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

People throw money on pipe dreams all the time, it's not that surprising. I wonder how close they actually are to putting out this MMO, the fact it's still in the "codename" stage probably means not very close.

As a Rhode Islander who already gets taxed to hell and back, and really hated KOA, I hope he says no. WE ARE A BROKE STATE.

It's important to note that they were given 75 million TWO YEARS AGO by rhode island. Isn't like this is over a 5 year span. They somehow managed to blow through 75 in two years.

@DrDarkStryfe said:

It is becoming increasingly tough to be a AAA developer, especially one that is starting from scratch.

If starting from scratch, one probably shouldn't reach for the top (especially if the money isn't already there). A ladder or some stairs would have been much more appropriate in the case of 38 Studios. At least they would have had proper footing.

@paulwade1984 said:

Wow. 38 studios won't even comment on the state of Copernicus to save the company. That's freaking insane.

38 Studios does not comment on rumors or speculation (seriously that is messed up).

Ah, it couldn't have happen to a bigger asshole.

@Autechresaint said:

It's important to note that they were given 75 million TWO YEARS AGO by rhode island. Isn't like this is over a 5 year span. They somehow managed to blow through 75 in two years.

They've so far received $49.8 million of the loans, and have 379 employees. Unless I forgot to carry a one, that figures out to be about $65,000 a year per employee. I have no way of knowing what the actual situation is at 38, but those numbers don't seem too out of whack.

@PopeShabooda: Also Dell's. ha ha local references.

@Daveyo520 said:

@PopeShabooda: Also Dell's. ha ha local references.

Feels like a concert, when the performer drops local references to get the crowd on their side. "Earlier today I was driving down Route 10 to Walt's Roast Beef..."

@DrDarkStryfe said:

It is becoming increasingly tough to be a AAA developer, especially one that is starting from scratch.

I'd say its becoming increasingly more evident that spending a high 7 figures on MMO development, especially if you only plan to iterate on WoW, is a bad idea. Not that it wasn't already obvious.

@PopeShabooda said:

@Autechresaint said:

It's important to note that they were given 75 million TWO YEARS AGO by rhode island. Isn't like this is over a 5 year span. They somehow managed to blow through 75 in two years.

They've so far received $49.8 million of the loans, and have 379 employees. Unless I forgot to carry a one, that figures out to be about $65,000 a year per employee. I have no way of knowing what the actual situation is at 38, but those numbers don't seem too out of whack.

How do so many employees produce so little? If I remember correct, both Skyrim, Gears and Uncharted were made with 100 people or less while God of War and Dead Space were closer to 200. That probably doesn't include marketing and all that jazz, but that stuff would probably be handeled by EA anyway, wouldn't it?

I can't imagine any studio working on an MMO that has a monthly subscription is too happy about their outlook at the moment. I know I'd never invest a cent in a company that was doing so, except maybe for Blizzard's next game (and that includes that boring-looking Elder Scrolls MMO).

Contractually obligated to hire 450 employees took me aback too when it was first mentioned. God I hope at least some of those people are sex workers or drug pushers.

Hell a couple weeks ago I would've been surprised if you had told me 38 studios had more than 38 employees.

I sure wish I could see the game so I knew how to feel about this, because the part of me that feels bad is at odds with the part of me that hears MMO and thinks yet another god damned WoW (Everquest?) clone. Both parts unfortunately feel like "why should they be given any more money?" Where's the point where cutting your losses is better than making the problem worse?

Maybe if they would actually officially announce their totally-not-yet-another-generic-fantasy MMO, they wouldn't be in this situation, now would they? Actually, scratch that. As long as they can pretend that Copernicus isn't going to be yet another Massively Multiplayer game in the style of the last 10 years they still can get people to theoretically care.

@Autechresaint said:

75 Million. Let that sink in. 75 million for an mmo that never came to fruition and a stale single player RPG.

I heard it was 775 million...

I'd always rather see people be successful rather than fail, but seriously, this looked like a boondoggle from day 1. I just hope they talk with the public about where mistakes were made, so others can learn from them.

The 75 million dollar financing was received sometime between July and November 2010, 22 months ago at the most.

We know that they have less than 450 employees, because they haven't met that milestone, but assuming they had 450 employees the entire time, and completely ignoring any revenue generated from KoA Reckoning(not an insignificant amount of money), they would have to had paid out an average annual wage of over $90,000 per employee per year in order to blow through all that money, I know there are other costs involved, but wages are the majority in companies like this and it seems crazy that they would have been able to spend that much in so short an amount of time.

The repayment frequency of the loan would have a huge impact on this, if they have been paying that back monthly since day one, that's a big chuck of change...

@CH3BURASHKA said:

@Autechresaint said:

75 Million. Let that sink in. 75 million for an mmo that never came to fruition and a stale single player RPG.

I heard it was 775 million...

I heard it was 7775 million...

@Kidavenger: Actually, that's pretty reasonable.

50K-80K salary + employer provided insurance + 401K + soft benefits + material costs(workstation, office lease, sticky notes).

The cost of most game development comes from having to pay a shit ton of people a solid professional wage for a long time. The longer the development takes, the more all those costs get multiplied. If this thing is off track, they could be in massive debt already with an endless downhill slide in front of them.

@bugmeyer: Ya I was just thinking about it some more, they have been paying this loan back monthly, probably from the start so that would bring the wages down a lot, I did make a lot of outrageous assumptions through, re no revenue from Reckoning and they are somewhere between 160 and 450 employees, probably a lot closer to the lower end of that scale as many of those 450 will be csr's/tech support once the mmo is out.

For the state of states in this country I don't think Rhode Island has the fund to toss around money at things like this. Sure, it bring jobs but most of the states in the country are broke. It is quite sad.

@Kidavenger said:

@bugmeyer: Ya I was just thinking about it some more, they have been paying this loan back monthly, probably from the start so that would bring the wages down a lot, I did make a lot of outrageous assumptions through, re no revenue from Reckoning and they are somewhere between 160 and 450 employees, probably a lot closer to the lower end of that scale as many of those 450 will be csr's/tech support once the mmo is out.

Here's what I'm finding on the actual numbers, courtesy of the local news. First, the loan:

38 Studios had received $49.8 million in cash from the loan as of March 15, according to a disclosure notice the company sent to bondholders that was obtained by WPRI.com. Another $23.4 million was put into a Capital Reserve Fund and a Capitalized Interest Account, with the rest used to pay for floating the bonds.

And on the employees:

The disclosure notice said 38 Studios employed 379 full-time workers as of March 15, with 288 of them in Providence and the rest at its other studio in Maryland. The company also reported 34 full-time contractors and eight interns. The company listed 18 job openings on its website as of Monday evening.

Also note that the financing was only for the MMO, and was separate from Reckoning:

38 Studios released its first game – “Kingdoms of Amalur: Reckoning” – in February to positive reviews and decent sales. But the taxpayer-backed loan is actually funding its other project – “Project Copernicus,” a massively multiplayer online game that was first targeted at a September release but has remained under wraps

@CH3BURASHKA said:

@Autechresaint said:

75 Million. Let that sink in. 75 million for an mmo that never came to fruition and a stale single player RPG.

I heard it was 775 million...

They were having the launch at the Staples Centre.

@Grissefar said:

@PopeShabooda said:

@Autechresaint said:

It's important to note that they were given 75 million TWO YEARS AGO by rhode island. Isn't like this is over a 5 year span. They somehow managed to blow through 75 in two years.

They've so far received $49.8 million of the loans, and have 379 employees. Unless I forgot to carry a one, that figures out to be about $65,000 a year per employee. I have no way of knowing what the actual situation is at 38, but those numbers don't seem too out of whack.

How do so many employees produce so little? If I remember correct, both Skyrim, Gears and Uncharted were made with 100 people or less while God of War and Dead Space were closer to 200. That probably doesn't include marketing and all that jazz, but that stuff would probably be handeled by EA anyway, wouldn't it?

EA was only involved in Reckoning. 38 has been completely on their own with the MMO.

Not sure if we need more number thrown around here, but I thought this was interesting from wcvb.com:

Under legislation passed in 2010, the General Assembly created a program giving the economic development agency the authority to back up to $125 million in loans to businesses promising to create permanent, full-time jobs.

Maybe it's me, but doesn't setting aside better than half that for one company seem like a bad idea?

That guy on the front page is working on 3 computers at once, they don't need more money, they need better financial advice.

@sarahsdad said:

Not sure if we need more number thrown around here, but I thought this was interesting from wcvb.com:

Under legislation passed in 2010, the General Assembly created a program giving the economic development agency the authority to back up to $125 million in loans to businesses promising to create permanent, full-time jobs.

Maybe it's me, but doesn't setting aside better than half that for one company seem like a bad idea?

From an objective perspective, yes, it is a bad idea. But if you know Rhode Island, the fact that they were a) giving the money to any kind of emerging technology company, and b) being at least somewhat transparent about it, is a pretty big improvement over how things are usually run in the state.

If you don't live in or around Rhode Island, it's really hard to fathom how corrupt and messed up the state government really is.

WAIT. Curt Shilling has been making video games since 2006?

@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

God, local press is so awful.

Best of luck to both, as a H.P. Lovecraft fan I have a dire fascination/love for Rhode Island & really enjoyed the stuff so far from 38 Studios.

I really hope that they can climb out of this hole. I really enjoyed Reckoning and think that it could be a great companion piece to the upcoming MMO.

@Kevin_Cogneto: Not a surprise if you follow Schilling on Twitter. He seems to be on the libertarian/conservative scale of denying global warming among other things for the sake of "personal responsibility" or some such nonsense while hypocritically benefiting from the government.

Strange for a governor to decide to finance a video game studio. Shouldn't he know that studios are shaky. He should have looked at some other studios that recently went down and taken a hint.

@Divina_Rex said:

Strange for a governor to decide to finance a video game studio. Shouldn't he know that studios are shaky. He should have looked at some other studios that recently went down and taken a hint.

To clarify, the Governor was against it the project. It was pushed by the Rhode Island Economic Development Corporation. From the Providence Journal:

While Chafee strongly criticized the idea of the loan guarantee for the former Boston Red Sox pitcher's company while he ran for office in 2010, he has since said it's important now to work with it and make sure it succeeds.

This blows my mind. That shit is crazy!

@PopeShabooda

Damn shame they went through with it. They should be looking for solid investments especially in these trying times.

It probably would have been smarter for all parties involved to have this meeting after E3 in order to gauge the actual excitement around the product. That is unless 38 wasn't planning on showing anything at E3. In which case, I would be concerned with how far along the MMO really is at this point.

So, from what i saw on other sites, it looks like if the studio goes down, than Rhode Island gains ownership of Amalur. If this is really the case, i propose that they rename their state to Amalur, since Rhode Island is well... a bland name, and it would be kind of cool to have a state called Amalur... or Morrowind...

let me give a big FUCK YOU to that reporter saying Kurt was "running away"

They don't deserve anymore money. Look, they got 75 million dollars which will add up to around 200 million by the time the loan is paid off in 2020 because of interest rates. All of this money has been spent on development of the MMO they keep talking about but absolutely nothing has been seen of it. They were supposed to hire 450 employees as well and they haven't even hit that mark.

I didn't have sympathy for Silicon Knights and I don't have sympathy for these people. I feel sorry for the taxpayers that have to front the bill for a pile of idiots not knowing how to run their business.

That video was surreal. Since this delt with video games I kept expecting something wacky to happen, like the mega64 guys to jump out or something. Then I would come back to the realization that these were real people asking real questions over a real situation.

@PopeShabooda said:

[snip]

Also note that the financing was only for the MMO, and was separate from Reckoning:

38 Studios released its first game – “Kingdoms of Amalur: Reckoning” – in February to positive reviews and decent sales. But the taxpayer-backed loan is actually funding its other project – “Project Copernicus,” a massively multiplayer online game that was first targeted at a September release but has remained under wraps

This is interesting: there was a target release date for this past September (or September 2012) for Copernicus? Where did the reporter pull that from (did they cite anything)?

I ask because I hadn't heard of any prospective dates, release or otherwise, for anything relating to Copernicus, although I've not been paying close attention. Just curious where that mention came from.

Thanks for looking more into this and posting your findings.

I'm really perplexed as to why they're still so stodgy about withholding information about Copernicus, even with the situation they're currently in.

This sucks and i hate to seen anyone lose their job, but this is what gets people in trouble all the time spending money they don't have or borrowing they can't pay back. And betting the repayment of the loan on a unproven game and future game is just stupid. And i really hope they don't give them anymore, and sucks that the states going to eat the 75m loan.

@gamekata said:

@PopeShabooda said:

[snip]

Also note that the financing was only for the MMO, and was separate from Reckoning:

38 Studios released its first game – “Kingdoms of Amalur: Reckoning” – in February to positive reviews and decent sales. But the taxpayer-backed loan is actually funding its other project – “Project Copernicus,” a massively multiplayer online game that was first targeted at a September release but has remained under wraps

This is interesting: there was a target release date for this past September (or September 2012) for Copernicus? Where did the reporter pull that from (did they cite anything)?

I ask because I hadn't heard of any prospective dates, release or otherwise, for anything relating to Copernicus, although I've not been paying close attention. Just curious where that mention came from.

Thanks for looking more into this and posting your findings.

Can't trace where they're getting it from, but this article , posted in August of 2010, seems to imply that they're confusing Copernicus and Reckoning.

For those interested in the specifics of the loan arrangement, this link has a lot of details, including the following:

• 38 Studios will not receive the entire loan amount at once. The company will receive the funds on a staggered basis as it meets certain relocation, job creation and product development milestones.

• 38 Studios is subject to a job shortfall penalty fee of $7,500 per year for each of the 450 jobs it has agreed to bring to Rhode Island.

• 38 Studios will offer all of its assets as collateral to the state. These assets include, intellectual property, licenses, licensing fees, distribution and publishing contracts, receivables, equipment, hardware, software and work product.

• 38 Studios will offer all of its assets as collateral to the state. These assets include, intellectual property, licenses, licensing fees, distribution and publishing contracts, receivables, equipment, hardware, software and work product.

• Should 38 Studios relocate the company or any substantial portion of its operations outside of Rhode Island, it would constitute as a default on the loan in which case the company’s debt and related job shortfall penalty fees would become immediately payable, including any outstanding costs and expenses incurred by the RIEDC.

@PopeShabooda said:

@gamekata said:

This is interesting: there was a target release date for this past September (or September 2012) for Copernicus? Where did the reporter pull that from (did they cite anything)?

I ask because I hadn't heard of any prospective dates, release or otherwise, for anything relating to Copernicus, although I've not been paying close attention. Just curious where that mention came from.

Thanks for looking more into this and posting your findings.

Can't trace where they're getting it from, but this article , posted in August of 2010, repeats the September 2011 release date twice.

Hrm. It seems that article (written in August 2010) cites September 2011 (twice, as you mention; once in a caption of a marketing graphic) for Kingdoms of Amalur: Reckoning, not Copernicus. It did say this, though, of Project Mercury (Copernicus's original code name, apparently):

Copernicus has been in development since mid-2006, when Schilling founded 38 Studios, then known as Green Monster Games. Originally called Project Mercury and slated for release late this year, it has been delayed.

So it would seem whoever wrote the recent article misread this one, but apparently the proto-Copernicus project was originally thought to ship in late 2010, having been in development since 2006...

EDIT: Also worth mentioning, though not directly relevant to Copernicus, is that KoA:R actually shipped on February 7, 2012, according to Giant Bomb's data, not in September 2011.

meeting aint good when there is an evacuation map behind the presenters.

The ancient dream of Copernicus charting economic revival in Rhode Island as EVE Online did for Iceland seems too distant now.