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Blame Rhode Island gov't for 38 Studios downfall, says SOE's Smedley
Blame Rhode Island gov't for 38 Studios downfall, says SOE's Smedley
February 11, 2014 | By Mike Rose

February 11, 2014 | By Mike Rose
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    10 comments
More: Console/PC, Business/Marketing



"I had the good fortune of seeing the game. It looked great. If that idiot Governor Chafee hadn't trash talked right at the time Curt was trying to get funding you would be playing the game now."
- Sony Online Entertainment president John Smedley says that it was the fault of the Rhode Island government and Governor Lincoln Chafee that 38 Studios went under, not Curt Schilling's.

Back in 2012, Kingdoms of Amalur team 38 Studios collapsed, causing great troubles for the state of Rhode Island, which had loaned the company $75 million for follow-up Project Copernicus. Chafee was a vocal proponent in the downfall, stating time and time again that giving that amount of money to Curt Schilling's studio was a terrible idea.

Now SOE president Smedley has hit back at the Governor, blaming him for the final demise of 38 Studios. In a long series of tweets, Smedley agreed with Chafee that the original funding never should have taken place -- but noted that Schilling could potentially have found additional funding for the studio's Project Copernicus and saved the company if Chafee hadn't kept sticking the knife in.

"The idea of suing someone when Chaffe's own comments were what poisoned the well at the end is beyond the pale," he said. "All he had to do was give Curt another week and we wouldn't be here today."

Smedley claims that Schilling approached SOE many times for funding before the Rhode Island loan had taken place, and while Smedley loved the idea of the game, "the economics were too tough to make work for us."

"This is a business where risks are large," he added. "We had enough balls in the air. More risk was too much for us. It was gorgeous. It had smart people working on it. It was just too expensive is all."

"All he had to do was give Curt another week and we wouldn't be here today."

In the end, says Smedley, Rhode Island should never have funded the game -- but Chafee's comments did far more harm than good, and actually ended up making the situation worse for both 38 Studios and Rhode Island.

"That 38 Studios deal just never should have been," he tweeted. "Public funds shouldn't be backing risky things like online games. If the fact that no other VCs were investing wasn't enough of a clue, then you damn well shouldn't be surprised by failure. Anyone with a brain could have told them no one would buy it. They contacted us and I told them so."

"Curt put every dime he had into it," he added. "That's the part that people are missing. He put his own money where his mouth was, but that's ultimately what undid it. Unqualified people at that Rhode Island economic council should have seen the fact that no one else would get in as a sign and they failed. That's not Curt's fault."

"Curt's only crime was believing in his own ability to will things to be better. He busted ass trying to get funding... Curt is an honest guy with good intentions."

Update: We've updated the headline to clarify that Smedley is chastising the Rhode Island government, not the people of the state.


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Comments


Jonathan Murphy
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It was a disaster on all fronts. I knew someone who was hired to work there. I remember, "It's ok, I landed a really good job!" years before the game launched.

Michael Joseph
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Sticks and stones will break bones but apparently even words can hurt 38 Studios...

In the century of self people won't even take responsibility for their most spectacular failures.

Sean Dunn
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When the Governor makes a public insolvency claim while the company is trying to fund raise, then yes words can hurt a lot.

Christian Nutt
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I think this comment is incredibly unfair. We've heard now from multiple sources that investors and interested publishers backed off when public statements from the governor made it seem like the whole enterprise was looking dodgy.

Michael Wenk
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When dealing with investors who are asked to spend a lot of money, anything can mess it up. Words, yep. Hell, bad weather may affect the mood of the VC, especially when they're looking at a large downside.

I totally agree with Smedley that Chaffe was the guy that killed the company. However I disagree that we'd be playing the game had Chaffe not said what he did. 38 was burning capital at such a rate that even had someone stepped in then, they'd likely have imploded later. The sad fact is that CS didn't have the skills to manage. He needed to control costs, and wasn't able to. Of course its possible 38 could have released, I just don't personally think so.

I definitely agree that gov't shouldn't put that much money in any high risk private company.

Judy Tyrer
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Not having the contracts in front of us, we can't really say. BUT, if the money was due and it wasn't paid on time, I don't see how that is the fault of the person to whom the money was owed. And everything I read about it said it was the failure to make a payment on time that caused the governor to rescind the funding. I could have missed something, but that was my take on it.

Fred Zeleny
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I can't speak for how the MMO would have turned out, but I can say for certain that Chafee's comments killed any chance of Big Huge Games finding a publisher for Reckoning 2. Reckoning had done well for a new franchise, and we had interested parties lined up to publish the sequel, but once Chafee made it a priority to paint the entire thing as a failure, anything connected to the company was seen as toxic.

Sean Dunn
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It was seen as likely to enter bankruptcy, so any deal with BHG would have been voided.

John Tessin
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So how much experience did Curt Shilling, R.A.Salvatore and Tod McFarlane have developing MMOs? Seems like learning as you go is very very expensive.

Michael Wenk
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I don't think it was skills in developing MMOs, but they definitely needed skills to control costs, and they failed miserably, and spectacularly. I think they lacked general business operation skills.


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