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Situation at 38 Studios

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BlvdNights polycounter lvl 8
Haven't seen a thread about this yet, but the financial situation going on at 38 seems to be pretty sticky. And now this news comes out...

http://www.joystiq.com/2012/05/17/38-studios-doesnt-make-payroll/
38 Studios was unable to make payroll this week, but is in the process of making the $1.125 million payment that set off the company's crisis earlier this week. WPRI reports that a spokesperson for the Rhode Island Economic Development Corporation did confirm that former Red Sox player Curt Schilling's video game company was unable to pay its employees.

A source tells Joystiq that beyond not making payroll, all temps and contractors were fired this week.

At the same time, Governor Lincoln Chafee's office did state that 38 Studios is in the process of making the overdue payment to the state.

[developing]
I have a few friends at 38. Haven't heard anything about their specific situations, but hopefully everyone affected by this and those who were let go, bounce back quickly.

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  • glottis8
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    glottis8 polycounter lvl 9
    fishy stuff... could it be one of those times devs say "ITS OK!" and the next day doors are closed and you end up without a job.

    Hope this is not as bad as it looks... but if i was there i would expect the worst and start putting my resume out there.
  • Justin Meisse
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    Justin Meisse polycounter lvl 18
    that stinks - from everything I've heard it could have been an east coast equivalent to Blizzard.

    The artist there are top notch - so if the west coast Blizzard needs any more peeps, hire them!
  • skylebones
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    skylebones polycounter lvl 10
    I've been keeping up with this, and it sounds like a crappy situation all around. Game jobs here in the east are pretty sparse as is. Hope they figure something out.
  • Gestalt
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    Gestalt polycounter lvl 11
    Yeah I've been reluctant to make a thread since there wasn't one already and it could be a touchy subject, but this has been a huge news story here (understandably so).

    I'm not affiliated with 38 in any way, and although I wish them the best (for their sake, the sake of the state, and the sake of future developers in the state), I think myself and many people here just really have to ask "wtf happened!?".

    Seriously though, I don't understand how they could already be in financial trouble; it's hardly been a year that they've been here, they've already received about $50mil and this is only their first payment to make, costing a relatively minor $1.1mil. They have close to 300 people working for the studio, and on a very healthy salary with benefits I don't see how they could even legitimately use more than half the amount that they've received so far in this time. And while KoA:Reckoning wasn't a crazy big success, as of now it has allegedly sold around 500,000 copies here in the states which must at least amount to something.

    Super fishy, especially with tax-payers being on the hook at $120mil if they fail; they haven't even released the game and they're already failing; people were worried about the game's success on release being that it's an mmo, but there could very well be no release! No idea how this could happen and how the money could disappear without anyone realizing that things wouldn't keep afloat.

    I was super hopeful that they would be able to bring a lot of great development to this area, but now it seams like quite the opposite. As I said I wish them all the best. /rant
  • skylebones
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    skylebones polycounter lvl 10
    Sounds like things just got worse. Apparently the check they paid today for the loan payment was returned after there wasn't enough funds. :(

    With that much money disappearing that quickly you bet there will be a big investigation.
  • aivanov
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    aivanov polycounter lvl 5
    Is there any reason that 38 Studios is getting involved with the state? You hardly hear about anything of the sort with other floundering studios.

    Edit: And how much is Schilling actually involved with the studio? If he cares and this isn't just a passing fancy, a mill should be coverable by his deep pockets, no?
  • BlvdNights
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    BlvdNights polycounter lvl 8
    aivanov wrote: »
    Is there any reason that 38 Studios is getting involved with the state? You hardly hear about anything of the sort with other floundering studios.

    There move came about a year ago, prior to Reckoning coming out. Also Schilling is very prominent in the New England area because of his time with the Red Sox, so I can definitely see his influence and possible political connections with why the state decided to give them the money.
  • Ghostscape
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    Ghostscape polycounter lvl 13
    aivanov wrote: »
    Is there any reason that 38 Studios is getting involved with the state? You hardly hear about anything of the sort with other floundering studios.

    They got a $75m loan from the state. So you're hearing about it because they owe the state of RI $75m.

    I can easily see where 38 could run into money problems - they bought Big Huge Games, they spent money on turning their RPG into Kingdoms of Amalur, KoA has sold very poorly (500k copies in the states is going to pay for Big Huge Games), and they've only been given $50m of the $75m loan.

    Meanwhile they have to pay salaries to 300 people as they've had to grown incredibly fast to meet RI's requirements, and 300 people/month is probably somewhere in the ballpark of $3m/month to keep each desk working and staffed with a body.
  • Gestalt
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    Gestalt polycounter lvl 11
    The state has an Economic Development Corporation that had $75mil to loan in order to bring growth to Rhode Island (which we need given we have the second highest unemployment in the country). Anyway, the EDC decided to give 38 the entire amount rather than break it up among many small local businesses who may not have had the same impact.

    Edit: And yeah part of the deal was to make 450 jobs or so over the next few years. I believe the game was supposed to be released sometime at the end of this year, but it seems they're running into money problems already.
  • aivanov
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    aivanov polycounter lvl 5
    Man, and I was prospecting 38 as potential workplace too, welp. I hope everyone there is backing up their work.
  • aesir
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    aesir polycounter lvl 18
    I don't know a lot about the particulars of the situation beyond what I've read, but it seems like there has been a criminal misuse of money and people need to be fired/investigated/prosecuted. Whoever the people in charge are need to get kicked out.

    I mean shit, I realize that 300 employees will cost 30 million a year or so, but maybe you don't need quite so many employees when you're limited on funds? Maybe you don't go spending money buying other studios? Maybe you put some thought into when your next game will be finished and how much money you'll have left by then?
  • PredatorGSR
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    PredatorGSR polycounter lvl 14
    I agree that it looks like they got too big way too fast, especially for a new studio without any track record, but that was a requirement of their loan, since the only goal of that was to create jobs. Either way, looks like a bad business decision in hindsight. I hope the employees don't suffer for it too much, but I don't have high hopes.
  • Alberto Rdrgz
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    Alberto Rdrgz polycounter lvl 9
    Yeah, heard about this the other day, such a shame. Luck to everyone affected by it.
  • Jeff Parrott
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    Jeff Parrott polycounter lvl 19
    Man this is bad for 38. Tons of talented folk there.

    And the industry. You're going to see less tax incentives for companies as a whole once the dust settles.

    I really hope there is a true post mortem on all this once the dust settles. I'd love for what happened to be public knowledge so it doesn't happen again.
  • Eric Chadwick
    As mentioned, the monthly burn rate has got to be substantial, no wonder it's been tough on them.

    All my best to the guys working there! This absolutely sucks! :(
  • D4V1DC
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    D4V1DC polycounter lvl 18
    Best of luck all, hope they get those b-tards if that is indeed the situation.
  • aesir
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    aesir polycounter lvl 18
    jeffro wrote: »
    Man this is bad for 38. Tons of talented folk there.

    And the industry. You're going to see less tax incentives for companies as a whole once the dust settles.

    I really hope there is a true post mortem on all this once the dust settles. I'd love for what happened to be public knowledge so it doesn't happen again.

    Oh, it won't happen again. That's for sure. No more state funded studios.
  • BlvdNights
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    BlvdNights polycounter lvl 8
  • SouthpawSid
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    SouthpawSid polycounter lvl 7
    this whole situation makes me :/
  • Lennyagony
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    Lennyagony polycounter lvl 14
    Really sorry to hear about this, KoA:Reckoning was awesome, with what must have been some incredible talent on board to produce. To read in this thread that they are now not making payroll? fuck that shit.
  • Blaizer
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    Blaizer interpolator
    I wish all the best to them, but i'm sad about the future of Amalur, wasn't it a success?¿

    Despite the "corridor like world", the game is fantastic with its combat system.
  • katana
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    katana polycounter lvl 14
    Pretty clear they grew beyond their means. Unfortunately the ones who suffer are the workers...the top exec's usually come out clean.
  • ambershee
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    ambershee polycounter lvl 17
    I was about to say "but haven't these guys been hiring like mad recently?" - but reading the comments in this thread, it starts to make some sense.
  • eld
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    eld polycounter lvl 18
    Blaizer wrote: »
    I wish all the best to them, but i'm sad about the future of Amalur, wasn't it a success?¿

    Despite the "corridor like world", the game is fantastic with its combat system.

    It was, but not when it comes to the cost of the project.

    Then again the development costs for amalur were completely unproportional as people have mentioned, which is a shame, the game could've made profit had it been developed in a reasonable way.
  • Jason Young
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    Jason Young polycounter lvl 14
    This probably goes without saying, but anyone still there should backup their work and start looking for a new job.
  • TomDunne
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    TomDunne polycounter lvl 18
    This is a bit off topic, but man, I can't stand Curt Schilling. He always comes across as one of those blowhards who is always right and always knows more than you, but he's as fake as a $3 bill. His profile on the 38 Studios site says "Mr. Schilling has 8 years of video game industry experience." Yeah, except that half of that experience was playing World of Warcraft between starts with the Red Sox. He didn't retire from baseball until the fall of 2007, so he hasn't even had five years yet to devote to actually working in the game industry. Maybe he had a subscription to Game Developer he read on flights between baseball stadiums.

    He's also allegedly a staunch conservative who has gone on record many times about people needing to fend for themselves. Great quote from an interview last year: "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." He also had comments supporting Republican senator Scott Brown, on the grounds that “he’s for smaller government." This is the same guy that moves his game studio from Massachusetts to Rhode Island solely to get a tax-payer funded loan? Yeah, it sure is. I wonder if Schilling told the governor of R.I. his feelings on 'small government' when they were handing him that $50 million check.

    I'm really sorry for all the creatives this is going to affect, everyone of them deserves better. But I'm even more sorry that a guy with too much ego, too little knowledge and apparently not enough money is the one who put them in this situation.

    *edit*

    Just had to add this: "Schilling has asked for additional help from the state."

    It falls on us, the individuals, to find a way out of our own personal crisis MY ASS. What a fucking hypocrite.
  • Arkadius
  • whats_true
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    whats_true polycounter lvl 15
    JMYoung wrote: »
    This probably goes without saying, but anyone still there should backup their work and start looking for a new job.

    Like this job
  • Eric Chadwick
    I dunno, I've been resisting the urge to post a link to the job page at our studio. 38 isn't closed at this point, so it could come across a bit like poaching, which this area has been pretty good about not doing.

    I mean, it's a nice gesture and all, but I wonder if it's a bit premature. If you put yourself in their shoes, you would be urging your talent not to drain away, and you would hope the other studios around would wait until it's clearly closing down.

    Working without pay though, that's a bit of gray area I guess. Hmmm.
  • glottis8
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    glottis8 polycounter lvl 9
    there is no gray area on working and not getting paid... it's pretty black and white if you ask me. Apart from the implications that it means that a check bounced for over a million dlls, if you don't get paid you should not commit to work. If you do, you are telling everyone, it's ok if this happens. When it clearly should not.

    Sorry... but i've been through this, and payroll being missed is a big problem with little chances that they will go away in the short run. So i guess i can say i am entitled to express my opinion on the matter with some weight to what i am saying. ( and i am not trying to come across as a rude person,i don't think anyone wants studios to close or find themselves in financial issues).

    Now... i am not sure if this whole deal means that people didn't get paid in the actual studio, or who is affected by it, and more of the details. But whether or not this is happening, paying attention to your company is something you have to always be on the lookout and always backing up your work so you don't get left out with out your next big update for your portfolio.
  • katana
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    katana polycounter lvl 14
    ^ What he said...
  • roosterMAP
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    roosterMAP polycounter lvl 12
    I'v had friends who have worked at a studio where there was no pay for a few months because of a lack of funds. There were many times where the company was only paying its employees rent (which is way WAY less than what they are supposed to make).
    These things happen, and because of the terrible economy, companies are more likely to fall back on this because they know that most employees rn't gonna risk the terrible job market.
  • Eric Chadwick
    I hear ya about backing up your work, taking care of #1, and all that. I'm just saying if I was in their situation I wouldn't want other local studios to start picking at my remains, when I'm not quite dead yet. :) It's up to each person to decide what they want to do of course. I would definitely be looking for work if it was me.
  • Mark Dygert
    There is one reason to come into work when you know you're not getting paid and that's to backup your stuff, and maybe do a little work (while also looping for another job) in hopes that things start flowing again.

    I understand where you're coming from Eric but I think at this point we're starring at a blue corpse and just waiting for the corner to come in give the body a quick look and say "oh yea, that's a dead body alright". Who knows maybe this one will sit up in the morgue and ask whats going on?
  • BlvdNights
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    BlvdNights polycounter lvl 8
    Seems the check is cleared and the government has told them they need to find private capital now ASAP.
  • Ghostscape
  • bugo
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    bugo polycounter lvl 17
    At least it came public and to the news. Other places I've work happened about the same, and nothing got public...
  • Gestalt
  • Arkadius
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    Arkadius polycounter lvl 13
    A peek at what we are working on...

    [ame="http://www.youtube.com/watch?v=m9nvnrP0j8U&feature=plcp"]Project Copernicus World Fly-Through - YouTube[/ame]
  • BlvdNights
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    BlvdNights polycounter lvl 8
    Woah! Cool man! I love the flat color styling of it! Let Hernandez know Mama is proud!
  • ScudzAlmighty
    those are some pretty snazzy enviro's :)
  • Eric Chadwick
    Great palettes! Especially love the white statues/green foliage locale.

    Edit, here this... awesome statuary work.
    http://www.youtube.com/watch?&v=m9nvnrP0j8U#t=47s
  • blankslatejoe
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    blankslatejoe polycounter lvl 18
    It's been a long time to be silent, but the team here is amazing, the project is amazing, and the experience has been nothing short of amazing.
  • glottis8
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    glottis8 polycounter lvl 9
    Yea... talking to a budd from over there. Really some detailed environments. I love the lighting and the work paying off! i am sure this will catch the attention of several gamers around. Much better looking than Amalur. Good job guys!
  • BrianP
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    BrianP polycounter lvl 7
    looking awesome!
  • Mark Dygert
    That looks AMAZINGLY AWESOME! I really hope they find a way to keep the lights on so you guys can keep churning out great stuff.

    Which makes it hard to write this next bit...
    Gestalt wrote: »
    I don't think they are out of the woods? Based on this they made their payment to the state but don't have funding for day to day operations and will have to find funds from somewhere to keep the lights on until they release? While making two more payments like this one? Then when they release, they have the mother of all payments $12.6 million? Lets say they do that and they manage to pay it all back, will they have enough to push forward?

    It seems like borrowing on future success has lead to disaster in the past, its one of the reasons the publishers ended up with a bunch of indentured servant studios and wouldn't let them take any risks and ended up closing a bunch of them down.

    Don't get me wrong I want to see this project succeed but it really looks like the deck is stacked against them. It's a long rocky road ahead, I hope they find a way to pull it off, that content deserves to be shared with the masses, its beautiful.
  • glottis8
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    glottis8 polycounter lvl 9
    I have to agree with Mark... just because the check cleared it doesn't mean that this all goes away. They got there for a reason, and payments will have to be made as well as payroll. So just be mindful, that as much as everyone doesn't want to see the company go under, that might be a possibility. I know they already let go a lot of co-ops and what not.

    Certainly a bitter-sweet taste after looking at that awesome trailer.
  • Gestalt
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    Gestalt polycounter lvl 11
    Well according to the news they were able to obtain a film tax credit or something of the sort which is helping to keep them in the clear, but is a round about way of getting more money from the state. I don't know the details, but it seems things are good for now. I believe they said they'll require $14mil or so for the project (I'm just going from memory so take this with a grain of salt).
  • BlvdNights
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    BlvdNights polycounter lvl 8
    Kotaku just posted a pretty comprehensive article on the entire financial situation http://kotaku.com/5911515/how-a-pro-atheletes-video-game-studio-came-to-owe-rhode-island-millions
  • xvampire
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    xvampire polycounter lvl 14
    oh wow ... that ... sounds like extremely risky business .. no matter how talented and passionate they are ...,

    I hope the new title will do the justice.
    looking from Project Copernicus World video I'm hoping some new investor will lend a hand.
    it look damn good.
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