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

Oh, and the governor of Rhode Island just tossed out a release date for "Copernicus."

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.

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113 Comments
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Posted by Portis

The Copernicus MMO is never going to come out, I'll eat my hat if it does. Also, 38 Studios won't make it another full year.

God speed employees of 38 Studios and Big Huge Games.

Posted by Flip175

Good for them for the ambition, but taking on an MMO as a first project seems absolutely insane. Hope they land on their feet one way or another.

Posted by Chris2KLee

I wish all parties luck on this one. It seams like everyone involved only had the best intentions in mind, but as game development has shown before, nothing is guaranteed, especially when it's an MMO.

Posted by Twinblade34

I dont get it, why would they want to make an mmo, seems like the worse possible direction to me, there is no way a mmo based on a completely new universe will have any kind of success.

Posted by NegativeCero

Well I have no faith in Copernicus shipping after this arbitrary release date.

Posted by Trilogy

@Portis said:

The Copernicus MMO is never going to come out, I'll eat my hat if it does. Also, 38 Studios won't make it another full year.

God speed employees of 38 Studios and Big Huge Games.

You know what happened the last time somebody on this website mad a bet about eating hats...

Posted by Diablos1125

Sad, sad news....

Posted by Rhombus_Of_Terror

@BBQBram said:

@Meatsim said:

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

I'm calling mine right now about GTA V!

You'll need to get in touch with the Scottish Government in that case. Send a crate of Irn Bru while you're at it.

Posted by Jolt92

Show your fucking game already

Posted by kiwi_whisker

@theredace: This might just be their current operating costs with addition staff on a contract basis. After said product ships, they would drop down in size.

Still. I don't see them breaking even anytime soon.

Posted by Ghostiet
@Trilogy said:

@Portis said:

The Copernicus MMO is never going to come out, I'll eat my hat if it does. Also, 38 Studios won't make it another full year.

God speed employees of 38 Studios and Big Huge Games.

You know what happened the last time somebody on this website mad a bet about eating hats...

Yeah, he fucking bailed out of that promise. : [
Posted by Video_Game_King

@Alex said:

He believes that the game is due June 2013.

Did he follow that statement with the words "or else..."?

Posted by firecracker22

Their spending 4 million dollars a month?

For something that's never seen the light of day...that's pretty damn crazy. I know games cost money to make, but the fact that nothing's ever even been shown of it. That's crazy.

Posted by BabyChooChoo

@Jolt92 said:

Show your fucking game already

lol I know right. We've been hearing about it for fucking ever and have yet to see a damn thing. The most we've seen is like some 3 year old concept art for a forest or some dumb shit like that.

Posted by NellyK

It's a good time to be in the games business!

Posted by allworkandlowpay

@alternate said:

$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.

I'm going to go out on a limb and say it is unreasonable, seeing as the average salary would need to be $160,000 a year at 38 games. That or the execs are padding themselves to a wholly irresponsible amount.

Posted by Superfriend

They should just show the damn game now. Who knows, maybe it´s awesome and a lot of people/investors are going to give them money.

Nah, it will probably be a WoW ripoff in another fantasy universe.

That will never be released.

Posted by Krakn3Dfx

This sounds like it can only go well.

Posted by LibrorumProhibitorum

Not to shit on dreams but why bother making MMO's? It might be the most ambitious project in the world, but if you're not WoW (or a game by Blizzard) you're not going to stay afloat. It'll turn out to be a waste of resources.

I really do hate to sound pessimistic, but that's just how MMO's are. They don't have the staying power of a Blizzard game.

Posted by umdesch4

So, at $4 million a month burn rate, for the next 12 months until launch, with nothing else on their plate, we've got this game costing an additional $48 million on top of what's already been spent on it since 2006.

For your consideration, here's an interesting recent article on the Top 10 Most Expensive Video Game Budgets.

Even just the $48 million would put it into this list. Yeesh!

Posted by Brackynews

That's a pretty good logo.

Posted by Jazzycola

@theredace said:

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.

I'm pretty sure they were counting on their MMO subscriptions to pay their bills. It's not a matter of selling copies. It's a matter of building a loyal base to squeeze as much money as you can from them. I mean Rift made 100 million dollars in monthly subscriptions in 2011 not to mention what WoW makes even after it's loss of subscribers. I can't blame them for trying. MMO's are a risky venture but it can pay off big time if you're successful.

Posted by Brackynews

@andygazi said:

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

February figures were 330kand it's possibly closer to 1M worldwide now. Even if the publisher received $60 per copy (which they don't), that's not enough. That money has to first cover what's already been invested during years of development. The comment right before yours covered it actually. ;)

@Pixel_Kaiser: That is addressed in the article. They still have funding but they can't go back to the well.

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,"

Posted by Sweetz

@jmood88 said:

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.

Everyhing may look like it's doing poorly compared to WoW, but it doesn't take that many subscribers to be profitable. Eve Online has been running for ages and only just hit 400,000 subscribers this year and that's enough for them to support a company size of 350-400 people. Even at their reduced number of 1.3 million subscribers, I'm sure SWToR is still raking in a ton of cash.

That said, I generally agree anyway. ToR has Star Wars, and I'm sure that CCP Games didn't start as a company that had $4mil/month operating costs. People aren't looking for another fantasy MMO, unless perhaps it has furries and lolis :)

Posted by dream431ca

Bad loans are Bad.

Posted by jaycrockett

@Sword5 said:

What does this say about Scrum?

I use Scrum at work. It's just a process, it's not magic. Honestly I don't know how you could use Scrum on an MMO, it's too big. At any rate they should have a lot things to show off at this point. My guess is requirements have changed wildly on this project. (Chasing the latest MMO trends). It doesn't matter how effective your dev team gets if you have to scrap it all every 6 months. (See Duke Nukem)

Posted by admanb
@EthanielRain said: 

What makes the videogame industry so different? Why are the people at 38 studios still working, when they didn't get paid? Are the opportunities so limited that it's acceptable? Have they been promised greater rewards, and they believe the company will succeed enough to deliver? I just don't get it...why hasn't this company been looted by it's employees yet?? :O)

A big part of it is that people get heavily invested in creative projects, especially ones they've been working on for upwards of six years. I would also guess that the majority of their employees aren't supporting families and/or aren't living month-to-month.
Posted by familyphotoshoot

ABANDON SHIP ABANDON SHIP

Posted by andygazi

@Brackynews: Thanks, totally missed the comment right above lol

Posted by alternate

@allworkandlowpay said:

@alternate said:

$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.

I'm going to go out on a limb and say it is unreasonable, seeing as the average salary would need to be $160,000 a year at 38 games. That or the execs are padding themselves to a wholly irresponsible amount.

The calculation is not that simple. The wage bill alone is not $4m a month. Even if you included things like health insurance in the wage bill, it is the infostructure for 300 employees that eats cash. As a bare minimum they need to office all those ppl with the IT, facilities and utilities that that entails. I bet the 300 figure doesn't even include contracted workers provided by a third party such as security and cleaning.

Online
Edited by Uberjannie

This is so silly. Spending so many years making an MMO, while in that time they could have made hundreds of XBLA/PSN games which would have made them a profit.

What moron makes an MMO as their studios first game? Should have gotten the Darwin award for company CEO's.

*edit*

For this reason, I will not buy the game even if it is entertaining. Tbh, the MMO market is full.

Posted by TheHakku

I thought the MMO was their second game.

Posted by HansKaosu

Turbine is recruiting next week in Rhode Island.. *stab, twist knife*

Posted by DrDarkStryfe

It makes a bit of sense that they punped out DLC so fast for KoA.

Posted by crithon

4 million a month, man that does seem a bit excessive. I'm trying to think hard where that money could be going to? In studio sound design work? Motion Capture studios? It doesn't seem impossible to at least manage this down to something reasonable.

Posted by edb87

"Eek" is the only word I can think of...good luck!

Posted by GaspoweR

@alternate said:

@allworkandlowpay said:

@alternate said:

$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.

I'm going to go out on a limb and say it is unreasonable, seeing as the average salary would need to be $160,000 a year at 38 games. That or the execs are padding themselves to a wholly irresponsible amount.

The calculation is not that simple. The wage bill alone is not $4m a month. Even if you included things like health insurance in the wage bill, it is the infostructure for 300 employees that eats cash. As a bare minimum they need to office all those ppl with the IT, facilities and utilities that that entails. I bet the 300 figure doesn't even include contracted workers provided by a third party such as security and cleaning.

Agreed, having 300 employees for a company that has yet to make a hit game does seem A LOT and I'm sure that 4 million a month is probably something that amounts to also hiring contract workers and such.

Online
Posted by wafflez

What do you people expect them to pay Rich Gallup?  With peanuts?!

Edited by coaxmetal

man if they were making a real game instead of am MMO they might have a chance. They are fucked though.

Posted by Cybexx

Well its good that they didn't default on their loan. As with everyone else I'm concerned about the health of the Subscription MMO market. MMOs are not cheap or fast to build. WoW was $100 million, SWTOR was about $250m.

Edited by Korolev

4 million a month? That's a bit on the extreme end of things. And I'm not sold on the June 2013 date - they'll release an MMO in a year from now? Making MMOs takes a ton of time, and without extensive marketing, they fail. So either they've done something monumentally stupid - make an MMO in secret without telling anyone or advertising it - or they barely started work which means there's no way they'll get a good MMO out in a year's time.

Me thinks someone is trying to string along some investors and partners until it's time to jump ship. The 2013 date was probably told to him and him alone and was just a false date to deceive him - a State Governor's not going to know much about video games, so he probably believed it.

Posted by Matoyak

@Korolev: I believe they've been in development on this since 2007ish. Could be wrong, but that's the numbers I remember hearing, and heard a podcast recently that said similar.

Posted by vinsanityv22

They seem like they got through by the skin of their teeth here. I certainly hope they can stay open. I hate to say it, but perhaps they should fire a bunch of people? That studio is unbelievably large for a new developer; Curt Schilling really jumped into the deep end of the pool right there. And while the sentiment is admirable, it clearly is too much of a strain. Roll back into a medium sized studio for awhile, bring down operating costs (another article said they estimate it to be $4 million A MONTH), and build back up to a nice, stable place. Than hire people back when you're good.

****. I really wanted to wait until Reckoning came down to $30 (it came out in February. There's no reason it should still be $50 New on Amazon), but I may pick up a copy this weekend regardless just to feel like I'm helping them out in some small way. I really dig the art they do; so much color and style. It's the exact opposite of boring, desaturated, "grounded" fantasy like in Skyrim.

I hope they are good. Stay open, 38 Studios!

Posted by Osiris

@Korolev said:

4 million a month? That's a bit on the extreme end of things. And I'm not sold on the June 2013 date - they'll release an MMO in a year from now? Making MMOs takes a ton of time, and without extensive marketing, they fail. So either they've done something monumentally stupid - make an MMO in secret without telling anyone or advertising it - or they barely started work which means there's no way they'll get a good MMO out in a year's time.

Me thinks someone is trying to string along some investors and partners until it's time to jump ship. The 2013 date was probably told to him and him alone and was just a false date to deceive him - a State Governor's not going to know much about video games, so he probably believed it.

They have been working on the MMO since 2006, read the whole article:) Far before the single player.

Posted by divakchopra

3 strikes your out shilling. better pay your employees

Posted by dropabombonit

I love how people covering games have NDAs that if they break the PR would be on their ass but people like voice actors and politicians just say what they want and don't get in trouble

Posted by ArsenalFan
@dropabombonit Maybe that's because Lincoln Chafee is a governor - covering video games isn't his job
Posted by NicksCorner

@dropabombonit said:

I love how people covering games have NDAs that if they break the PR would be on their ass but people like voice actors and politicians just say what they want and don't get in trouble

I bet if a voice actor kept spilling the beans that the job list would get real short real fast.

Games "journalism" is a kinda strange term, so rarely do we get stories that the publishers dont want. I think you are overestimating the legal value of a NDA.

Posted by Enigma_2099

WHERE... DID ALL THAT MONEY.... GO?

Posted by LikeaSsur

It's sad to see a company go under, especially when they haven't been given a chance to shine yet. All they have is Kingdoms of Amalur, and that's pretty good for a first forray into the gaming world.

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