Something Is Up With 38 Studios

[Drow Oblivion]

http://www.gameinformer.com/b/news/a...8-studios.aspx

by Jim Reilly on May 14, 2012 at 11:29 PM

The developer behind Kingdoms of Amalur: Reckoning could be in some trouble, according to local Providence, R.I. reports

Reports from WRIP and the Providence Journal say state governor Lincoln Chafee met with officials from 38 Studios Monday night to discuss the company's current financials. 38 Studios received a $75 million taxpayer-backed loan in 2010 from the state under the condition it would move to Rhode Island from Massachusetts.

The reports haven't been clear, but they strongly suggest the studio is in some kind of financial difficulty. The governor reportedly said he was working with officials in "keeping 38 Studios solvent."

“We’re concerned and just doing everything possible to ensure that 38 Studios stays part of the Rhode Island community,” Governor Chafee told WPRI.com Monday night. “We’re working on different issues with them.” When asked whether he thinks 38 Studios can be stabilized, Chafee told WPRI “We’re working on it.”

Game Informer has contacted 38 Studios for comment.

[Top Dogs]

Hmmm now that does sound fishy. Maybe I should go pay full retail for KOA to help support them but on the other hand if there going down do I want to give someone a golden parachute.

[ozbuffinatic]

Considering that KOA has EA logos on it, I wouldn't be surprised if most of the money from selling the game goes into EA's pockets and that 38 Studios gets pittance compared to what EA makes from it.

[Vermillion Haze]

They have only made one game. It's not like they have a "Track record" as of yet. Maybe they simply over extended themselves with KoA. Curt Schilling can throw a baseball really really hard but it remains to be seen if he can make money in the video game industry.

[ozbuffinatic]

They have only made one game. It's not like they have a "Track record" as of yet. Maybe they simply over extended themselves with KoA. Curt Schilling can throw a baseball really really hard but it remains to be seen if he can make money in the video game industry.

that may be true but to me it sounds like EA want the small companies to make the games that they can then swoop in on and buy to then make a lot of money from in a similar fashion to how Bill Gates and Microsoft did with small computer companies in the 1970's. I'm not saying it's wrong, just very good business savvy from the bigger company and not very savvy thinking from the one's that are struglling (38 Studios in this case). They may have only been looking at the short term view with the offer from EA instead of the long term prospective view.

[Drow Oblivion]

UPDATE:


http://www.trueachievements.com/n878...state-loan.htm

Written by Dog of Thunder today at 15:25

Just a few days after expanding our news coverage, 38 Studios, the developer of Kingdoms of Amalur: Reckoning, defaulted on their $75 million loan from the state of Rhode Island. The original loan, granted by the Rhode Island EDC (Economic Development Corporation) in 2010 was granted with the promise that 38 Studios would create 450 jobs at their main office near Providence, Rhode Island. Also, that $75 million was a loan and required regular payments in order to pay it back which does not look likely as 38 Studios missed their first payment of $1.125 million this past Monday.

Before 38 Studios failed to make payment, the Rhode Island government was not happy with them as the quota of 450 jobs was not met with only 288 workers in Providence. The other 91 employees are still in Baltimore using their old building as part of Big Huge Games, which was acquired a few years ago by 38 Studios. None of the loan money was used in the Big Huge Games acquisition, and supposedly, none of the loan money was used to fund Kingdoms of Amalur: Reckoning.

The $75 million loan was broken down into chunks with $49.8 million converted into cash used by 38 Studios to fund their MMO (Massively Multiplayer Online) set in the Kingdoms of Amalur universe. $23.4 million was set aside in a Capital Reserve Fund for the purpose of helping to pay back the loan. The remaining $1.8 million was used to float the loan, which means it was used to pay the interest rates that were lower than normal due to its status as a floating loan.

What makes this entire situation far more interesting and far more volatile than a standard studio's financial problems, is that this loan was backed by the state government of Rhode Island. The numbers in the following chart, provided by WPRI, represent what 38 Studios owes and if they can not pay, it represents what the state of Rhode Island owes to their creditors.





Part of the reason 38 Studios is in this situation, aside from the hefty financial cost of starting a MMO, is that Kingdoms of Amalur: Reckoning failed to set the world on fire. 38 Studios debut title only sold 1.15 million units across all platforms. The Xbox 360 version moved 560,000 units, PS3 sold 400,000 units and PC fell way behind with only 150,000 units. These are world-wide numbers valid as of May 5th, 2012. While they may seem large to me and you, developing a large-scale, cross-platform retail title with a new IP (Intellectual Property) from a brand new studio involves a lot of overhead cost.

In addition to providing steady paychecks for over 300 full-time employees, 38 Studios also owes author R.A. Salvatore $1.46 million in October, with the potential to earn an additional $5 million in royalties based off of the success of Kingdoms of Amalur: Reckoning and the follow-up MMO, originally slated for a Fall release. The price of research and development, high-end equipment and specifically, the high-end server farms one needs to keep a MMO running have the potential to eat away very quickly at any profits from the below expectations performance of Kingdoms of Amalur: Reckoning.

Today at 8:30 AM, Rhode Island Governor Chaffee is meeting with Curt Schilling, CEO of 38 Studios, to try and figure out how the two parties can move on from here. Unfortunately parts of this meeting will be closed with information unlikely to be released, though if it is, you can be assured we will be following this story as it continues to develop.

[Vermillion Haze]

The company was created to develop a MMO specifically. They better hope it's awesome or else Schill will be pitching for some AAA team sometime soon.

[ozbuffinatic]

It would be interesting to see a further breakdown of the sales statistics into a region by region nature as I think the game was selling for over $90 in Australia and for most of that time the Aussie dollar was trading between $1.02 and $1.05 in $US

[Drow Oblivion]

UPDATE:

http://www.xbox360achievements.org/n...-Reported.html

Written Friday, May 18, 2012 By Richard Walker

Kingdoms of Amalur: Reckoning developer 38 Studios has found itself in financial turmoil this week, following loan negotiations with the Rhode Island Economic Development Corporation, which the studio owes an overdue repayment of $1.25 million. As a result, 38 has failed to make its staff payroll. None of the 300+ staff at 38 Studios have been paid this week.

Worse still, sources close to Joystiq suggest that former baseball pro, Curt Schilling's studio may have laid off all of its temporary staff and contractors. The last financial report for 38 Studios states that the company employs 379 full-time staff, as well as 34 full-time contractors and 8 interns. Its cheque to the RIEDC bounced recently, due to insufficient funds.

Kingdoms of Amalur: Reckoning was 38 Studios debut title, an RPG adventure written by RA Salvatore with art from renowned comic book artist, Todd McFarlane. It garnered a generally positive critical reception and has sold more than 400,000 copies in North America alone. However, the fate of 38 Studios hangs precariously in the balance.

[Top Dogs]

Oh how the threads of fate has suddenly turned on the makers of KOA.