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38 Studios' Downfall: The Gamasutra Report
38 Studios' Downfall: The Gamasutra Report Exclusive
June 1, 2012 | By Leigh Alexander

June 1, 2012 | By Leigh Alexander
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    60 comments
More: Console/PC, Social/Online, Business/Marketing, Exclusive



In the wake of 38 Studios' collapse, insiders are at last speaking out. Speaking under condition of anonymity, multiple Gamasutra sources say the characterization of 38 Studios as a heavily-funded studio that bungled its resources at taxpayer expense is not entirely accurate.

They tell us founder Curt Schilling -- the former pro baseball star with a love of MMORPGs like EverQuest and World of Warcraft -- was a kind patron and supportive leader.

But his naive optimism, backed by millions in taxpayer-backed bonds and Schilling's personal savings, was exploited and manipulated by executives and politicians, sources claim.

Former employees both at headquarters and at its acquired arm, Kingdoms of Amalur developer Big Huge Games, say the company relied too heavily on getting dollars crucial to continue development of its MMORPG codenamed Copernicus, a game that would never be completed -- leaping without enough rope, and crashing when no more rope arrived.

"I don't think it was a matter of having all the money necessary and just burning through it too quickly or irresponsibly. It was a matter of working overtime to make sure we continued to acquire funding sources, such as the Rhode Island-backed loan," a source from 38 Studios says.

"I can say that the company didn't spend money extravagantly at all," he adds. "We didn't have giant statues in the halls, or supercomputers with 30-inch monitors at every desk. We had what we needed to work on the game and that was it."

But to continue meeting those needs, partnerships with investors were necessary, and politics played a huge role in why funding dried up, outraged sources say.

Caught in a political crossfire

Two years ago the company forged a key funding partnership with the state of Rhode Island to the tune of $75 million in taxpayer-backed bonds. The loan, which lured 38 Studios from its original Maynard, Massachusetts headquarters to Providence, was intended to create hundreds of new tech jobs in the area.

But the amount of the loan was viewed controversially by Rhode Islanders, amid media scrutiny of the major risk inherent in releasing a major MMO in the crowded fantasy genre. Schilling has claimed current governor Lincoln Chafee used that taxpayer anxiety to his advantage.

Employees who are now out of a job, out of healthcare, and who have every reason to resent their management for the poor preparation, support Schilling's allegations. They say Chafee centered his re-election platform on criticizing the previous governor for financial decisions, a tactic to which the 38 Studios deal had been central.



"I don't know how feasible [Copernicus] ever was, but it seemed to have modest expectations it would be able to achieve," says one former Big Huge Games employee. "Once things went bad, Chafee's office started leaking any information it could to make 38 Studios look like it had been a bad deal... unfortunately, a lot of these leaks involved partial and complete misinformation."

A 38 Studios employee corroborates, pointing out some of what he says are Chafee's most egregious acts of misinformation: Calling a private loan effectively cosigned by the state "taxpayer money" makes it appear that the state has already paid the cost, instead of being responsible for it in the event of failure.

And the highly-publicized million-dollar payment wasn't a loan payment as Chafee claimed, states the employee: "It was actually a weird extra fee to the board he was on, which had nothing to do with payments and interest -- [which was] already handled by setting aside a full third of the loan for that purpose," he adds. "This made it seem like we had somehow burned through all $75 million, including the money set aside to do this."

Chafee also publicly claimed 38's first release, the single-player RPG Kingdoms of Amalur: Reckoning, "failed," artificially deflating its sales numbers and suggesting it was a commercial flop -- which it wasn't. It's true that the game didn't sell enough to fulfill a clause whereby publisher Electronic Arts would start paying a cut to the studio, but employees say potential profits for Reckoning were never part of the budgeting plans for 38.

Most importantly, employees say Chafee's public statements about possible solvency issues for the 38 Studio teams in the first place caused potential investors who might have given teams the funding to continue development to distance themselves. In a funding scheme that relies on continually forging investor partnerships, employees believe this might have been the most damning act.

Bad press about supposedly-poor Reckoning sales, potential insolvency, and a demand for an audit -- even though a regular audit process was conditional to the loan -- are thought by employees to be the reason no investors emerged and why those in talks got spooked and left the table.

"As a result of all of the negative publicity and misinformation, the publishers we were talking with ended up distancing themselves from us and letting us collapse," says a Big Huge Games employee. "In a real way, Chafee's political maneuvering is responsible for the lost jobs of 107 entirely blameless professionals in Maryland [where Big Huge was based]."



Schilling is 'one of the good guys'

Although Schilling is being portrayed in the media as a sports star who tossed money at his dream project without thought of how to succeed, employees don't agree with this view, describing a kind and enthusiastic patron whom they believe did much to try to make things work out.

"We never would have survived to make Reckoning if he hadn't bought us," says a Big Huge Games source. He describes Schilling's "kindest, most generous" intent in the early days of the MMO, and says Schilling "went to lavish personal expense" for his teams, buying customized jerseys and other morale perks.

"But in the end, his optimism turned out to be naivete, and it slowly killed us," the source continues.

Employees never had warning when the company was going to miss its payroll because apparently Schilling had been all but certain another investor was coming through, up to the last minute. Employees say they later learned that on two occasions the threat of being unable to make payroll had been alleviated by savior investors, so on that third occasion, Schilling had just been counting on something to manifest -- and that didn't happen in time.

"Even so, for the next seven days, he insisted that they were just about to get a new investor who would solve everything, and we hoped and slowly collapsed," the employee continues. He even says he's worried about Schilling's well-being and how he's taking the failure of 38 Studios.

"At the end, he stopped talking to us at all -- which is a shame, because he honestly loved the setting and both teams, because they were personal dreams of his... He was a naive sucker, and I think his VPs played him, but he always had the kindest intents for everyone, and was never malicious or manipulative. He deserves that much to be known."

"I know this scandal has been painting Curt as a hypocritical idiot, but he is absolutely one of the good guys," another source at 38 Studios agrees. "[Schilling] often said that if there is anything he or the company can do to help in times of crisis or need, that he would be there, and until this mess, he was always able to back that up."

Misinformation and inaccessibility at the top

The company took as many pains as it could to insulate employees from any worries about the company's situation -- unfortunately, a desire to enable devs to just concentrate on their work led to them being "completely blindsided" in the company's final week, and to a perceived opacity about the higher-ups, whose roles sources say were unclear and led to jokes about a profusion of unnecessary VPs at 38.

What infuriates many former employees most about the collapse is that they're forced to scramble to find health care; even an employee who was a cancer survivor was abruptly left with chemotherapy sessions to cover. Bill Thomas, president and COO was the author of the infamously-terse 11th-hour layoffs email.

But other execs proved similarly unavailable at the end, says a Big Huge Games source. "In the last few days, 38 refused to even answer the phone calls of [Big Huge Studios'] head," the source claims.

In the studios' final days, employees at both headquarters and Big Huge Games portray an environment of sorrow and denial that eventually gave way to a deep sense of betrayal. A 38 Studios employee says staff were told that speaking to the media would only harm their circumstances. All the while, negative publicity proliferated in the press, fanned in part by political factors that drove misinformation no one seemed to be stepping up to correct.

Employees questioned the public relations advice apparently keeping execs from making statements to combat the misleading news stories: "There was an immense amount of frustration around the fact that the company was not clarifying or addressing any of these blatantly inaccurate accusations," the employee says. "It's been a terrible couple weeks for over 200 families, and seeing the negativity out there, largely based on inaccurate information, is extremely painful."



Team unity, project love in the final days

During the final "tearful" rollercoaster when employees feared the worst and wondered if they'd ever see a paycheck, employees at both headquarters and BHG banded closely together. Both attest that team bonds were incredibly strong.

"While the average company salary has been quoted around $86,000, many many individuals were making far less than that, and living paycheck to paycheck," says a 38 Studios employee. "When we didn't get paid, it immediately became very difficult for a number of people, but they continued coming in and working anyway. As it seemed like things were not being resolved, people started bringing in extra food and leaving it in the kitchen for anyone who needed it to grab."

Both teams also had incredible faith in their projects -- Copernicus in particular was closer to readiness than many believed, and an employee says that misunderstanding about long beta cycles for MMOs also contributed to premature doom predictions about the game.

"I have worked on a number of projects in my career, and I can say without reservation that Copernicus [had] incredible potential to be a blockbuster MMO," he says. "It wasn't completely revolutionary in terms of gameplay, but it took existing conventions and refined or improved them across the board, not unlike Blizzard's approach with WoW. The idea that this imminently playable, triple-A, beautiful MMO that had millions of dollars and man-hours poured into it is heartbreaking."

At Big Huge Games, Reckoning 2 was underway, and employees are disappointed to lose the opportunity to address the things they wanted to fix about the first installment. "Our view of Reckoning was that even though it wasn't a perfect game, it was a vital stepping stone to making our ideal game, addressing the things we knew were weaknesses in the first," says the employee.

"Now we may never have an option to make that better game, or even work together with our second families ever again, all because of the people far above us," he reflects.

[Jen MacLean, former CEO of 38 Studios, informed Gamasutra after this report was published that she had left the company a couple months before the end: "I left 38 Studios on an indefinite leave of absence on March 23, 2012, and resigned from my position as director, officer, and employee on May 17. I was not involved in any day to day company operations after March 23." - Ed.]


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Comments


Ken Hannahs
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This is a heart-breaking account of the 38 Studios I followed for the past five years, starting back when it was still called Green Monster Games. The screenshots I have seen of the game are incredible, and it absolutely sucks that things shook out the way that they did.

I wish everyone who worked at 38 and BHG the best, and thank you for your hard work.

Nicholas Lovell
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Having read this article, I'm struggling to find why "the characterization of 38 Studios as a heavily-funded studio that bungled its resources at taxpayer expense is inaccurate."

The descriptions characterise the CEO is naive. That sounds like bungling.

It describes managing the business on an endless treadmill of fundraising. That sounds like bungling.

It describes the taxpayer money as not really being taxpayer money, becase it was only a guarantee in the event of a failure. Politicians love these because they claim they aren't actual cash, but when things go wrong, they are (as we have all discovered with the implicit guarantee we have given to our banks).

I am sure Curt is a lovely man. I feel terribly sorry for the people who lost their jobs. But nothing in this interview makes me think that the characterisation you described was inaccurate. Quite the reverse: it makes me think it was true.

Michael Rooney
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Curt wasn't the CEO.

Kris Graft
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Hi Nicholas! You do have a point, and the statement wasn't intended to be so absolute, so I softened up the wording there. (Also it's true that Curt was not the CEO, that was Jen Maclean.)

Edit: I've added this to the article as well: [Jen MacLean, former CEO of 38 Studios, informed Gamasutra after this report was published: "I left 38 Studios on an indefinite leave of absence on March 23, 2012, and resigned from my position as director, officer, and employee on May 17. I was not involved in any day to day company operations after March 23." - Ed.]

Nicholas Lovell
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I had misunderstood, and now know that Jennifer McLean was CEO (http://38studios.com/staff/jennifer-maclean). I still see plenty of naive bungling.

Kevin Cardoza
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Agreed. I think it gives more insight into Curt, who I think is being unfairly dragged through the mud because of his celebrity and previous political statements. While he may have been naive, it sounds like he also wasn't directly in control of management decisions.

However, it still sounds like the executive team steering this company had no clue what they were doing, and even if they had no intentional malice, continuing to operate a 200+ development team right until the week they were completely broke is grossly incompetent no matter how you look at it. Even if they got that last minute funding for a third time, what would they do when it came up again a year from now? Considering they weren't even prepared to show off anything other than a teaser trailer in their last minute of desperation, I sincerely doubt that MMO would have been ready by 2013 as they claimed.

Morgan Ramsay
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@David Mata: I'm quite tired of hearing people say that Schilling was inexperienced and that's why 38 Studios closed. Every entrepreneur is inexperienced because every company presents new challenges. Experience really has very little to do with why companies fail.

Furthermore, 38 Studios was Schilling's second game company. His first game company was Multi-Man Publishing, which today continues to publish Avalon Hill's portfolio of board games, such as Advanced Squad Leader. (He joined MMP as an owner one year after the company was founded.)

MicroProse cofounder Wild Bill Stealey told me that Schilling actually wanted to go in with him to buy Avalon Hill at one point, too. Schilling has a long history with games and video games; he's not "just a former baseball player who got in over his head" as Rhode Island Gov. Chafee would have you believe.

Bob Allen
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@Morgan Ramsay: How is that better? If he's experienced he should have known better and that doesn't make him the innocent victim after all. If he was new to the business, he could be excused for letting executives mislead him or having unrealistic expectations. But if he has industry experience, he should know trying to make a profitable MMO is the biggest gamble there is. Even when it's great, it's hard to get traction and make a profit.

Morgan Ramsay
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@Bob Allen: All startups are gambles. The willingness to assume great risks is the cornerstone of entrepreneurship. For people who aren't founders, starting a company -- any company -- is part crazy and part stupid. For the rest of us, risks aren't to be feared; they're opportunities to be pursued. Schilling is an entrepreneur. He has had a long, close relationship with Sony Online Entertainment, and most certainly understands the online-game business. An MMO is simply a great big opportunity.

Eric Geer
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Well this paints quite the different picture....

I hate Politics--they seem to ruin everything good...

Nicholas Lovell
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Just to declare a bias, I included 38 Studios in my list of ten games companies that I thought were doomed in October 2010. http://www.gamesbrief.com/2010/10/ten-games-businesse-that-are-do
omed/ It was an incredibly high risk venture in an crowded market funded by people (i.e. politicians) who don't understand the industry. It was always going to be tough to make it work.

Paul Meyer
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Good call. You also predicted that Trion Worlds, CCP, and CoD subs would fail. Throw enough at the wall, I guess you can say you called it when one piece of laundry sticks. A couple of the other "predictions" had already happened.

Regular Carnac the Magnificent, you.

Josh Rough
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It's always hilarious to see fringe industry people (i.e. they haven't accomplished anything of note in video games) on Gamasutra in the comments section saying; "See, I was right!"

Go make a game (any game) worth talking about, please. Then you can share your opinions about what does/doesn't work.

E McNeill
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Josh: While Paul's criticism is valid, it's not correct to say that Nicholas is a "fringe industry person". He's been consulting and blogging for a long time, and led a good panel at GDC this past year. Not everyone worth listening to is a game creator themselves.

Nicholas Lovell
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I was wrong about Trion Worlds and CoD. We'll see about CCP (my issue was with Dust, which hasn't launched yet. I hope it works, because I like the team at CCP, but I raised the likelihood of failure because I want investors and the market to understand that it is an incredibly risky venture, and that if it fails, that does not mean that all video game investments are bad).

I help people with their business models. That's my thing. Pretty well the first game I consulted on when I started (and still a client today) has been regularly in the top ten games played on Steam (Stronghold Kingdoms).

@ E McNeill. Thank you.

Nicholas Lovell
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I'm also struggling to reconcile this account with the news that certain staffers are stuck with second mortgages: http://www.gamasutra.com/view/news/171172/Former_relocated_38_Stu
dios_employees_stuck_with_second_mortgages__report.php

That was extremely shoddy behaviour by any level.

Peter Matiss
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If:

A) Governor Lincoln Chafee used 38 Studios for his own personal political gain. (Article suggests yes)

and

B) 38 Studios and its employees suffered as a result of his political efforts. (Article suggests yes)

Then:

C) Governor Lincoln Chafee and politicians like him should be sent a clear message that interference with Developers, their creative product and livelihood will not be tolerated. You can contact Lincoln Chafee here governor@governor.ri.gov

Joe Wreschnig
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If you don't want someone "interfering" with your "creative product", don't take their money.

Michael Rooney
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They didn't take their money. They got the previous governor to co-sign a loan in return for them moving to the state.

The corollary to what you're suggesting Joe is that if you don't want the 'creative product' to fail and land you and your constituents in massive debt, don't interfere with it.

Not to imply the shitstorm rests on a single person, but to imply that politics did not play a role is misinformed.

Jeffrey Crenshaw
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@Joe I agree with that sentiment, but it is also worth noting that this type of involvement (be it government or investor) affects people who are not there to defend themselves (backing a business with tax payer money, giving a business an unfair advantage over other businesses trying to create jobs, etc). We can't keep up the illusion that there are only two sides of a contract worthy of consideration, third parties be damned; it's a shrinking world. Everything affects everyone through butterfly ripples. Moving money around in certain ways can devastate people by misrepresenting value and rewarding the wrong types of "hard work" in the best scenario and flat-out stealing taxpayer money through nepotistic and back-handed deals in the worst scenario.

Luke S
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Joe: I think Morgan Spurlock would have some alternate approaches to that.

Alan Wilson
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I'm sorry to be down on a bunch of people who are out of jobs, but...

All this about "not being extravagant", not bungling it and not burning through money. I'm sorry, but just how much money DID the company chew up? It seems to have been Curt Schilling's savings PLUS Rhode Island's loan PLUS investor capital. RI alone was worth $75m at full, so the company must have chewed its way through north of $100 million dollars over the last few years - for what return? And the management wondered why the funding dried up?

Come on, people, engage some brains. Whoever is to blame - be it owners, management or local politicians - it is still a complete clusterfork of disgraceful proportions. A whole bunch of people should be deeply ashamed of themselves. This stuff is Business 101. It isn't rocket science - it is cashflow management.

I still feel deeply sorry for the poor buggers doing the actual work on the floor, who are the ones now shafted and out on the street. Don't expect me to feel any sympathy for Schilling (he only has himself to blame), for the management he employed, who allowed the company to get into a state where it can collapse so easily, or for the politicians in RI. All of them need a good slap - although I suspect Schilling has just taken a very painful slap to his net wealth.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Morgan Ramsay
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Rhode Island's true loan value was less than Schilling's own investment.

WPRI reports: "When the $75 million worth of bonds were sold on Nov. 1, 2010, the EDC spent $1.9 million of the proceeds on fees, then put the rest into three accounts: $49.5 million went into the Project Fund, $12.8 million went into a Capital Reserve Fund and $10.6 million went into a Capitalized Interest Account. As of Nov. 2, 2011, a year after the bonds got sold, the Project Fund was empty – that was the source for all the above transfers from EDC to 38 Studios."

Source: http://j.mp/MfVysU

Christian Nutt
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The story states: one-third of the $75m was held in escrow to pay back the loan (which was not from RI, but private investor[s].)

Morgan Ramsay
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Here are the public loan documents, including the Loan and Trust Agreement:

http://www.riedc.com/38studios-public-documents

Paul Marzagalli
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Obviously, 38 Studios made some bad choices. There's no denying that - certainly this whole mortgage thing (provided the situation is as it has been painted) is a snafu of the highest and most awful order. However, I am *very* happy (in a jaded political sense) to see Chafee called into account for his role. His bad faith bargaining with 38 Studios in the final days absolutely cut the throat of the developer, most egregiously the EA deal for KoA2 that might have at least salvaged the BHG staff. To be against the deal before it was made is one thing, but his actions since taking office have been to irresponsibly undercut and eventually kill it. Lincoln Chafee is the proverbial poet who kills his inspiration so he can sing about the grief.

As for Curt Schilling...I've heard similar sentiments from those involved, but of course you don't really hear those in the mass media. Here in liberal-minded New England, it has been an irresistible chance to pile onto the conservative and outspoken Schilling. Regarding his silence, it is hard to fault him (though I seem to be the only one who thinks this). When expressing his views on politics or sports, it's one man's opinion. In his capacity as owner of 38 Studios, though, he doesn't just speak for himself. We can argue about what his PR strategy should have been, but those who mock him for not being his usual self betray an unwillingness to separate the man from his position.

The whole situation is just a tremendous tragedy for all involved - for all the out of work devs rearranging their lives on the fly, the RI taxpayers who get stuck paying for nothing, and yes for Schilling, too - the guy sunk tens of millions of dollars into a dream that blew up in his face. He is a real-life John Hammond with Copernicus as his own Jurassic Park. I feel sorry for the man, who has a legitimate passion for the industry. I hope he finds other ways to chase it, with lessons learned and a better approach.

c anderson
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I am seeing some "facts" left out. For example, the alleged unfavorable Waterhouse audit. And how many VPs were there really, unless there were really 38 of them. If you take public money to fund a speculative venture, you have to expect it to be used for political football, especially if one has been whining about public money use. Chafee certainly didn't help matters ... but from my naive POV it looks to me like it was pretty majorly mismanaged before he started hammering nails in the coffin.

Rob Wright
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"It's true that the game didn't sell enough to fulfill a clause whereby publisher Electronic Arts would start paying a cut to the studio, but employees say potential profits for Reckoning were never part of the budgeting plans for 38."

I've written about this in previous comments, but it bears repeating -- I get the feeling that 38 Studios/Big Huge Games signed a VERY unfavorable publishing deal with EA. To be cash-starved and not be able to reap ANY of the sales from your game that sold a million copies in three months is just ridiculous. Does anyone else think EA should get some of the blame here, or at least be called out for taking 38 Studios to the cleaners?

Kevin Cardoza
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While I'm not going to deny that a lot of publisher/developer contracts are notoriously lopsided, I'm not sure if this is as bad a deal as you're making it out to be. According to the information we have, this was a deal where EA paid $35 million for the development of the game, and also paid for the marketing and distribution of it, and at the same time 38 gets to still retain the IP. It's true that EA gets all the profit until it reaches a certain threshold, but to be fair it sounds like they also took 100% of the risk.

Rob Wright
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I've seen the $35 million sum for the initial EA deal on a few forums, but has that been confirmed? I know that Schilling has said an unnamed publisher pulled out of a $35 million publishing deal for a KoA sequel after Chafee and the state went public, but do we know that's what EA paid 38 Studios for Reckoning?

Kevin Cardoza
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I haven't seen the number confirmed by EA, but it was the number Schilling said in the same article where he cited the amount for the sequel.

http://ireader.olivesoftware.com/Olive/iReader/ProvidenceJournalW
ithAuth/SharedArticle.ashx?document=TPJ%5C2012%5C05%5C29&article=
Ar00100

Bob Allen
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My reaction was different. I thought "Who PLANS to not make a profit from their game"? It sounded more like marketing spin- "Sure we didn't make any money on the game- but that was our PLAN all along." If 38 thought the terms were unreasonable, they could have gone to Activision, Ubisoft, Valve, self-published on Steam, etc.

Alan Wilson
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Do the math.... IF EA put up $35m, plus all the marketing costs and the rest - AND they didn't take the IP - then I'd say 38 got a pretty good deal. It would take EA something like 1 million units just to recoup their costs. I'm actually fairly staggered that EA would sign a deal like that. I'd guess that EA kept most of the money from the first million units - and they were absolutely right to do so. They helped bankroll the beast. I'd also guess that EA didn't even reach recoup on this one - a game that apparently sold 1 million units?!? They don't get "all the profit" - they get to try and recover their losses. Once they have reached recoup, theh they can try and make a profit out of it!

Andrew Timson
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@Bob Allen

"Royalties" is probably a better term here than "profits" - you're ignoring the up-front sum that EA paid. Now, if *that* wasn't enough to cover the costs, then 38 was doing it wrong, but as long as that up-front sum was enough to cover 38's expenses they didn't take a loss.

Josh Jones
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The important issue here is the families. We as the community can not do anything to fix the past, we can however, do something for tomorrow. I posted on Facebook (IGDA Baltimore) about putting together a cookout for the families. Some fun in the sun. At times like this you need support and know that the industry supports each other. Some families could use it, the ones that have been effected the most. So if you live in that area try and help out and get that organized. I am in Monterey California and am moving to Baltimore.I can't put it together..but hopefully I can spark a fire for others to get motivated. Lets get this done and support these families...

Rebecca Richards
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That sounds like a really good idea!

Tadhg Kelly
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That detail about people bringing in food so others could eat, along with the double mortgage stuff, really touched me. I've been through a few of these in my past (no game dev hasn't I think) but never to the point of starving workers and actual bankruptcy. Sincerest condolences to all.

As to whether it should have been done differently: Well it's easy to say from afar (and I'd probably agree) but when you're in the thick of it and trying to make something great the first thing to go out the window is perspective.

David Phan
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What really sucks is that the executive team and upper management who are largely responsible for this fiasco (imo) will get-off scott-free and easily find new executive positions at another developer or tech company. If pressed during the job interview on their role or level of accountability for this fiasco, they'll all defer and point the blame elsewhere.

Jason Weesner
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At the risk of burning bridges, it would be worth it to call out these individuals if not by name, at least by position and more details of their actions. There are some important lessons to be learned from such a (apparently) fundamental failure that would be of great benefit to the development community.

Josh Rough
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Best wishes to all involved. These situations are never easy and if you feel the need to make judgement, do it with some class in private - wounds need no salt. Thank you Leigh for yet another thoughtful article that isn't Kotaku-hipster-sensationalism...

Rebecca Richards
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Seconded. It is so hard to find REAL gaming news thanks to the low bar Kotaku has set for the rest of the field.

Chris Parsons
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Another great article by Ms. Alexander that details a perspective not clearly shown until now. It is still drawing from anecdotal comments from people involved who may or may not have known the entire story; something to keep in mind.

What should we in the industry take away from this? I think whatever else, this sad affair was a massive PR fail, especially--but by no means only--in recent weeks. The silence from the studio was deafening. It's pretty clear to anyone who does PR that if you aren't telling your story someone will tell it for you, and that's exactly what happened here. But it was greatly aggravated by decisions going back years to keep the project completely under wraps. The screens and vids released recently were literally the first assets shown to the public, well, ever! I have friends working there that maintained tight-lipped security the NSA would have been proud of. And that's fine to not have employees talking about random parts of development, but NOTHING shown of the game--a game approaching release? No exclusive peeks at PAX or E3? Nothing but years of hearing: "It's going to be awesome, and we can't talk about it."

Compare that to SWTOR's approach. They showed parts of their game every step of the way. Periodically they'd release fantastic cinematics which turned out to be intro's for each character class and therefore not only PR but game assets! They generated huge buzz in the media and at cons that built continuously right up to release. That was completely lacking here. That made 38 extremely vulnerable to ANY story in the media, and the story that popped was very, very bad. How much was accurate? How much completely wrong? Really, it doesn't matter now. It was the ONLY story out there until far too late. Now all that matters is the pain of what was a motivated and hard-working team left in the lurch.

As far as the politics, one of my co-workers said it best. When politicians are part of your project, two things will happen. If the project fails, they will throw you under the bus, and if it succeeds they will take credit.

Jeff Hollis
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This is an extremely sympathetic look at 38 Studios' management. While I'm sure that Schilling is a nice guy, he didn't handle even the simplest things very well. Consider this article, detailing how publicity for Copernicus was handled: http://torwars.com/2012/05/29/off-topic-38-studios-shuts-down-cop
ernicus-mmo-cancelled/

A key point? Copernicus isn't even the name of the MMO. They don't have a name yet, and if they do, they STILL aren't telling anyone, after six years of development. They did manage to put together a single fly-through video though - again, it only took six years to produce.

They were, however, willing to hold panel discussions and Q&As galore. In those Q&As, execs chose to discuss the cakes they ate at the holiday party, their founder's tattoo, and other irrelevant whatnot.

Perhaps the motto of 38 Studios should not have been, "World domination through gaming" but instead, "Hey, look at me!"

Derek Smart
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So uhm, pretty much what I said over here then?

http://www.gamasutra.com/view/news/171015/38_Studios_Big_Huge_Gam
es_lay_off_their_entire_staff.php#comment151441

Chris Parsons
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Yup.

Josh Rough
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...

Mark Morrison
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In other news, and on the other end of the country a handful of people are squabbling over $1B dollars and how to split it up fairly. We live in strange game industry times. Some bad. Some good.

My best thoughts and wishes go out to the entire group of developers who are our industry colleagues at 38 Studios. I've posted on the other 38 Studios Gamasutra pieces that I am happy to support any of the developers start over with Unity tools. I work in the Biz Dev. unit there, and it's my opinion that my peers at Unity extend their best wishes to all affected here too. Feel free to find me online for any middle-ware help.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Chad Nimmo
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West and Zampella just got a big payoff from Activision. Maybe Respawn should buy 38/BHG and release Copernicus as their first game. They can even take of KoA: Reckoning since they already have a deal with EA. Sounds like it would help some people out.

Kellee Santiago
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The practice of jumping without enough rope is, unfortunately, an all-too common practice, I believe one that many developers who were raised through the great age of AAA development were trained to practice, through hostile publisher/developer relationships. Many, many games have survived and shipped by becoming too big to cancel, and I've seen the practice of asking for as much money as you can get at the time, with the goal of making something that's good enough to force the rest of the budget to happen, occur many times, even in my short life as a dev.

I hate this practice, and wish that transparent dialogue around production was rewarded and encouraged. It doesn't make it less of a "bungle", but from this report, it sounds like the people in charge were acting like pretty much everyone else does in their position & situation. But they weren't able to ship the game that would forgive these transgressions, and so they lost.

Steve Danuser
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This article is the closest to the truth so far. The reader should always temper comments made by "unnamed inside sources" because you can never be sure exactly how privy that employee was to first-hand information vs. how much they assumed or heard via rumor. No matter how transparent a company is in its activities, most employees only see some fraction of what actually happens there.

It's true that the company had a lot of VPs--anyone who looked at the org chart could see that. But the quote about them playing Curt is kind of silly. Most of them were kept in the dark about the majority of goings-on, finding out about situations only a few minutes before they were announced to the staff. Communication at the executive level had been a problem for a long time.

The part of this article that's absolutely spot-on is how the vast majority of us feel about Curt Schilling. He's one of the finest human beings I've ever met, a genuinely kind and spiritual person. He cared about all of us and went out of his way to do anything he could to help us and our families. On a strictly personal level, he's stood by me through some very tough times, going above and beyond in ways too personal for me to write here.

Am I angry that I haven't been paid? Absolutely. Am I pissed that years of hard work will go to waste due to mismanagement and bad decisions? More than I can say. But I can't be angry at Curt. I just can't. I'd walk through fire for the man, even today. And no matter how it ended, I've made so many great friendships and experienced so much joy at 38 Studios that I consider it time well spent.

Thomas Nocera
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Out of adversity comes the seed of a new opportunity.
This is a well-written account of a complicated, sad situation
that touches both the hearts and minds of readers. And as has
been pointed out, the comments here on Gamasutra tend to add to understanding.

Jonathan Murphy
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This should be a reminder to any future game companies. You're only as strong as your weakest links. Notice how I said links. It often takes more than one person to destroy a company. The rest are people along for a ride they didn't deserve.

Paul Tozour
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The game industry never ceases to amaze me.

We have the world's most skilled developers, with a staggering amount of engineering, design, and artistic talent at our disposal ... but we seem to be completely incapable of pairing all of that with even the slightest bit of business acumen.

Glenn Sturgeon
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It seems to me 38 studios was a mess from the start.
Realy the only good thing they done was buy BHG so reckoning could be released.
So my conclusion is, its not suprising 38 died.
But as a gamer i think its quite a shame they took BHG and the reckoning franchies with them. As a 1st rpg for the studio and franchies, it was very good. I'm sad knowing they were working on reckoning2 when they closed, as i was looking forward to having another rpg franchies that was worth buying on day one.

Harlan Sumgui
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It would have been such a great success story.

Chris Clark
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I just hope that the MMO and Reckoning two as well as the developers caught in the crossfire of this land at another studio and we see these projects to completion and the developers having jobs to take care of their families. I for you, think Reckoning is a great game and would like to see a sequel.

Ed Macauley
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I appreciate the enthusiasm and the teams pulling together in the end. In all seriousness, however, has any game company ever survived a "nobody is getting paid and people are bringing in extra food for those who don't have any money to buy their own" stage and become successful? Are we talking about cautious optimism or "moving deck-chairs around on the Titanic"?

Michael Burkhead
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I think what saddens me about this situation is they weren't given a chance to succeed or fail. They pulled the plug on them before it even shipped, when it was apparently approaching a beta state. I've heard ex employees mention it was fully playable, they just weren't quite finished adding content and making it fun. They sill had 25M in their pot of funds the governor was quick to hold on to, and yet kept telling everyone in the media they had used up all their money and it was going to cost the tax payers $110 million. Not once did he mention the loan RI was under was a Moral bond agreement, and when it was time to pay back, the case would be voted on to pay on it or not. Certainly it was a ton of money on the line for sure, but I really think they could have mitigated their losses by letting these guys finish their game. The staff was brilliant, talented, and just needed to get new management in it seems. Chafee and his team certainly didn't help matters.


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