38 Studios Pays its $1.125 Million Debt, Will Receive No Additional Funds from State

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Posted by Alex (2401 posts) -

At a press conference held today, Rhode Island governor Lincoln Chafee announced that 38 Studios had successfully paid the $1.125 million payment it had previously defaulted on when it missed its original May 1st deadline.

38 had previously attempted to make the payment yesterday, but the check was refused by the Rhode Island Economic Development Corporation when it was made clear that the studio had insufficient funds to cover the payment.

Chafee said that the total $49 million thus far loaned to the studio has reportedly been spent, though an auditor will be brought in to ensure that is the case. Chafee estimated that 38 is currently spending around $4 million a month in total expenses.

38's next payment due is a $2.6 million payment due on November 1st, which the governor believes will be covered. $12.6 million in full annual debt service will be due in 2013. "That's on their dime," said Chafee.

Chafee says that his number one priority is to ensure that 38 stays afloat, but that the state government won't be providing any additional funds to the company beyond the current agreement. "It's time for them to go out and get private capital funding," Chafee said. "That's the deal. It's a generous deal, but stick to it."

In a rather odd aside, Chafee also blurted out a release date for "Project Copernicus," the MMO the developer has been working on since 2006. He believes that the game is due June 2013.

#1 Posted by Alex (2401 posts) -

At a press conference held today, Rhode Island governor Lincoln Chafee announced that 38 Studios had successfully paid the $1.125 million payment it had previously defaulted on when it missed its original May 1st deadline.

38 had previously attempted to make the payment yesterday, but the check was refused by the Rhode Island Economic Development Corporation when it was made clear that the studio had insufficient funds to cover the payment.

Chafee said that the total $49 million thus far loaned to the studio has reportedly been spent, though an auditor will be brought in to ensure that is the case. Chafee estimated that 38 is currently spending around $4 million a month in total expenses.

38's next payment due is a $2.6 million payment due on November 1st, which the governor believes will be covered. $12.6 million in full annual debt service will be due in 2013. "That's on their dime," said Chafee.

Chafee says that his number one priority is to ensure that 38 stays afloat, but that the state government won't be providing any additional funds to the company beyond the current agreement. "It's time for them to go out and get private capital funding," Chafee said. "That's the deal. It's a generous deal, but stick to it."

In a rather odd aside, Chafee also blurted out a release date for "Project Copernicus," the MMO the developer has been working on since 2006. He believes that the game is due June 2013.

#2 Edited by SmasheControllers (2553 posts) -

Hope the best for everyone at 38.

#3 Posted by Phatmac (5730 posts) -

This won't end well..

#4 Posted by Hot_Karl (3309 posts) -

June 2013? Uh ok.

#5 Posted by Mars (310 posts) -

Good luck 38!

#6 Posted by Rincewind (258 posts) -

Everyone and their mum seems to be making a sub-par mmo these days.

#7 Posted by Alex (2401 posts) -

@VinceNotVance: Yeah, that sounds like a really sketchy temp date someone told him to get him to stop asking questions, if you ask me.

#8 Posted by MeatSim (10942 posts) -

Want a release date for a game? ask your governor.

#9 Posted by SmilingPig (1341 posts) -

If I would be an employee of 38, I would look for something else right about now.

#10 Posted by benjaebe (2784 posts) -

Something tells me Copernicus will not actually come out June 2013.

#11 Posted by Xeirus (1371 posts) -

@Alex said:

@VinceNotVance: Yeah, that sounds like a really sketchy temp date someone told him to get him to stop asking questions, if you ask me.

Yup, I feel bad for the employees :/

#12 Posted by freakin9 (1171 posts) -

Well it coulda been worse, he coulda answered "Release Date: How about Never".

Which is probably more factual.

#13 Posted by DiGiTaL_SiN (1790 posts) -

yay for RichieG

#14 Posted by WalkerD (460 posts) -

Jesus fuck, how do you spend four million dollars a month and produce next to nothing? Are they just rolling in big piles of cocaine over there or something?

#15 Posted by jmood88 (399 posts) -

I don't know why anyone thinks that making an MMO is a good idea, especially one in a fantasy universe that barely anyone knows about. Bioware had one of the biggest properties in the world and their game isn't doing that great, what makes the people at 38 think that they'll do any different? The genre can lead to a lot of money but is a lot more likely to kill a studio.

#16 Posted by Daveyo520 (7008 posts) -

That is the kind of hard hitting journalism my governor does.

#17 Posted by nERVEcenter (191 posts) -

I am ready and holding on to my butt.

#18 Posted by wewantsthering (1594 posts) -

$4 million/month for a new studio? That seems...a little crazy considering they haven't even proved themselves yet. I understand that they brought in a bunch of people with experience so they had to pay them a bunch of money, but it still seems a little extravagant considering the games that small indie teams are putting out with little or no budget.

#19 Posted by phrosnite (3518 posts) -

So many years... no new on copernicus whatsoever... did will end bad.

#20 Posted by radioactivez0r (867 posts) -

While the smart idea seems to be for them to get private investments, I wonder if they would actually look at giving them more money; would handing off another $20 million be worse than watching them die a slow death and then having the state be on the hook for the money anyway?

#21 Posted by Scrawnto (2467 posts) -

I'm still flabbergasted that a company that has only released one game to date has hired enough people to run up $4 million in monthly expenses. That could pay for a whole Double Fine game every month! It seems crazy, though I suppose if you think you're going to compete with WoW, then you have to commit to it.

#22 Posted by dr_mantas (2074 posts) -

HUBRIS!

People working there seem cool, but seriously folks...

#23 Posted by Corvak (1173 posts) -

@jmood88: MMOs are the riskiest games in the industry these days.

They should be making more Amalur DLC or a sequel instead.

#24 Edited by alternate (2720 posts) -

$4m a month is not unreasonable for a 300 strong workforce.

300 workers is unreasonable for the debut project of a new studio though.

Should have started smaller and worked up to an MMO.

#25 Posted by mrfluke (5350 posts) -

jesus since 2006 they have been making that damm mmo and we've heard next to NOTHING?

god that mmo is the new duke nukem forever

#26 Posted by hardindr (191 posts) -

Hard to make a game when you don't have the liquidity to pay your employees. I wonder what the RI Dept of Labor plans to do, if someone complained (I view not paying employees for their work as theft).

#27 Posted by Sword5 (150 posts) -

How long until we hear about people leaving?

#28 Posted by AndrewB (7691 posts) -

So look for a 38 Studios Kickstarter coming soon?

#29 Posted by Foggen (900 posts) -

You know, if your number one priority is to keep 38 Studios afloat, then you should be handing them piles of money interest free. I think what you mean is "I'd really like it if we didn't wind up eating this loan guarantee on a default, but there's no way we're throwing more good money after bad."

#30 Posted by freakin9 (1171 posts) -

It does take skill to hire 450 people and have most of them play solitaire and minesweeper all day. You get the feeling Schilling read the part about hiring 450 people, thought it was a little much, but didn't want to say anything because he was going to get gobs of money.

#31 Edited by Phished0ne (2541 posts) -

I wonder what kind of effect this whole thing will have on states helping out game developers in the future.

@freakin9 said:

It does take skill to hire 450 people and have most of them play solitaire and minesweeper all day. You get the feeling Schilling read the part about hiring 450 people, thought it was a little much, but didn't want to say anything because he was going to get gobs of money.

I donno, Schilling seems genuinely interested in game development. But i think he over stepped by going straight into developing an MMO.

#32 Posted by Pixel_Kaiser (58 posts) -

Seriously, best of luck to 38 Studios and Big Huge Games. This breaks my heart, I wanted them to be a big success.

Did the press release mention how the state is going about keeping them afloat without actually giving them anymore money?

#33 Posted by TadThuggish (913 posts) -

r.i.p. rhode island 1636-2012

#34 Posted by MrRedwine (430 posts) -

So, not that anyone will really care about this, but people seem to think that the MMO is taking place in the same world as Reckoning. Actually, it takes place thousands of years later, so I'm guessing the world will have changed substantially. I doubt it will just be a fantasy setting, probably more like a fantasy/ sci-fi mashup or something.

#35 Posted by BBQBram (2294 posts) -

@Meatsim said:

Want a release date for a game? ask your governor.

I'm calling mine right now about GTA V!

#36 Posted by Hector (3380 posts) -

38 Studios needs to start the biggest KickStarter to date!

#37 Posted by Xeirus (1371 posts) -

@MrRedwine said:

So, not that anyone will really care about this, but people seem to think that the MMO is taking place in the same world as Reckoning. Actually, it takes place thousands of years later, so I'm guessing the world will have changed substantially. I doubt it will just be a fantasy setting, probably more like a fantasy/ sci-fi mashup or something.

I seeeeeriously doubt that, they have concept art on the games wiki, it's classic fantasy.

#38 Posted by CenturionCajun (1461 posts) -

This whole thing makes me sad. I absolutely loved Reckoning and was looking forward to more games in the series. Hopefully this all works out. I could care less about the MMO though.

#39 Posted by jmood88 (399 posts) -

@Phished0ne said:

I wonder what kind of effect this whole thing will have on states helping out game developers in the future.

@freakin9 said:

It does take skill to hire 450 people and have most of them play solitaire and minesweeper all day. You get the feeling Schilling read the part about hiring 450 people, thought it was a little much, but didn't want to say anything because he was going to get gobs of money.

I donno, Schilling seems genuinely interested in game development. But i think he over stepped by going straight into developing an MMO.

It will mean that states will need to have someone familiar with the business if they want to subsidize game development.

#40 Posted by EthanielRain (931 posts) -
#41 Posted by ArbitraryWater (12130 posts) -

This cannot end any way other than poorly. Copernicus would have to be the most exciting "Not a generic fantasy MMO" to receive any sort of serious outside funding and I honestly don't see that happening, considering they haven't even bothered to show it yet.

#42 Posted by Jimbo (10001 posts) -

Governor Lincoln Chafee had this to say:

#43 Posted by Chuddy (20 posts) -

This is why government subsidies fail for industries outside of essential resources like energy, food and mining/oil/whatever. I hope 38 studios does close down and that the detail of the audit are made public. this is like solyndra for vidya games.

#44 Posted by Cretaceous_Bob (528 posts) -

This studio is already turning out the couch cousins looking for change to not shut down and they haven't even released their over-hyped under-performing MMO into the oversaturated market of over-hyped under-performing MMOs.

They're fucked.

#45 Posted by clstirens (847 posts) -

@EthanielRain said:

Eh, it isn't like RI could've used the money for something else.

True, but the hope was to bring taxable business into the state in order to help generate funds. I'd say it was poor planning, but ideally it would have brought in more money for things like education.

Pie in the sky and whatnot.

#46 Posted by RedRavN (414 posts) -

Well I guess we know why they refuse to patch reckoning to fix the balance and difficulty issues that keep me from enjoying the game.

#47 Posted by Scotto (1221 posts) -

I feel bad for the employees, but have to wonder how badly the studio was mismanaged for this to happen already. They've released one product. ONE! And it was a reasonably well-received product at that, not a total bomb.

I think Schilling just entered the game industry with stars in his eyes, brought in these big names like Salvatore and McFarlane, hired way too many people, and then didn't know what the next smart step was. And it appears this learning experience may be on Rhode Island's dime.

How do you burn through that much money, with nothing to show for it? KofA:R wasn't even their game from scratch - it was Big Huge Games' game, retooled to fit into the Amalur universe.

At any rate, I bet 38 Studios probably isn't a fun place to work at this morning. Tons of pressure from all directions expecting them to become self-sufficient, and soon. Not to mention everyone looking over their shoulders, waiting for a pink slip.

#48 Posted by theredace (80 posts) -

They're burning through $4 million a month? Are they aware of math? If they're keeping 50% of gross sales on every unit sold (which they're not), AND they sell every game at $60 a pop (which they're not), they'd have to continually sell 133,000 units a month....EVERY month of every year....just to break even. If they release a game every 4 years (which they're not) then every game would have to sell 6.4 million copies....just to break even. Which....wait for it....they're not.

#49 Posted by andygazi (102 posts) -

What about the KoAmular money they have? Do they really not have that much from that game to float them for the next year?

#50 Posted by Sword5 (150 posts) -

What does this say about Scrum?

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