The ongoing financial struggles at the Rhode Island-based 38 Studios came to a head this afternoon, as an affected source has confirmed to Gamasutra that 38 Studios and its subsidiary Big Huge Games have laid off their entire staff.
This news follows a long string of problems that came to light within the last few weeks, shortly after the company failed to meet the deadline for a major loan payment to Rhode Island state.
This is the email that was sent to the staff of the company this afternoon:
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.
According to reports from local news group WPRI, 38 Studios employed 379 employees as of March 15, 288 of which were located within Rhode Island State.
The Curt Schilling-led 38 Studios originally received a $75 million loan payment from Rhode Island state in 2010, after which the studio planned to relocate from Massachusetts and expand to some 450 employees in the state to develop its full-scale MMO, until now known as "Copernicus."
The company's wholly owned subsidiary, Big Huge Games, released the action RPG Kingdoms of Amalur: Reckoning earlier this year, and that debut title went on to sell 330,000 copies in the U.S. during its first month.
Gamasutra has contacted 38 Studios for further comment, but has not heard back as of press time.
[Update: During a Rhode Island press conference this afternoon, Governor Lincoln Chafee said that 38 Studios ran into such dire financial trouble in part because Kingdoms of Amalur: Reckoning failed to live up to expectations.
"The game failed," Chafee said, claiming that in order to break even, the game needed to sell more than 3 million copies, and it unfortunately did not come close to hitting that lofty goal.
It's unclear where the Governor received this fiscal information from - Curt Schilling recently claimed on Twitter that "Reckoning, 38 Studios first game, has outperformed EA's projections by selling 1.2mm copies in its first 90 days."]