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38 Studios Skips Payroll in Favor of Paying Back State [UPDATED]

Workers go unpaid as the studio works to make its owed $1.125 million payment to the state of Rhode Island.

38 Studios head Curt Schilling being accosted by reporters following yesterday's meeting with the Rhode Island EDC.

Coming on the heels of yesterday's circus-like meeting and press conference regarding the developing situation at 38 Studios, WPRI is reporting that the company is in the process of paying its overdue $1.125 million payment to the Rhode Island Economic Development Corporation, but is doing so at the expense of its own employees.

Current reports state that 38 skipped payroll this week, leaving the more than 300 full-time employees at the company without a paycheck. In addition, a source has told Joystiq that all temp and contract employees had been let go as of this week.

In the wake of the situation at 38, Keith Stokes, the executive director of the RIEDC since 2010 and architect behind the $75 million loan that brought the studio to the state from Massachusetts, has resigned.

38 Studios still has yet to comment publicly on the situation.

UPDATE: Just when you thought this whole thing couldn't get any worse, WPRI now reports that the check 38 Studios reps hand-delivered to the RIEDC has been returned due to insufficient funds.

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267 Comments
Posted by Zaccheus

I hope Big Huge Games can at least survive this mess ok. I'd like to see what they can do after Reckoning.

Posted by CaLe

The guy looks unhealthy. Look at his eyes. Has to be some form of malignant tumor.

Edited by MrKlorox

RIEDC, what the fuck do you think "don't cash this until Monday" means?
 
@CaLe said:

The guy looks unhealthy. Look at his eyes. Has to be some form of malignant tumor.

Seriously? A tumor?! God forbid you ever land a career in your lifetime that causes the slightest bit of stress.
Posted by Cowman

@CaLe said:

The guy looks unhealthy. Look at his eyes. Has to be some form of malignant tumor.

It's not a Tumah!

Posted by Poltergeist13

The games business is vicious. Here's hoping things turn around for 38 studios.....and the many other developers on the brink of going under.

Posted by Icaria

@Kidavenger said:

@DrDarkStryfe said:

I feel even worse for the workers, they are the ones getting the raw end of this.

How so? They can just go and get another job if they are good and completely wash their hands of this, the owners of 38 studios are going to lose all the startup capital they put in to get the company going and will likely be hounded by the state and other creditors for years, and the tax payers of Rhode Island are out however much is still outstanding on the loan. Employees did a shitty job and the game is behind schedule and they get off scott free.

Low-level employees don't decide the scope of projects, where the money goes, or what's expected of them. I sincerely hope you were just being reactionary or a troll and don't actually believe that shit.

More generally, is there any way as gamers/consumers that we can influence the industry so that screwing over workers becomes unacceptable? We see these stories again and again but so much of it is after the fact and about the only thing I can think of that I can do as a consumer (boycott) doesn't seem like it would help devs, either. Even with solvent dev houses, you hear stories about insane overtime and people sleeping at desks.

Posted by reverendericd

Having worked for a company that almost had to miss payroll because of debt (but didn't and has since recovered) I can tell you this... Once you miss payroll you are pretty much done. Most employees can't afford it and will immediately resign and look for other work. This is especially troubling for me as a good friend of mine is an encounter designer at 38 :(

Posted by Kidavenger
@Icaria

@Kidavenger said:

@DrDarkStryfe said:

I feel even worse for the workers, they are the ones getting the raw end of this.

How so? They can just go and get another job if they are good and completely wash their hands of this, the owners of 38 studios are going to lose all the startup capital they put in to get the company going and will likely be hounded by the state and other creditors for years, and the tax payers of Rhode Island are out however much is still outstanding on the loan. Employees did a shitty job and the game is behind schedule and they get off scott free.

Low-level employees don't decide the scope of projects, where the money goes, or what's expected of them. I sincerely hope you were just being reactionary or a troll and don't actually believe that shit.

More generally, is there any way as gamers/consumers that we can influence the industry so that screwing over workers becomes unacceptable? We see these stories again and again but so much of it is after the fact and about the only thing I can think of that I can do as a consumer (boycott) doesn't seem like it would help devs, either. Even with solvent dev houses, you hear stories about insane overtime and people sleeping at desks.

It's not that I don't feel bad for the workers, I'm just sick of people saying poor workers and fuck everyone else.

The workers are the day to day operators at the company and directly responsible for its failure yet somehow hold the least responsibility.

This it a terrible situation for all involved, not just the employees .
Posted by G0rd0nFr33m4n

I don't have any love for bad companies. If you are a company, and end up in a situation were you suck up huge amounts of resources and produce little to no products, you should and other people should ask "should they be a company"?

They are not the first company to bite off more than they can chew, and they won't be the last, but yeah, if 38 studios goes under, I won't be shedding any tears. Financial responsibility is what a good company should strive for and is a lost art form as of late, don't feel sorry for these people.

Posted by Korolev

Sad. They bit off more than they could chew. They made a decent game, but if you promise someone the moon and only give them Mt. Everest, they aren't going to be too happy.

Kingdoms of Amalur sold well enough - but not well enough to save the company. That's tragic. Hopefully they can find new jobs elsewhere - after all, they have some skills.

Posted by dr_mantas

Reckoning has almost nothing to do with any of this. If that game was the second coming of Jesus it wouldn't have saved them from unbridled ambition.

You don't just make MMOs for six years without anything to show for it. Especially as the first game you make... ever.

It's sad but it's also a good lesson.

Posted by Binman88

@G0rd0nFr33m4n said:

I don't have any love for bad companies. If you are a company, and end up in a situation were you suck up huge amounts of resources and produce little to no products, you should and other people should ask "should they be a company"?

They are not the first company to bite off more than they can chew, and they won't be the last, but yeah, if 38 studios goes under, I won't be shedding any tears. Financial responsibility is what a good company should strive for and is a lost art form as of late, don't feel sorry for these people.

I agree. I haven't followed this all too closely, but the entire thing sounds very messy and disorganised. Also, knowing the guarantees that were put in place by the government of RI (i.e. the fact that the taxpayers more or less footed the bill on this), the past and ongoing secrecy surrounding their MMO doesn't sit well with me at all. Who's to say they even have anything to show for 6 or 7 years of development and it isn't all just a waste of resources?

Posted by BBQBram

All this economy business is really killing my buzz.

Posted by Mcfart

Too bad for those losing their jobs, but this goes to show that baseball players ≠ businessmen.

Posted by Excast

I like that this company tried to do some big things, but it seems as if they have been living on the hype for far too long now.  Kingdoms of Amalur was talked up as if it was the best fantasy game ever created and what it turned out to be was a perfectly serviceable game that wasn't even in the same league as Skyrim. 

Edited by cmblasko

@Kidavenger: Programmers and artists don't get to decide how funds are allocated.

Posted by Kidavenger

@cmblasko: The game was supposed to come out in September 2012, I suppose the programmers and artists have nothing to do with it not being ready enough to show let alone be in beta which it should be by now.

Posted by boylie

Jesus christ. What a mess.

Posted by TristanSQ

@Kidavenger said:

@cmblasko: The game was supposed to come out in September 2012, I suppose the programmers and artists have nothing to do with it not being ready enough to show let alone be in beta which it should be by now.

It's impossible to say without being on the inside. But, from personal experience, more often than the developers just being terrible at their jobs, it is that management doesn't understand how to manage scope. The developers don't always have the input to control what features are going into the product, so it's easy for schedules to slip as changes to the initial scope happen. Also, if the developers are terrible at their jobs, it is management's duty to either get them trained or replace them with someone competent.

Posted by dropabombonit

After playing Max Payne 3 for 4 hours today this continuing story seems like something from that game without the violence. A bad situation getting worse

Posted by phantomzxro

@G0rd0nFr33m4n said:

I don't have any love for bad companies. If you are a company, and end up in a situation were you suck up huge amounts of resources and produce little to no products, you should and other people should ask "should they be a company"?

They are not the first company to bite off more than they can chew, and they won't be the last, but yeah, if 38 studios goes under, I won't be shedding any tears. Financial responsibility is what a good company should strive for and is a lost art form as of late, don't feel sorry for these people.

What do you call a bad company? Because many companies take risks and don't come out on top. Now i can't speak for this case because the deal that went down here is crazy but other companies have made great financial plans for whatever their goals may be and it just does not happen.

Also I must add what people do you not feel sorry for? The Big CEO cats who took this risky deal or the other 250+ people who could surely be out of a job and even worse have not got paid for their recent work yet. I see your point but it not as simple as you make it out to be and even terrible companies have honest workers working there trying to earn a paycheck and feed their families.

Posted by phantomzxro

@Kidavenger said:

It's not that I don't feel bad for the workers, I'm just sick of people saying poor workers and fuck everyone else. The workers are the day to day operators at the company and directly responsible for its failure yet somehow hold the least responsibility. This it a terrible situation for all involved, not just the employees .

Man i feel like you are so off base here and i don't know if you know the whole story or not but the game turned out quite good, so the day to day workers did their job. Also this talk about missing payroll and these people not getting their paycheck. So I can't see how they are getting away scott free.

We don't know the details and what they had to do in their time frame but building a big rpg such as Amalur and also working on a MMO is no small task , so it's a little crazy not to expect some set backs or delays. I don't understand the hate on the lower tier workers here but they are not to blame for this. This is completely bad management along with some real risky deals they just did not pan out.

Posted by gaminginpublic

Lol.... That's one way to fix the problem.. Practice slavery! I think they're on to something.

Posted by Chuddy

there goes our tax dollars.

Posted by JesterPC238

Very sad. It completely blows when the business side of video games rears its ugly head.

Posted by sins_of_mosin

Honestly, the amount of employees that I keep seeing compared to the games they put out... something ain't right.  Truth be told, they'll need to lay off a bunch of people if they ever hope to make it.

Posted by warthurton

The fact that I haven't seen any takeover rumors does not bode well. If the project were close to completion, I'm sure they would have shopped it to another game publisher to bridge until the game started to make money. Without any rumors of takeover, you have to assume either that the game is too far away from generating revenue to make the bridge loan payments until release (and income). The only option is that publishers do not see any value in the product at all. In that case, it's a real shame.

Though not a huge fan of RA Salvatore, he's pumped out a metric ass ton of fantasy stories and worlds. Todd McFarlane might not be the writer/creator he once was, but his art still sends chills down my spine. I was really excited to see what they would do with a MMO.

It is also sad news for Big Huge Games, who seemingly will have to close up shop (unless there is a buyer) again. It doesn't look like they will ever give us another Rise of Nations or AoE. Their acquisition by 38 studios had made me excited for some really strategic component to the MMO, but perhaps that was just my hope.

Posted by chrisphil1724

Quick! Someone send Rich a paycheck! If he's not funding Time Trotters, who will? WHOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!

Posted by Dagbiker
Posted by Grok1122

@umdesch4: There are no CDS's out on 38 Studios. There would never be a market for it.

Posted by cmblasko

@Kidavenger: If programmers or artists are under performing, then the onus is on management to do something about it. I'm not saying the lower-level workers are blameless, but everything about this scenario reeks of failure on the business side, not development.

Posted by cikame

That is a crazy loan indeed.

Posted by Sword5

$75 million and ~400 people couldn't make a game in 6 years. Sounds like Duke Nukem forever. A group that set no goals and wasted everything they had.

Posted by BiG_Weasel

@Jellybones said:

It's kind of amazing to me that this is legal.

Its not. Every law I've ever read says employees get paid first.

Posted by Rossuron_X

Well, this is a rather interesting development! :S

Posted by Cretaceous_Bob

Burning up taxpayer money never pays.

Posted by subyman

I thought Amalur was commercially successful. Hopefully everything works out for them.

Posted by Tridenter

It's kind of amazing that anyone would put blame on the state. It's not that unreasonable to request a fraction (in this case, almost 1/75th) of the money they put forth, especially when the terms of the loan have yet to be met.

Posted by crcruz3

The world has gone wrong somewhere... to pay the State instead of employees.

Posted by pancakehumper

I am kind of glad I didn't get hired there now :(

Posted by TyCobb

@Sword5 said:

$75 million and ~400 people couldn't make a game in 6 years. Sounds like Duke Nukem forever. A group that set no goals and wasted everything they had.

Don't lump all 400 people into that group. It all comes down to the project manager(s) and the higher ups. From my experience it has always been the grunts/peons that get their work done, but the project managers and department managers have no clue what they are doing.

I don't do game development, but I imagine it still goes like this for some companies:

-Manager Requesting Functionality ( Manager ): I want a button.

-Developer: Okay.... what do you want it to do?

-Manager: It should be gray and look like the rest of the buttons. Oh! Put it over here! *points at his monitor even though this a telephone conversation*

-Developer: What do you want it to do?

-Manager: It should work.

-Developer: *Face Palm*

And in case people haven't seen this before, this is true:

Posted by SmasheControllers

Really hope everything works out for them, I wish the best of luck to everyone at 38.

Posted by umdesch4

@Grok1122 said:

@umdesch4: There are no CDS's out on 38 Studios. There would never be a market for it.

The way I arrived at that idea was by thinking that RIEDC would probably have wanted a hedge on this loan, but who would pick up the other side of that? Naturally, my train of thought veered off into Goldman Sachs suckering retail investors with "one shitty deal" after another. While this 38 Studios thing is orders of magnitude smaller, I could still see somebody at a trading desk thinking "hey, I could pick up some pocket change in commission by brokering a deal for these guys".

I thought there would never be a market for bundles of sub-prime mortgages owed by people with no stated income either, but it happened...

Posted by ShuaReborn

Ah man this is painful to read about. It hurts to see people go through this sort of thing. Especially when they did such great work.

Posted by Zenthere

This story makes me sad. It is possible for 38 to turn it around, but it would be one of the best comeback stories ever.

Posted by Bolgirk

I really like KoA despite its flaws. Sad to see this happen to them already. Hopefully they get it straightened out soon and can remain in business.

Posted by Fire_Marshall_Bill

Poor Rich Gallup

Posted by AxleBro

look, Amalur:Reckoning was definitely disappointing (4 stars my ass Jeff!). But they don't deserve THIS!

it's a shame.

Posted by HonkeyKong

Rich needs to... GALLUP back to CBS!!! Come to Giantbomb Richard!!!!!

Posted by takkun169

Curt Schilling is such an insufferable dick hole. A few years ago he was quoted as saying that America is in a really tough spot and it is up to the individual to pull up their boot straps and make an effort to improve their own situation and in turn the state of the country will in turn improve. Only now that his company, that I am now on the hook for paying for (I live in Rhode Island), is falling apart, he goes crying to the government for help.

Piece of shit rich republicans like this fucker complain all day about poor people getting government assistance all the while they use the government to line their pockets.