Collapse of 38 Studios sticks some devs with second mortgage

Employees told by Kingdoms of Amalur: Reckoning studio that the company had sold their previous homes, now being contacted by banks looking for missed payments.

Fallout from the collapse of Curt Schilling's 38 Studios continued today, as The Verge reports that a number of former developers for the Kingdoms of Amalur: Reckoning developer have been stuck with second mortgages due to the company's failure.

Amalur is your home away from home away from the home 38 Studios said it would sell for you.

According to the report, when 38 Studios moved from Massachusetts to Rhode Island in 2010, it offered employees a relocation program that would see the company sell their old homes for them. However, "some" employees received notice from banks this week that they had missed mortgage payments on their old homes, at least one of which 38 Studios told the owner employee it had sold last year. An unspecified 38 Studios official told the site that it was trying to resolve the situation.

38 Studios' troubles first came to light earlier this month, when reports from the Rhode Island government indicated the company had failed to make a $1.125 million loan payment to the state's Economic Development Corporation. The studio eventually made the payment, but it also enacted a round of unspecified layoffs. Reports also surfaced that 38 Studios could not pay its employees as scheduled twice this month.

Between the original $75 million loan and interest, Rhode Island taxpayers could be on the hook for as much as $90 million as a result of the deal. The $75 million was secured by the Rhode Island EDC as a way to entice 38 Studios to move from Massachusetts to Rhode Island. Last week, EDC executive director Keith Stokes, who helped structure the loan, resigned from his post.

Kingdoms of Amalur: Reckoning shipped in February to a warm critical reception and sold 330,000 units in the United States alone during the month. Schilling said it sold 1.2 million copies, but Chafee called it "a failure," saying it would have needed to sell 3 million just to break even.

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Discussion

282 comments
hector530
hector530

dont worry curt schilling im sure you can find some way in your mind to blame obama for this.

Suikogaiden
Suikogaiden

This whole deal has kickback written all over it. The only people more corrupt and greedy than bankers is Democrat governments.

GetafixOz
GetafixOz

Handsup who thinks you can still make a generic RPG using a fantasy setting so similar to everythign produced in the last 15 years that it is almost indistinguishable and.... still make a killing on it at the game store ? Please PM me your answers because I have an investment opportunity for you. Its called Realmsofwowkingsinwitchlandofleftrollgiantswordskingdomthingy.

DAOWAce
DAOWAce

The last 3 paragraphs, along with the video, are a direct copy and paste from another article.

 

Well done Gamespot.

 

I knew this game would only be average, but I didn't expect the company to have one of the worst failures in recent times.  Guess that's what you get with a brand new IP and a charge of $60 for it along with a load of expensive DLC and pre-order/demo/etc. rewards that give you direct ingame power. Can't believe it's still on sale for $60.

 

PS: What the hell is this terrible comment system?  The old one was way more functional and far less clunky.

rarson
rarson

I found it strange that the company would spend so much money relocating their employees, but I find it even stranger that they would do so by promising to buy out their old mortgages before the company was even established. It just sounds like some BAD business decisions all around. Perhaps this was driven by the bailout mentality, if things go wrong just turn to nanny government to get a handout (which is exactly what creative director Steve Danuser said: "We just needed a little more help, and we thought the state would have our backs on that."). Sounds like the company 

 

One thing is clear: if you want to invest your money, give it to a competent investor. If you want to throw your money away, give it to the government.

DesertLynx83
DesertLynx83

If I were the former employees of 38 Studios, I'd sue Schilling and EA! However, they probably had a clause in their contracts preventing that.

swamptick
swamptick

This has been a messy, sad story. Let it serve as a lesson: When liberal governments are involved, disaster will follow.

steelmouth
steelmouth

i had to much hope for that todd spawn guy and am still hopeful he will get a better team/partnership to deliver an awesome spawn movie and game

steelmouth
steelmouth

3mil to break even?,thats a tall oder for a new IP, Sony got fan favorate AAA tittles that on their 3rd installment that can hardly pass the 3mil mark

TheEveryMan
TheEveryMan

Kingdoms Of Amalur was not a fantastic game, but it wasn't exactly horrible either. I think the developer rushed the production of the product to get the final product released. And besides, what were they thinking when going head-to-head with Skyrim? Bethesda have been making role-playing games for 18 years now and have more than enough experience to rule the crowd. 

 

Keep in mind that one of the creative forces behind Oblivion & Morrowind (Ken Rolston) did develop Amalur, but I doubt he had much creative freedom because of budget constraints and the tons of pressure piled upon the studio.

 

When your studio is getting loans from the government, it doesn't take a genius to figure out you are in trouble. And on top of those already large problems, a former baseball player was helming the game, a baseball player! What does he know about running a company? It doesn't matter now, 38 studios is gone, and people will learn from this episode. 

 

jmc88888
jmc88888

Now you know why games are really made by wall street entities.  To pay off their LOANS.  Not to provide YOU with a good game, or to provide their workers with an equitable and fair job.  It's to provide you with whatever bare level that is needed to meet those needs.

 

Now while the creative people BEHIND this company actually did create a game loved by many, it doesn't mean it will escape the same failings behind the structure of PRETTY MUCH EVERY video game maker.

 

The sad fact is they are in business to pay off their creditors so they can take out NEWER, BIGGER LOANS, and in that process the few at the top can make their bonuses and reward their stockholders from this overall scam with bigger dividends and a higher stock price.

 

YOU think they are in the video game business.  NOPE...they are in the business of WALL STREET.

 

Funny thing though, I bet those people getting hounded by 'banks' are being hounded by banks that don't actually own the 'note'. How many millions of people need to be kicked out of THEIR homes by people that don't own them? Funny enough, it happens to almost each one that does get kicked out of their homes.  Funnier still, odds are in order to BE kicked out of THEIR home, the bank that CLAIMS to own it, commits FRAUD UPON THE COURT in order to do it, and gets away with it scot-free.   For example, signed by 'Linda Green', is really rubber stamped for the good of the TBTF who screwed everything up. 

 

Every mortgage 'securitized' has been lost in the fraud of wall street, yet that won't stop them from foreclosing on you.  The man of the people who brought change, even allows them to knowingly do this.  Thanks Wall Street Walker Ner-O.

 

Now we have a situation where someone decided to pull the loan plug (in a ZIRP environment mind you) that destroys a company that utilized a broken business model (industry wide standardized broken business model), and in the process it's employees (and customers in other ways) risk having THEIR homes stolen away from them by some banks that CLAIMS but ACTUALLY DOESN'T have legal claim to their home.

 

Don't worry if they can't find work for 99 weeks they'll go off the roles and be claimed to 'not trying to work' thus enabling the 'official farce unemployment rate' to decline, even if no one actually was hired.  Besides of course the millions of jobs they add because a computer model aka a fake way of adding jobs that don't exist doesn't decrease it either.

 

Land of the idiot, and the home of the scared.  Play fraud.

 

Glass-Steagall

AyatollaofRnR
AyatollaofRnR

Thats pretty harsh for the employees to have to put of with, given they have just lost their jobs. It's a shame game studios are so transient these days. How are you meant to provide stability for a family when your job could end after one game is done.

Avenger1324
Avenger1324

With each day this story gets worse.  It's looking more and more like serious mis-management at 38 studios, possibly bordering on illegal activity.

 

No doubt someone will try to sue them, but what can you sue for when the company is bankrupt to the tune of tens of millions of dollars?

ZakMcKracken
ZakMcKracken

Those insane loan and investment figures just reek of mismanagement. Really feel sorry for the devs...

Jerrytt2
Jerrytt2

So?..bye bye Project Copernicus?? or what??

KingJduro
KingJduro

Curt Schilling should have to pay for this not the people!!

novak2k6
novak2k6

This is sickening and getting uglier by the day.. first having not paid since May 1 so they worked for no wages until being let go.

And now news that most likely they'll have to go through bankruptcy marred with bad credit to accompany unemployment

stabby_mcgee
stabby_mcgee

Wait, how could they not know that their homes weren't sold?

 

If you had someone else sell your house and they told you that they had just sold the house, wouldn't the first thing you say to them be, "great, let me have the check so I can use it to pay off my mortgage"?

Chr0noid
Chr0noid

Anyone else find it a little suspect that Sinclair thought this was news-worthy?   Why does this article even exist?   What was the purpose of letting us know that the poor employees over at 38 Studios had to get second mortgages?  Is he trying to guilt trip u us or something?  My inner conspiracy theorist would connect this article to the ever-growing notion that developers and publishers are VICTIMS of used game sales and piracy and need YOUR money, lest they be thrown out onto the streets like Tiny Tim. 

 

Yeah, my mother was recently fired after working dilligently at her workplace for 15 years.   You cannot fathom how little I care about someone needing a second mortgage. 

dadoesch
dadoesch

 @DAOWAce In GS' defense, many news articles repeat info from previous articles on developing stories.  NYT does it quite often.  It's just more efficient -- why rewrite the background over and over again?

Vickman178
Vickman178

 @DAOWAce Honestly though I just bought it yesterday for $60 after playing the demo and I have to say it deserves to sell way more than that. 

 

Its an awesome game and its so refreshing to have a game like this come out when everybody else is making fps games.Well worth the $60 I paid, I have no regrets.

hector530
hector530

 @buccomatic thats funny because Curt Schilling is a ultra far right Tea Partier givin the loan by Tea Partiers LOLOLOL moron try doing some some research 

xenexprime
xenexprime

 @buccomatic Really? it is Obama's fault? not the REPUBLICAN governor who gave the loan? Not the REPUBLICAN(Curt) who couldn't manage the company's finances properly? That's why us Independents are so tired, no party takes responsibility for their actions and blames the other side on everything.

 

So NO I am sorry, but this is something Obama has nothing to do with.

Jamesp2005
Jamesp2005

 @buccomatic Want to know what is worse then politicians? People who feel the need to bring up politics in everything.

Valtero
Valtero

 @buccomaticThis has absolutely nothing to do with anything the president has enacted. Contrary to what Tea Party morons believe, no new taxes have been put into place to "spread the wealth" (are you proud you remembered how to recite what FOX News tells you every day?), in spite of many financial analysts insisting that upper-income and capital gains taxes should be used to create revenue. Also contrary to what you can comprehend is the fact that the president's policies undeniably HAVE created jobs and continue to each month.

 

If you want to blame the RI government for foolishly dishing out a massive loan without knowing how the gaming industry actually works,  then that's fair. None of the policies at the executive level encourage a state to take a huge multimillion dollar gamble on a start-up game developer with zero titles under their belt, or any other start-up corporation with no track record that requires a massive investment with slow, scarce, or highly variable returns.

 

When you spout off right-wing ignorance like the above you reveal yourself as a tool that only understands politics through conservative propaganda force-feeding.

Pro-Aktivity
Pro-Aktivity

 @buccomatic Well the management at 38 studios are in charge of their own financials. I EA doubt they could've predicted what mess this all would become when they got into bed with these guys. Cut EA some slack their not as bad as ppl make them out to be.

rarson
rarson

 @swamptick

 

"When governments are involved, disaster will follow."

 

Fixed.

Valtero
Valtero

 @swamptick Nice way to show you have no idea what "liberal" means in terms of government. This is venture capitalism, beloved vehicle for generations of conservatives.

rarson
rarson

 @jmc88888

 

"Don't worry if they can't find work for 99 weeks they'll go off the roles and be claimed to 'not trying to work' thus enabling the 'official farce unemployment rate' to decline, even if no one actually was hired."

 

Ha! So few people actually realize this. I hear so many people quoting government numbers to support the claim that unemployment is going down and the economy has been improving (for years now). The numbers are bogus. Most of the stuff that the government tells us is bogus. I cannot believe so many people still cannot grasp this yet. Land of the idiot, indeed.

 

PS- Pretty sure nobody reading your comment knows what Glass-Steagall is.

inaka_rob
inaka_rob

 @jmc88888 "Now you know why games are really made by wall street entities.  To pay off their LOANS.  Not to provide YOU with a good game, or to provide their workers with an equitable and fair job."

 

umm yeah... I knew that while I still in my mothers womb. 

williebazerka
williebazerka

 @Fo_Fai

 While I feel bad about anyone losing jobs and the 38 studios downfall we all have our own problems to worry too much about other peoples problems.I think this is a ongoing story so that's why the article  was written.I am sorry your mom lost her job of 15 years and I hope everything works out

DAOWAce
DAOWAce

 @Vickman178 I played the demo (and streamed it; archive up on my JTV/YT channels) prior to retail release.

I watched the streamathon (day of reckoning) hosted by Day9 ALL DAY.

 

It felt nothing but average.  Felt like it could've been more, but it just reeked of console quality and had the shortcomings that developers seem to be required to take for console games (including average graphical quality).

 

Basically, go watch TotalBiscuit's playthrough of it; he basically says everything I felt when playing the demo, but in a well detailed manner.

 

I really feel that if it wasn't $60 it wouldn't have crashed so badly.

 

 

(Also, why have I been directed to the UK version of gamespot? My e-mail is also spammed full of alerts from GS due to this new comment system, yay.)

rarson
rarson

 @Jamesp2005

 

Uh, the story is about the failure of a major government loan...

rarson
rarson

 @Valtero

 

"Contrary to what Tea Party morons believe, no new taxes have been put into place to 'spread the wealth'"

 

Same could be said about Bush. The problem isn't taxation, the problem is spending. When taxation is unpopular, the government covers the bills by printing more money, which inflates the currency and, guess what, reduces your wealth. Inflation is an indirect tax.

 

"Also contrary to what you can comprehend is the fact that the president's policies undeniably HAVE created jobs and continue to each month."

 

Creating jobs is meaningless if the jobs aren't valuable or sustainable. Also, a lot of government policy encourages and enables people to stay unemployed. I mean, just look at welfare and unemployment insurance.

 

Did you know that you can actually get more money back in taxes than you paid in if you make below a certain level of income over the year?

 

"None of the policies at the executive level encourage a state to take a huge multimillion dollar gamble on a start-up game developer with zero titles under their belt, or any other start-up corporation with no track record that requires a massive investment with slow, scarce, or highly variable returns."

 

I certainly can't think of any off the top of my head, and you might very well be right about this, but it would be wrong to assume that you are without researching. After all, government policy DID encourage banks to take huge gambles on subprime loans and lead to the collapse of the housing industry. Government routinely gambles with your hard-earned money and makes bad investments.

Shiftfallout
Shiftfallout

 @Valtero You are right, he just called them "fees" instead of taxes. The hypocrisy in your post is that you are touting idiotic left wing ignorance. Both parties suck since they are run by self interest big gov elitist.

Pro-Aktivity
Pro-Aktivity

 @buccomatic To be fair they knew they had to make those payments back for while now. So wth was their management doing all this time? If a company fails to pay back a loan, are you gonna give them another one?

rarson
rarson

 @Valtero

 

Capitalism has nothing to do with government. Government loans are the opposite of capitalism.

Phil-teh-Pirate
Phil-teh-Pirate

 @buccomatic

 

Quick! Get out the tin foil hats! Heaven forbid news about a game developing company and the developers who develop the games be posted on a gaming news site!

 

Crikey! We got ourselves a mystery here scoob.

Iamshmee
Iamshmee

 @DAOWAce You just have to go into your settings and turn off email notifications for user comments. I was annoyed by it at first too.

TomJimJack
TomJimJack

 @buccomatic Let's use politicians as Rockstar games uses them... for target practice!

Pro-Aktivity
Pro-Aktivity

 @rarson Or about a company that made poor decisions on how to handle their money. Seriously ppl keep politics and religion out of gamesites. It only ruins the mood.

Pro-Aktivity
Pro-Aktivity

 @buccomatic Lol dude, no comment. Like I said earlier I don't do politics or religion. Does discussions can only end badly.

TomJimJack
TomJimJack

 @Pro-Aktivity EA is not in business just to make money but to make money while pissing everybody off!

Pro-Aktivity
Pro-Aktivity

 @buccomatic I din't say they are angels, only that their not as bad as ppl make them out to be. Their in the business of making money, like every other business out there.

 

I remember when John Riccitiello took over and promised to focus more on new IP's. Those games did not do well, It's a miracle we even got a sequel for Dead Space. Or how they kept pouring money into Swtor when any other publisher would've forced Bioware to release that game along time ago. Which is more than I can say of alot of other publishers.