38 Studios Meets With Rhode Island Governor, Asks for More Money [UPDATED]

I suppose the hard part to digest is he made tens of millions during his baseball career. Surely he can man-up and pay the $1.5 million. It would be nice if we had film and game tax credits here in Idaho.

Schilling's been known to be an avid MMO/RPG fan for a long time. Maybe he went into this with his fan hat on a little more than his business hat. KOA was decent, but I don't see how you can base an entire product line off of fare this typical. Now an MMO? That's never been done before. Even Bioware backed by EA and Lucasarts isn't really driving the car into the garage with that one. It seems like his whole business model is kind of cartoony, hiring MacFarlane and Salavatore and making RPGs sounds good and all, but are they really the right guys to make a game that makes money? The whole thing looks like what would happen if you put a 15 yr old fanboy in charge.

@BiG_Weasel said:

@ep_driver said:

@PopeShabooda said:

Just to shed a little more light on the situation, the State of Rhode Island did not loan the money to 38 Studios, but arranged for banks to make the loans, which were then guaranteed by Rhode Island. If 38 Studios is unable to keep up with its payments, the State of Rhode Island will then be forced to take on the debt.

As a resident of Rhode Island, and a developer, this news makes me very sad. I hope they can work something out, but it doesn't sound very promising.

Thanks for the input. As a former government employee I was puzzled as to how a state invested tax payer money into a private company, but your info shed light on that topic. I'm surprised that they were even able to get involved in the manner they did, potentially having to take on the bad debt. That's gnarly!

This is no different that what Mitt Romney did at Bain Capital, or the Federal Reserve did under TARP or the "bailouts" issued by Obama. This is gov't picking winners and losers, some with bad business practices. Better that they had failed on their own, rather than losing that kind of taxpayer money.

If they had tried, and failed on their own, they would have done so somewhere else. The loan arrangements were made in an effort to bring jobs to Rhode Island, which are needed pretty badly (especially tech jobs of any kind).

If you live in or know Rhode Island than you'd know that this situation, while it has not panned out, is a pretty big improvement over how things usually go in the state. I can not overstate how corrupt and messed up Rhode Island is. With this project, the lost money isn't too crazy (we've spent more on "fixing" a single bridge in Pawtucket, which has been "in progress" for five years), it brought tech jobs to the state, and the dealings have been fairly transparent.

Honestly, in discussions about this, I've seen much more vitriol from people elsewhere than I have from actual Rhode Island taxpayers.

@ep_driver said:

@PopeShabooda said:

Just to shed a little more light on the situation, the State of Rhode Island did not loan the money to 38 Studios, but arranged for banks to make the loans, which were then guaranteed by Rhode Island. If 38 Studios is unable to keep up with its payments, the State of Rhode Island will then be forced to take on the debt.

As a resident of Rhode Island, and a developer, this news makes me very sad. I hope they can work something out, but it doesn't sound very promising.

Thanks for the input. As a former government employee I was puzzled as to how a state invested tax payer money into a private company, but your info shed light on that topic. I'm surprised that they were even able to get involved in the manner they did, potentially having to take on the bad debt. That's gnarly!

This is no different that what Mitt Romney did at Bain Capital, or the Federal Reserve did under TARP or the "bailouts" issued by Obama. This is gov't picking winners and losers, some with bad business practices. Better that they had failed on their own, rather than losing that kind of taxpayer money.

@PopeShabooda said:

Just to shed a little more light on the situation, the State of Rhode Island did not loan the money to 38 Studios, but arranged for banks to make the loans, which were then guaranteed by Rhode Island. If 38 Studios is unable to keep up with its payments, the State of Rhode Island will then be forced to take on the debt.

As a resident of Rhode Island, and a developer, this news makes me very sad. I hope they can work something out, but it doesn't sound very promising.

Thanks for the input. As a former government employee I was puzzled as to how a state invested tax payer money into a private company, but your info shed light on that topic. I'm surprised that they were even able to get involved in the manner they did, potentially having to take on the bad debt. That's gnarly!

Late night talk show monologue: "Did you guys hear about this? World Series-winning Red Sox pitcher Curt Schilling's video game company 38 Studios is in trouble. My question is: do you really need that many studios, Curt? Can't you get rid of a couple of them?"

*rimshot*

This is pretty shameful - reckoning was an okay game but who gives a fuck about another fantasy mmo?

@Jason_Bourne said:

What did the state expect? They should have known this was a long term investment. 38 should've made it more obvious they wouldn't be making money until that MMO came out. THey should've pumped it out faster. Or better yet, they shouldn't have tried to make a game in the most genre with the most expensive and time consuming development out the gate. They should've made 3 or 4 games before even starting on that MMO.

Exactly.

What did the state expect? They should have known this was a long term investment. 38 should've made it more obvious they wouldn't be making money until that MMO came out. THey should've pumped it out faster. Or better yet, they shouldn't have tried to make a game in the most genre with the most expensive and time consuming development out the gate. They should've made 3 or 4 games before even starting on that MMO.

@Video_Game_King said:

So are Rhode Island and 38 Studios in boyfriend/girlfriend territory or father/son territory? (Please don't say both.)

I was thinking more of a Pimp/Whore territory.

So... when is the Kickstarter page launching?

@Kevin_Cogneto said:

@Alex, I would've expected you of all people to mention this aspect of the story:

There can be no question our country is in the worst economic crisis of our lifetimes. I also think there can be no question that it falls on us, the individuals, to find a way out of our own personal crisis." - Curt Schilling on the subject of government stimulus packages, February 2011

Haha, what a jackass.

Curt Schilling is a total douche, but I can't help but feel a bit sorry for him...his heart seemed to be in the right place with this, but obviously he just had no idea what he was getting into. Running a multi-million dollar entertainment company making some of the most complex types of software out there isn't quite the same thing as throwing a stitched hunk of leather past guys with sticks.

As bad as Schilling's mismanagement was and as ill-conceived as the state's actions were in guaranteeing the loans, it's nothing compared to the horseshit the banks pulled to get us into this entire mess, so maybe the state should tell the banks that they get to eat the meal. It would be deliciously ironic for the banks to cry foul at being defrauded.

That video was brutal.

@Herrdoktor said:

Anyone who is surprised by what is going on with this whole issue is obviously not from New England or has never stepped foot inside RI.

Rhode Island is arguably known as the most corrupt state in the US for a reason.

Too bad 38 Studios didn't know this before moving there.

OR DID THEY????

@freakin9 said:

Time to cut down on the number of studios boys.

Queue name change: 37 Studios

Fast forward one year: Studio wildly successful, prints game manuals on money because they have so much.

I hope rich leaves that horrible place and comes back to work with his buddies at GB in Cali.

I worry about Rich Gallup. :(

@Ujio: Not specifically the gaming industry, this happens between governments and companies all the time. :<

RichieG ;-(

...Damn, that's rough. I hope they pull outta this. I love KOA, and not that'll it help that much, but I'm gonna go pick up the DLC right now as a sign of good faith. :(

Reporters are assholes.

What a sad, sad situation for everyone involved.

Anyone who is surprised by what is going on with this whole issue is obviously not from New England or has never stepped foot inside RI.

Rhode Island is arguably known as the most corrupt state in the US for a reason.

Maybe he's from Fox News.

Man that video makes the situation look really bad, no wonder nobody from 38 Studios has come out to make a statement

Can't stand news reporters like that, they'd roll around in dog crap to get a comment.  
 
Hope everything turns out okay, but things don't look good. 

@MSG:@MSG said:

"Mr. Schilling, you've talked all your life, why don't you turn around and be a man right now?" That journalist is a real piece of work. I don't care how cold a source is being or how big the story is. That's out of line.

That's...rather tangential to the issue at hand.

How the fuck did they expect 38 to pay up? They'd be lucky if they even made a few bucks off reckoning. If they have to be paying millions a month to cover their loans, with no regular revenue, working on an MMO they've never shown to the public... They're fucked. There's no way around it. Everyone involved seems to have made sketchy decisions at best, and in the end the only people on the hook are Rhode Island residents. I mean even in the best of circumstances, they probably have what 18-24 months left of development? The lack of any public information on Copernicus besides "it's an MMO, you're going to love it" should have been kind of telling. You can only say that for so many years before people start to wonder. That goes without even mentioning the state of today's MMO market.

38 studios should ask Giantbomb for more money since GB has a new sugar daddy.

Hopefully Rich and co. land on their feet.

@MSG said:

"Mr. Schilling, you've talked all your life, why don't you turn around and be a man right now?" That journalist is a real piece of work. I don't care how cold a source is being or how big the story is. That's out of line.

Agreed, you can press a question all you want, but resorting to insults is Fox News levels of professionalism.

"Mr. Schilling, you've talked all your life, why don't you turn around and be a man right now?" That journalist is a real piece of work. I don't care how cold a source is being or how big the story is. That's out of line.

@Brackynews: Inevitable rumour is inevitable :P

"Mr. Schilling, you've talked all your life, why don't you turn around and be a me-yan right now."
 
lol

I have a problem with tax payer money being used for this sort of thing. First they use tax payer money to move the company to their state and now they're essentially saying "We need a bailout."

WTF is going on with the gaming industry today?

@Junpei said:

I realize that Rhode Island saw the opportunity to bring jobs and revenue to the state but I can't imagine how they came to the decision to loan a company that much money to set up shop. Especially one that had no proven history or track record. It's amazing to see this much fervor over a game company but the fact that the tax payers have to foot the bill to the tune of however much is remaining on the 72 million dollar loan is insane. If I lived in Rhode Island and knew they made that deal in the first place I would have been flipping out regardless of the fact that it was for an industry I love.

When you follow all of the corruption and horrible decisions made by the Rhode Island state government, this deal really wasn't that bad. It's like watching your meth-addicted brother smoke a joint - Not a great idea, but better than what he was doing.

That money was never going to make it to our failing schools or crumbling roads. It was either 'Move a game company here to create tech jobs', or 'Siphon it to Tony's cousin's brother-in-law's construction company.'

I realize that Rhode Island saw the opportunity to bring jobs and revenue to the state but I can't imagine how they came to the decision to loan a company that much money to set up shop. Especially one that had no proven history or track record. It's amazing to see this much fervor over a game company but the fact that the tax payers have to foot the bill to the tune of however much is remaining on the 72 million dollar loan is insane. If I lived in Rhode Island and knew they made that deal in the first place I would have been flipping out regardless of the fact that it was for an industry I love.

@selbie: Of course. Because internet-famous people aren't allowed to grow, change, or move on with their lives. ;p

Fuuuuuuuuck.

Man, between this and the Activision/Infinity Ward case, it sounds like the Bombsquad will have one helluva annual E3 Mystery!

The idea that Rhode Island invested tax dollars into an MMORPG is the nuttiest thing I'm probably going to hear this year.

I find myself mostly exceedingly interested at this stage in 38 Studios financials, the confidential financial status and projections mentioned in both the short press conference included (in part) in the video and in the official statement. I have yet to really dig into the terms of the loan/guarantee, but if they were making monthly payments up until May 1, and this story broke yesterday or Monday, that's half the month gone that Rhode Island hadn't been paid back. One would assume Rhode Island inquired immediately after May 1 came and went without a payment, if, in the worst case, 38 hadn't notified them in advance that they wouldn't be able to make it.

Which leads me to my second question -- presumably 38 knew somewhere shortly after their April 1 payment that they would not have enough liquid cash or float (if float is even applicable to repay the loan) to pay the May 1 payment, so when did they share this information with Rhode Island? And that's presuming (on my part) that 38 knew shortly after April 1 at the worst -- that is, that's the latest I'd expect 38 to know, usually companies have their financials current for at least the next quarter ending, especially with long-term ongoing repayments. Depending on their fiscal calendar, and how they were accounting for revenue from KoA:R, they should have known much earlier than that.

Rich needs money.

@gamekata said:

While doing some light trawling for other related news tidbits on this story, but not expecting to find much other than what's already been covered, I just came across this:

38 Studios CEO on indefinite leave

PROVIDENCE – 38 Studios LLC CEO Jennifer MacLean has taken an indefinite leave of absence from the video game design firm, company officials confirmed Wednesday.

Chief Operating Officer Bill Thomas said in a brief phone conversation that he did not know when MacLean would return and declined to discuss the reasons behind her time away from the company other than that it was her choice.

“I’m not sure when she will be back,” Thomas said. “It’s her decision, and I cannot discuss it.”

[...]

MacLean was hired to run 38 Studios after serving at Comcast as vice president and general manager responsible for games. She has also worked at AOL and Microprose Software.

EDC officials confirmed that MacLean was not present at the lengthy meetings with the company Wednesday morning.

MacLean’s Twitter account still describes her as the CEO of 38 Studios and her tweets, the latest coming May 13, make no mention of her leave of absence.

Don't know what else explains such a vague explanation at a time like this besides rats jumping ship.

Man, the way that video was edited made it seem like it was from a movie with the cuts back and forth between the governor and Curt Shilling. It really increased the tension versus if they had just shown the governor's remarks.

Obviously some hard questions have to be asked and some consequences accepted on part of 38 studios and the officials who ok'd the loan, but man, some of those reporters are just DICKS.

This feels like it's going to be on This American Life at some point.

Wow, that video is really unpleasant to watch, feel bad for those guys.