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Report – 38 Studios and Big Huge closure imminent

Thursday, 24th May 2012 21:03 GMT By Stephany Nunneley

Kotaku is reporting a rumor that troubled development house 38 Studios is laying off its entire staff, and closing down Big Huge Games.

Notices, missed payroll, cancelled benefits

According to a source speaking with the site, employees knew things were going south as early as April.

“38 Studios just laid off its entire staff, both Providence and BHG studios are being shuttered. We have not received a paycheck since April 30,” said the source. “On May 15, we found out we were not getting paid when our checks did not hit our accounts. Our medical insurance runs out tonight at midnight. We found this out when an employee’s pregnant wife was told by her doctor, this was on Tuesday the 22nd May this week.

“In my conversations today, there were no discussions about layoffs. We were just not given that confidence.”

“The company has not communicated anything concrete to the team throughout this process, leaving team members to figure out insurance stop-gaps (where people could afford it), etc. on their own.”

Meanwhile, a source familiar with the matter, has told Polygon 38 Studios laid-off remaining staff today, after the first round of lay-offs hit Tuesday.

An email sent to staff members, and forwarded to Gamasutra, stated the following: “The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary. These layoffs are non-voluntary and non-disciplinary.

“This is your official notice of lay off, effective today, Thursday, May 24th, 2012.”

The company had 379 full-time employees at its two studios as of March 15.

Twitter confirmations

It has been confirmed that Big Huge Games lead world designer, Colin Campbell, is one of those who have been let go.

“Big Huge Games was home for my wife and me for our adult lives so far,” he tweeted. “I’ll miss it terribly, but so proud. Good night and good luck.”

Community manager Charles Dane has also confirmed his departure, as has product manager Ryan Geddeswhich.

CEO Jen MacLean and SVP of product development John Blakely are also no longer with 38 Studios as of yesterday.

38 Studios has been in the news almost daily since it tripped up on its first loan payment pf $1.25 million to the state of Rhode Island. The first check reportedly bounced, but a second one issued cleared the bank.

Today, it was announced Helena Foulkes, the vice chair of the Rhode Island Economic Development Corporation which loaded the firm the $75 million to move to the state, has resigned.

Yesterday, 38 head Curt Schilling took to Twitter to state that KoA: Reckoing had “outperformed EA’s projections by selling 1.2 million copies,” its first 90 days on the market.

Big Huge Games was on the verge of shuttering before 38 Studios purchased the firm two years ago, when baseball legend Curt Schilling purchased the developer.

Its Kingdoms of Amalur: Reckoning action-RPG, was meant to give gamers a taste of what was to come with its Copernicus MMO – assets of which started trickling out this week.

“We gave them the million. They did not give us the tax credits, which would’ve not only payed the employees, but saved the studio most likely as we had several publishing deals in the works. The government flat out lied to us (big surprise).”

“The game failed”

During a press conference held this evening, Rhode Island governor Lincoln Chafee said he had no confirmation of the lay-offs or knowledge of whether the studios had indeed shuttered. He said he had reached out to the company, but discussions regarding lay-offs had not occurred.

“In my conversations today, there were no discussions about layoffs,” he said, adding that if so, the firm and the state were both facing “grim times.”

“We were just not given that confidence,” Chafee told the press. “It’s not a good situation. I’m not here to share good news.”

The governor said the Reckoning’s 1.2 million in unit sales was a failure, citing the need for the game to sell 3 million units in order for 38 Studios to break even, according to “experts” speaking with his office.

“The game failed,” Chafee said. “That was integral to the success of the company.”

State lawmakers have called on Chafee and the RIEDC “to immediately release all records related to 38 Studios’ financial situation and its $75 million loan guarantee.”

Coverage on the entire matter, as well as PDF files regarding the loan to 38 Studios can be found over on WPRI.

The government “flat out lied to us”

According to a Polycount forum post from Victor Cortis, an environment artist on Project Copernicus, the million dollar payment 38 Studios made to Rhode Island was “in assurance,” the firm would receive tax credits of $8 million.

“We even had buyers lined up for the credits and the government was sitting there telling us: ‘You give us the million, we give you the tax credits,’” he wrote.

“We gave them the million. They did not give us the tax credits, which would’ve not only payed the employees, but saved the studio most likely as we had several publishing deals in the works. The government flat out lied to us (big surprise).”

Cortis said he didn’t fault upper-management “too much,” as it had been “open about what’s going on,” but he said the higher ups thought the studio was going to “pull through this.”

“I’m sure the full story will eventually come out,” he said.

As of press time, neither 38 Studios, the Rhode Island Economic Development Corporation, nor Big Huge Games have responded to requests from the gaming press.

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24 Comments

  1. HighWindXIX

    This sucks. KoA: Reckoning was a great game. Someone should snatch up those combat designers and have them work on another RPG because combat was certainly the highlight of that game.

    #1 2 years ago
  2. Stephany Nunneley

    Press conference going on now through here:

    http://www.wpri.com/generic/news/politics/local_politics/38-studios-curt-schilling-gaming-company

    #2 2 years ago
  3. Telepathic.Geometry

    Man, that’s just heart-breaking. Yet another dev gone bust.

    #3 2 years ago
  4. OlderGamer

    Sad news on a couple different fronts.

    #4 2 years ago
  5. ejams

    This is quite sad. I just recently played the demo and I was impressed by how much fun I had, in fact I’m probably gonna go out and get it soon. But they needed to sell 3 million copies on a new IP to break even?? This reminds me of the whole LA Noire fiasco. It really is a gamble when starting a new IP, but setting your goals at millions of copies sold isn’t really the way to start.

    #5 2 years ago
  6. Ireland Michael

    “The governor said the Reckoning’s 1.2 million in unit sales was a failure, citing the need for the game to sell 3 million units in order for 38 Studios to break even, according to “experts” speaking with his office.”

    And yet people people bitch and whine for better and better and better and better graphics, again and again and again, completely uninterested in the financial burden such overbearing visual snobbery puts on developers.

    A game should not need to sell 3 million copies to break even. That’s just ridiculous. And it’s just going to get even more expensive in the next console generation.

    #6 2 years ago
  7. Phoenixblight

    @6

    Couldn’t agree more Michael. People want better eye candy and tech and don’t realize what that means not just for the consumer side of theings but the developers too.

    #7 2 years ago
  8. MegaGeek1

    @6 – While I agree with your point, I’m not sure it has any relevance to this story.

    I think its safe to say the high cost of developing KOA stemmed from building everything – from the studio to the IP – from the ground up. Had KOA went on to sell 3 million copies, I’d wager KOA2 would have cost half as much to develop.

    Either way, terribly sad to see. I loved everything about this game! I hope all those devs find work elsewhere.

    #8 2 years ago
  9. JB

    http://en.wikipedia.org/wiki/List_of_best-selling_video_games

    Try and be realistic next time – yes? 3 million units – lol ><

    #9 2 years ago
  10. Da Man

    Sad.

    Not enough sex mini games, whack-a-mole like gunfights and babbling in cinematics obv. Videogames don’t sell well these days.

    #10 2 years ago
  11. Stephany Nunneley

    What some of you are missing is that it was the gov of RI who said “experts” told him the game would need to sell 3 million to break even. 38/EA/BHB weren’t the ones who said it. What these “experts” failed to convey to him was that 1.2 odd million is rather excellent for a new IP. Granted he kept going on and on in the press conference that the games industry is a harsh business, but still, it would have been nice if these experts had been named.

    #11 2 years ago
  12. DSB

    @6, 7 But…. Did either of you play Amalur?

    I jumped on it during the Steam sale, and it really doesn’t look very good. It looks like a higher polygon count WoW.

    I really don’t see how this wasn’t entirely their own fault. Just look at the basic design decisions. I’ve played for 10+ hours, I’m STILL in the starting areas, and I feel like I’ve gotten absolutely nowhere in terms of advancing any kind of story, or really engaging with the world.

    I finished Arkham City in 11 hours, and I loved every minute.

    I mean – screw graphics – was it really neccessary to make a game world the actual size of Brazil?

    To me it just screams rookie mistake, and that’s not because I don’t like the studio, or even the game, but there were several ways they could’ve prevented this, or at the very least limited their exposure in case of a loss – The primary one being to not make a gargantuan game as their first effort.

    It stands to reason that a new studio won’t be a well oiled machine, and it won’t have the kind of efficient pipeline that you’d need to put this together without a huge amount of wasted effort.

    I just don’t buy “Blame society” for this one.

    #12 2 years ago
  13. absolutezero

    Poor game developers.

    Poor poor developers. Making video games. Poor little soldiers.

    #13 2 years ago
  14. DrDamn

    @12
    “I’ve played for 10+ hours, I’m STILL in the starting areas”

    For a lot of people that’s a huge plus point in a game like this though. I do agree that the structure is such that it’s very easy to get lots of side-quests and lose track of the main story. Though that’s a choice you make, the main quest line is easily followed if you want to go that route too.

    #14 2 years ago
  15. ManuOtaku

    I agree with Ireland Michael and Phoenix comments, and i will like to add that seeing this cases no wonder Publishers demand or force developers to go with the safetest route of yearly iterations, instead of creating new IP´s, the west and zampella situation comes to mind because one of the reasons, besides money, was the desire of starting working in a new IP, rather than doing MW3, among other things, therefore we gamers need to start taking this into consideration before demanding the bleeding tech on the next gens, and this add to the Epic comments regarding ps4/720 not being powerfull enough, iam seeing a trend here, and not a good one.

    p.s: DSB something tells me that we are going in the wrong direction, when now making a game, a new ip in that, that is big and well polished, that one can argue if it´s boring or not, depending on the tastes, is a bad thing and a sign of failure, that is telling me we are going in the wrong direction as an industry, and as consumers of this industry.

    #15 2 years ago
  16. DSB

    @14 I don’t accept that premise.

    You can tell people to ignore anything about a game, but ultimately the designers are responsible for every single thing they put in there. And if it’s in there, you’re meant to experience it.

    They make it in it’s entirety, and I play it in it’s entirety.

    If a car has a broken gearbox, you don’t just ask people to stop changing gears.

    If there are sidequests, you’re meant to do them. If the developers mean for you to ignore them, they should make a mode with no sidequests. In Amalurs case, those sidequests also play a big part of everything from gathering gear to just crafting materials.

    If indeed the game couldn’t be profitable at 1.2 million sold in less than 6 months, then I think it stands to reason that they probably would’ve been better off making a smaller game. That kind of loss certainly couldn’t be covered by expensive engines and graphics in this case. My guess is scale.

    #16 2 years ago
  17. OlderGamer

    I am with Manu on this one.

    I am not too sure what game you played DSB, but KOA was a wonder to look at. Bright and colorful. Fantastic looking game.

    I will take its visual and art styles over the washed out crap that plague most games today, with their mixture of mono tones and drab visuals anyday.

    I also strongly agree with what Micheal and PB said.

    Just wait for next gen, gonna be down right funny the prices are.

    The entire model for biz in video games needs a rethink.

    Thats why I like Nintendos way of thinking. Affordable hardware. Period. If you can’t afford to manufacter it and sell it w/o taking a huge loss per system, your doing it wrong. IMO. And look at what happens, PS3 and VITA say hi. There is too much tech in those boxes. It drove the prices up and hurt Sony.

    Anytime your making a video game or a game system, your banking your future against a certian number of units sold. You have to cover costs. Rather simple really. And with actual games, you have to worry about used games. Like I said it was really a sad thing all of the way around.

    Koa was an amazing game. Good story, great gameplay, huge world to explore, more quests then any game should have the right to have, vibrant and varried graphical settings, a nice crafting system, and very tight and fun combat. It got beat, dare I say, by Skyrims marketing. Alot of people I know are just now getting around to the game, and many of those are going to be used copies. And because of that, 38 studios loses.

    And so do we, cause now action RPG fans have more of Elder Scrolls clumsy and painfull combat to look forward to.

    #17 2 years ago
  18. Ireland Michael

    @12 Yes, I did.

    It’s a game of oddities. On the one side, the gameplay itself is super-solid and really enjoyable to play. But the world it’s set in was so dull, it’s story so plain and poorly expositioned, that I felt absolutely no desire to continue playing after a while – I had no investment in anything going on around me. My character felt… pointless.

    It’s not the most OMGMOSTSTUNNINGPIXELSEVAH game ever made, no, but a lot of people don’t seems to realize that what cost $200,000 about eight years ago (since you mentioned WoW) costs about $2,000,000 now. Obviously this are figurative numbers, but you get the point. The vast majority of that extra coat goes into the graphics.

    I strongly believe if something like this had been released even half a decade ago on the popular formats it easily would have made a profit.

    #18 2 years ago
  19. DrDamn

    @16
    ‘And if it’s in there, you’re meant to experience it.’

    Nah, if it’s in there then *someone* is meant to experience it. Ultra-hardcore modes for example. Not for everyone, but there for some.

    ‘They make it in it’s entirety, and I play it in it’s entirety.’

    Yet you don’t like where that takes you – why play a flexible game in a way you don’t enjoy? It’s meant to be possible to play in a lot of different ways, that doesn’t mean you have to. It’s a game, play it in ways you will enjoy it most.

    #19 2 years ago
  20. absolutezero

    Amalur failing to make a profit has nothing to do with how much they spent creating the graphics. Amalur was a game packed with content, most of which no one saw. It is a huge huge game, the sheer scale of the World, all that lore and level design. Thats what absorbed alot of the money.

    Its entirely possible to produce a beautiful game without spending the Earth, Dear Esther looks fantastic, as does Trine and Amnesia. Completely different games of course but even The Witcher 2 is an amazing looking title and im pretty sure CD Projekt have made a profit from it.

    #20 2 years ago
  21. Dinasis

    I hope a lot of the people from Big Huge Games’s past and present make their way back to Microsoft, and then that someone will finally make another Rise of Nations/Legends game, as I suspect Microsoft still owns the IP rights to that franchise.

    #21 2 years ago
  22. frostquake

    Game companies should never ever deal with Any USA Govt. In any form. It is the most corrupt ridden thieves guild on the planet. I bought this day one and me and the frost wife are enjoying it. Now I don’t want to buy DLC because I don’t want the State getting the money unless it can go to pay checks or health care. SAD

    Via Kindle Fire

    #22 2 years ago
  23. Phoenixblight

    @22

    38 Studio got 75 million from RI. 38 studios spent it on making a New IP alongside of the MMo and in order to for the MMO to launch KOA had to do well which it didn’t. It did not make enough to break even. This is only the states fault because they gave a new start up company a fat amount of cash in order to bring jobs into RI much like Texas,California and Louisana did. You know all the main areas that games are developed in?

    #23 2 years ago
  24. DSB

    @18 Are you sure about that?

    I mean, like others point out, even indies are looking gorgeous these days. Great graphics aren’t limited to AAA by any stretch of the imagination. Look at CD Projekt Red with the Witcher 2 or City Interactive with Ghost Warrior. Not exactly major operations.

    I’m sure that tech doesn’t sell for nothing, but I think it’s how effectively you apply it that really makes a difference, in terms of making ends meet.

    There’s nothing about Amalur that makes me think they broke the piggybank in any way. The gameplay is basic, the graphics are basic, and there really aren’t any physics to speak of.

    I definitely think the fact that you have a new, untried studio trying to make a gameworld the size of Siberia, and then having to fill all that up with stuff, has everything to do with 1.2 million being too little to stay afloat.

    At least to my mind, even with the best and brightest in your talent pool, they still have to work as an efficient team, together with middle management that is going to be just as new on the job. That’s not easy. A sports team with the best players isn’t worth shit until they have experience playing together.

    #24 2 years ago

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