. But the writing was on the wall, only days later the big announcement came.

 

[marmasatt]

Hot off the presses 3 or 4 articles on the front page of the Projo this morning. Funny, this was all I could find after a quick search of the site. What's also funny is all the employees are actually blaming Chafee (the current governor) just stating they could have used "a little more help". Current governor and state police stopping short of calling it a criminal investigation, but they are calling for a forensic audit of 38 Studios:

http://news.providencejournal.com/business/2012/05/chafee-38-studios-back-in-default-seeking-forensic-audit.html

 

[Wreckem]

Hot off the presses 3 or 4 articles on the front page of the Projo this morning. Funny, this was all I could find after a quick search of the site. What's also funny is all the employees are actually blaming Chafee (the current governor) just stating they could have used "a little more help". Current governor and state police stopping short of calling it a criminal investigation, but they are calling for a forensic audit of 38 Studios:

http://news.providencejournal.com/business/2012/05/chafee-38-studios-back-in-default-seeking-forensic-audit.html

They need to but, I doubt they uncover anything illegal. Everyone knew going in this wasn't a sustainable business plan. If they didn't they were morons. Its simple math.

Although I have absolutely no doubt there will be civil suits against various people involved in 38, in their individual capacities.

 

[Wreckem]

RI guy here. This whole thing is pretty tragic. I lean to the right a bit which makes me stick out like a sore thumb in either RI or MA. I can see how those with an agenda could jump all over this, but perhaps we should refrain. First of all hindsight is 20/20 guys. You should have heard how this thing was being spun in RI. An up and coming business with plenty of financial backing (hypothetically) that was lured away from Ma to create 400 new jobs over $70K each in RI. It was a major score. Think about the climate 5 yrs ago. Not that it was much different but RI was 1st/2nd in the nation in unemployment at like 12% IIRC. This is really unfortunate. I mean it's not going to send RI into a tailspin anymore that we already are but it's terrible news. Almost 15% of the country is on food stamps. In RI for instance, one out of 8 people are on. So you are in line at the grocery store or bank, etc - keep that in mind.

Back on topic - what's unfathomable is that they could not pay back their very first payment? In the Providence Journal here this week we found out that he (Shilling) went to the state in April and asked for another 20 million. Basically threatening our current governor that if he didn't get the money, the doors would close in a month. He made the first payment last week and it literally bounced (he called and told the state there were insufficient funds in the account) and then paid it like a day later when the press was so bad. But the writing was on the wall, only days later the big announcement came.

Technically they had loan guarantees amounting to $75million. They only ever saw $50million if it because the way it was structured the only got disbursements when they hit employment goals. The more and quicker they hired employees, the quicker and more money they got from their loan guarantee.

 

[zinfamous]

RI guy here. This whole thing is pretty tragic. I lean to the right a bit which makes me stick out like a sore thumb in either RI or MA. I can see how those with an agenda could jump all over this, but perhaps we should refrain. First of all hindsight is 20/20 guys. You should have heard how this thing was being spun in RI. An up and coming business with plenty of financial backing (hypothetically) that was lured away from Ma to create 400 new jobs over $70K each in RI. It was a major score. Think about the climate 5 yrs ago. Not that it was much different but RI was 1st/2nd in the nation in unemployment at like 12% IIRC. This is really unfortunate. I mean it's not going to send RI into a tailspin anymore that we already are but it's terrible news. Almost 15% of the country is on food stamps. In RI for instance, one out of 8 people are on. So you are in line at the grocery store or bank, etc - keep that in mind.

The surface promises of this deal that you guys were sucked into were a terrible bargain from the beginning. This was always a bad deal for you and for RI and should have been completely obvious, without the need for hindsight, and here is why:

i can understand what RI is doing with this idea, but shouldn't they be doing this with more stable companies or industries?

so they entice the company to RI to provide jobs (which seriously, how much did that help with such a specialized field?) and then the entire company rides on this unknown product to do well and it doesn't, so now they everyone at the company loses their jobs and the tax payers owe 120-some million dollars?

lmao...i am horrible with financial stuff and even i know thats a bad idea.

It's not that they provide this incentive, it's that they bankrolled your money on an unproven product. And to show how horrible an idea this was--the game sold relatively well--quite well, actually, for a first game. And it was a decent, fun game, deserving of those sales.

and they still went bust. Putting money into an unproven group--just bad bad. Now, again, considering that they did sell relatively well but ended up with zero cash in the end, it's possible that there is something far worse going on at 38Studios. But that's what the investigation is for.

 

[Wreckem]

The surface promises of this deal that you guys were sucked into were a terrible bargain from the beginning. This was always a bad deal for you and for RI and should have been completely obvious, without the need for hindsight, and here is why:



It's not that they provide this incentive, it's that they bankrolled your money on an unproven product. And to show how horrible an idea this was--the game sold relatively well--quite well, actually, for a first game. And it was a decent, fun game, deserving of those sales.

and they still went bust. Putting money into an unproven group--just bad bad. Now, again, considering that they did sell relatively well but ended up with zero cash in the end, it's possible that there is something far worse going on at 38Studios. But that's what the investigation is for.

I really don't think there was anything nefarious going on. Just an extremely poor business plan with management apparently asleep at the wheel. They weren't paying 413 people for playing tiddlywinks. They were working on an MMO that had a budget of $100million. It appears a substantial portion of it was done. They never came close to having $100million in capital and with the amount of employees that $100million budget was low. The game they did release was supposed to help keep them afloat while working on the MMO.

Whoever thought that investing/giving money to an unproven startup to make a $100million+ game was a total moron. There is a reason the major venture capitalist firms 38 tried to get equity financing through turned them down. That should have sent off red flags to RI. The deal should have never been made. The deal never made any sense.

The biggest problem was they were supposed to have 450 employees. That is mega-sized development team. One that wasn't needed. The only reason they had so many employees(413 from some reports) was because the loan guarantees had specific employment requirements to get disbursements.

All you have to do is look at the studio making TES Online to see 38 had way to many employees. That studio is ZeniMax Online, they only have 250 employees.

 

[Ashenor]

I would love to find a CE of this now that shipped right from there site, might be worth something if not a good story in the future.

 

[TehMac]

This doesn't seem so much as a libertarian issue as it is just getting financing from the wrong (former baseball players) people.

The first thing an entrepreneur learns, whatever company he is starting up, is that you choose investors carefully. A solid model and product will attract investors you can work with.