Wow. When gaming studios start taking out that big of loans, that negatively affect the region for which they live in, you know it is destined to fail. MMO's are becoming fool's gold. I liked KoA, but it was just a mashed up clone of 3 popular games.

I do not understand how a person running a business can take such a giant risk for themselves, their company, their employees lives, and now tax payers.

This is ego and madness running rampant.

It's pretty easy to dogpile on a company after the fact, so that’s what I'm going to do. First mistake was partnering with EA, and their market destroying marketing. EA has been using their poison-well marketing tactics for so long that it is becoming harder and harder to hype a big game. Using guerrilla marketing via paid forum posters and the 'massaging' of game sites with huge ad dollars amongst other things, can only work for so long before people become jaded. And the fact that EA was voted most despised (or whatever) company in America is pretty good proof of jadedness.

Second mistake was crafting a game that targeted too broad an audience. They wanted the game to appeal across the spectrum, from the casual 1 or 2 hour per week super busy gamer all the way to the 'gaming as a second job' devotee. One pole requires easy combat and a very small learning curve; while the other requires the opposite. No one yet has been able to make easy hard combat and shallow deep game worlds, but that doesn't stop people from trying.

And maybe that relates back to EA as well, because they try to market their games to everyone. It doesn't matter what kind of games a person is interested in, EA marketing attempts to tell them that whatever game they are peddling at the moment, it will fit their requirements perfectly. Maybe BigHuge was asked to create a game that could more easily be marketed this way?

Third was the avoidance of risk. There was nothing to distinguish their game. 'a world populated by trite Tolkien clichés, button mashing everybody-is-a-winner combat, epic "hero saves world" storyline'.

So, in summary, they made a game that would excite very few people and then had a company that has systematically burned out the excitement receptors of their audience market it.

I dunno if its that easy. IMO KoA *has* not *had* but *has* the potential to be a huge franchise. The main problem of the game might have three names: Skyrim, The Old Republic and Mass Effect 3.
Aimed at the RPG crowd, KoA had to face pretty fierce competition of games that have been on people's lst for months ahead.
Granted KoA has an individual visual style, it seemed to me less deep, less coherent and less block-busting than Skyrim and ME3. Maybe a few more months and a better release date would have helped, but it looks like 38 studios bit off a bit more than they could chew by putting Copernicus behind KoA to produce quicker income. I wish them the best of success though, I find the group of people working on KoA is stunning, MacFarlane for example :)

Let me get this straight. The story is about a local government lending a large sum of money out to a free market start up that makes fantasy games for consoles and PC, only to later worry about that company being able to actually pay back that loan now. Was the sale pitch of the company only that they will bring jobs to an area? Was that how they where able to receive such a large loan of taxpayers money from the city? Did they have to raise or obtain with in their holdings a certain amount of capital before that loan was approved? I just want to know the what the process and thinking was when they decided that they should shell out that much cash to one entity.

I was fairly staggered by Rhode Island's initial stance on this one, even if it is a loan guarantee, not an actual loan. Still something to be said about chickens coming home to roost.

Hindsight is always 20/20 but you have to wonder why the gov risked $75 million on a new dev working on new IP and $DLC. The demo was OK but no way it was going to pull COD numbers in order to pay the loan back. With no other known game but a MMO in the works, this studio is in trouble. MMO market is saturated and only appeals to one market, PC, so its doubtful it will be a huge success.

This one is fairly simple to figure out and the blame doesn't lie with Rhode Island govt. nor with EA for that matter. It is simply the cost of doing business. And business is all about risk. And in the case of video game development - especially MMOs - you need a fair amount of insanity to go with the risk of actually engaging in such enterprise.It is all about timing and missed opportunities.Somehow, the brain trust at 38 Studios [foolishly] assumed that - in a world dominated by the likes of WoW, Rift, KoTR etc, doing another fantasy MMO game that goes head to head with the best of the best, was a smart move. Funny thing is that Rift made the same bet and in their case the timing was good and the game was original enough to make a dent (we still don't know how successful it is).Also, if they borrowed near $75m to focus on *one* game, whoever took that[MMO] risk is probably insane - and so he/she fits right in with the rest of the industry.Either way, those who make decisions like this, still get paid. And when it's time to cut the fat, the low level guys who had nothing to do with decisions like this - go first.Frankly, I have absolutely NO idea wtf Curt was thinking when he decided to get involved in this industry. Most of us who have been doing it for so long, know one simple thing: if we had to go back and do it all over again, we probably would not.With the game nowhere in sight and the sales of KoA having settled down, I don't believe that the studio will survive 2012. I don't care what Rhode Island govt. thinks. Anyone who throws good money after bad, deserves what comes after.

This is why government shouldn't try choosing winners, there was no risk for the bureaucrats who put this together, it wasn't their money! But I bet they ran home and told everyone how they created 450 jobs. Why not just give a loan for 75 billion? You would create even more jobs! You can pay people to dig holes all day long, trouble is you eventually run out of everyone else's money to do it with.

And the final tab if 38Studios fails could be way more than $75M

http://www.stumbleupon.com/su/7tIHKv/www.gamesindustry.biz/articles/2012-05-15-3
8-studios-collapse-could-cost-rhode-island-taxpayers-USD112-6-million

Didn't they have Angel investors backing them for this project?