Kingdoms of Amalur dev misses payroll

Rhode Island government says 38 Studios is making overdue loan payment even as employees go without pay.

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38 Studios is making up its missed loan payment, but apparently at the expense of its employees. According to Providence, Rhode Island-based news outlet WPRI, the Kingdoms of Amalur: Reckoning developer is submitting a $1.125 million loan payment it missed, but told the state's Economic Development Corporation that it was unable to pay its employees as scheduled.

This was one Reckoning 38 Studios was unprepared for.

The debt in question dates back to 2010, when the EDC secured a controversial $75 million in loans to entice 38 Studios--founded by former Major League Baseball pitcher Curt Schilling--to relocate from Massachusetts to the Ocean State. According to the WPRI report, 38 Studios employed 379 employees full-time as of mid-March.

The EDC board yesterday held an emergency meeting to discuss whether to provide additional assistance to 38 Studios to keep the company in business. While the board made no ruling on the matter, it is expected to consider the topic again on Monday. 38 Studios employees aren't the only ones being hurt by the company's situation. Yesterday, EDC executive director Keith Stokes, who helped structure the $75 million loan, resigned from his post.

Kingdoms of Amalur: Reckoning is the first title from 38 Studios. Designed with the help of R.A. Salvatore, Todd McFarlane, and Ken Rolston, the action role-playing game received a positive critical reception upon release in February and sold 330,000 copies in the United States across the Xbox 360, PlayStation 3, and PC, according to NPD data. Additionally, a sequel is in the works.

As of press time, a 38 Studios representative had not responded to a request for comment.

Discussion

200 comments
ryan_sr97c_1
ryan_sr97c_1

i think KoA was just unlucky when they targeted their customer base.  it wanted to be an action oriented RPG hoping bridge to the worlds of RPGs and action adventure games (and win fans from both camps in the process).  however, the game that came out is nothing compared to Skyrim (which is your true blue western RPG) and it fell short of your frenetic action adventure games like GOW.  instead of winning the hearts and wallets of both camps, it merely piqued the interest of small population from both.  its an awesome game i think, and the reviews from any gaming media outlet pretty much says it all.  its sad that this is happening to them.  i personally want KoA to march onwards to a sequel so they can beef up where the first one failed at winning fans.  hearing this news is making it feel we wont see KoA 2 in our future. heres to hoping the team gets paid asap and for those like me who are hopeful for the game to eventually see more of KoA in the future

redness19
redness19

Shame, KoA wasn't too bad but it wasn't too good either. It was a mediocre title all around. It could have been something special if they had the right people.

GeorgeSyll
GeorgeSyll

Saw that coming long before the game was released.

 

It was clearly going to be just an overhyped expensive failure. Everything about it was obvious even since the announcement.

 

 

  When i read that big names were involved i thought "MUST BUY", but when i saw the very first screenshots i realised what was happening.

 

 They just used the names to advertise the title.

 

 McFarlane was supposed to be the Art Director, yet the game didn't look anything close to McFarlanes artstyle. Just no connection at all.

 That was a major turnoff for MANY people who were expecting something much more detailed,mature,dark,brutal,gory.

 

 When i read what was the story about i remembered that Salvatore was supposed to be the Creative Director and create the story.

  Yet again the story was just...meh. I've read a LOT of Salvatore's books and the story didn't seem to have anything to do with his style.

 

 Gameplay wise Ken Rolston was supposed to help develop it as he had designed Elder Scrolls Morrowind and Oblivion wich were succesfull.

 But the game again had absolutely nothing in common. Like he never had anything to do with it. It was just mediocre as well.

 

 

  What people payed for was a generaly half decent game. Honestly it was a child's action game not even an RPG. Had some RPG elements but few.

 

 Don't get me wrong here, sure it was fun for a few hours. My 12 year old cousin loved it (i bought it as a gift) and even my sister had a blast playing it.

 

 Generaly for people who aren't much into true RPGs and like lighthearted action games with minimal substance, was good.Maybe even GREAT like some called it.But for me it was just mediocre at best.

 

 

  Also don't forget another thing. SKYRIM. EA released the game after Skyrim, and the developer didn't even care to make it moddable....that my friends was a double fail.

 The game looked and played worse that Skyrim and it didn't even gave you the chance to make it better. That's one of the main reasons it failed.

 

 

I feel bad for all those people. Big mistakes have big consiquences.

 

And from what i read they are getting ready to make the mistake again by making a sequel and an MMO.....i just don't understand what goes through their minds. All or nothing gamble....? Mark my words, this will not end well.

naomha1
naomha1

First off @jmc88888 - you are a complete and utter moron. "Their free out of thin air money" wasn't free and it didn't come out of the air. It came out of the pockets of the folks of Rhode Island and should be paid back ASAP. It was a nice big 75 million dollar loan that no resident of Rhode Island EVER got to vote on. Your sing-songy haiku style post is,at the least, mildly irritating ,and at the worst, a whole lot of puff without any substance whatsoever. First, get your facts straight. 1. 75 million dollar load being defaulted on. 2. 379 employees as of mid March. Why so many employees still when Amalur already shipped months ago? Cut that shit down to 20. 3. If you don't pay off your debt, you default and then get shut down. 4. Amazing RPG. Huge campaign. Epic battles. That game should have easily sold over 1 million copies. Why didn't it? Not sure. 5. "Poor guys at Amalur don't get paid because the 'debt' needs to be paid"? Do any of you, for one second, think that 38 Studios is moving full tilt forward with upwards of 370 employees and missing paychecks?  Really? Did someone from 38 Studios step forward and say this? I don't remember anyone saying jack from 38 Studios, much less Curt Schilling saying this. 

   Don't believe the hype. 

Joshuatree25m
Joshuatree25m

From Curt Schillings Facebook page, Curt Schilling: To anyone posting here, despite the ENORMOUS amount of misinformation and the amount of time it would take to make you understand the truth, know this. At no time, AT ANY TIME during this process, did 38 Studios EVER ask the State of Rhode Island for a bailout, financial aid, nothing.

jmc88888
jmc88888

Wall Street/The City strikes again. Their free out of thin air money gets paid off first.

 

Screw the employees who actually worked for their wages that aren't being paid.

 

The 'investors' take the profits, necessitating the need to be a perpetual debt slave.

 

This is the setup.  However with this company in particular, they didn't get it 'going'.  But that's where they were heading had this launch worked.

 

Either way, employees should always be paid first. 

 

But we live in idiot world, where Wall Street/The City's idiocy misrules supreme.

 

You don't pay off your debt, you can't increase your debt capacity, which is all you were really doing by purchasing Amalur.  Enabling a new firm to increase the amount of debt capacity they can carry.

 

This is the Wall Street model.  With a little help from the gov't as well.  Completely backwards, and gives you all the crap you hate in gaming.  Non customer focus.  DRM.  DLC.  On disc you bought DLC. Always on.  Super duper 100 dollar packs.  Smaller campaigns.  Fewer multiplayer maps.  BIGGER advertising campaigns.  More hype, less substance.  Online passes.  Pulling online functionality in a few months. I'm sure plenty of others. 

 

Treating you like a slave, because they are a slave...to debt...perpetually, and never getting out NO MATTER HOW MANY you games you buy. 

 

Poor guys at Amalur don't get paid, because the debt 'needs' to be paid.  One day we're going to wake up and the gaming industry has gone poof in the night, because all their debt capacity will have been pulled.  The gaming industry sold their soul to the devil, and the time for collection is coming.  Not sure the exact day, but it's coming.  For these poor saps, looks to be already almost here.

Nightrain50
Nightrain50

can't believe it's only sold 333,000, game was very good, if you like rpg's and don't have this game you should be ashamed of yourself, wonder why we're not getting that many great sp games anymore

OurSin-360
OurSin-360

Sucks for employee's, but I guess it's the risk you take with investors especially when you make an ambitious game that doesn't sell.

maxwell97
maxwell97

Aaaaaand that's why government should not be investing in businesses.  At this point, it's sheer blindness to believe that a politician will invest the taxpayer's money more soundly than the taxpayers themselves.  Never worked, never WILL work.  Investors are motivated to put their money where it will make a financial return and be productive; politicians, by contrast, put the money of others where it will make a political return as a giveaway to somebody, because no one wanted to put their own money there by their own choice.  If government invests in something, it is, almost by definition, a losing proposition.

Ghostdog201
Ghostdog201

So 38 Studios becomes the Solyndra of the video game industry.  Please, for the love of pete, and the sake of decent video games, keep the post office out of the video game business.

richten71
richten71

Been reading through all the comments of how people feel really bad for the company and all the employees that didn't get paid. But how many times do I read from people about buying games used so the developer doesn't get the money or not buying the game at all because it was published by EA or waiting for a year or two before buying it? This is exactly why we need to support game developers when a game is good. It also said a sequel is in the works. If I ain't getting paid, I am definitely not doing any work on a sequel. I hope the employees get their money.

Bozanimal
Bozanimal

Users seem to be having difficulty figuring out what happened here based on the above story. Let me try to summarize:

 

The Rhode Island Economic Development Corporation (EDC) is acting as financier to 38 Studios. The EDC granted a $75mm load to the Studio to entice them into Rhode Island. Note that the loan isn't actually for Amalur, it's for an upcoming project called, "Copernicus."

 

Consider also that if Amalur sold 330,000 copies, that's only $16.5mm in gross retail sales assuming a retail price of about $50 on average, meaning it excludes the commission paid to distributors like Gamespot and Valve, marketing, and physical distribution costs like shipping and packaging. This is certainly insufficient to pay interest on the $49.8mm borrowed by 38 Studios so far.

 

38 Studios also backed out from presenting at E3 this year, which is a very, very bad sign. Nobody is talking to the press. Employees are not talking to anybody.

 

---------------------------------

 

So, the big question, you wonder, "Why is this happening?"

 

I want to first point a finger at IBM. "The EDC hired IBM in 2010 to provide ongoing third-party monitoring of 38 Studios’ progress." If they had been properly auditing the company as they were supposed to, the EDC would have had more advanced warning of the forthcoming default.

 

Somewhere along the lines someone had to have been overpromising. Whether it was the EDC to taxpayers to entice 38 Studios out of Massachusetts (the EDC is under pressure to create jobs in RI), finance at 38 Studios when representing the company - meaning financial projections - to the EDC to secure the loan, or one two many drinks between upper management and the State, someone high-up really screwed the pooch.

 

We won't find out what really happened until 38 Studios fails, which looks more and more likely, unfortunately. The ultimate losers here are going to be Rhode Island taxpayers, should the studio shutter. The employees will be on hard times too, obviously, though having a top-shelf game on their resume is a small silver lining.

 

I do hope that - somehow - 38 Studios pulls itself back together.

 

---------------------------------

Read more here:

 

http://www.wpri.com/dpp/news/politics/local_politics/38-studios-pays-edc-not-employees

 

http://blogs.wpri.com/2012/05/14/38-studios-finances-under-scrutiny-ri-taxpayers-75m-at-risk/

Ringx55
Ringx55

Okay let's get this straight for once. This loan, and contract in their entirely had to with their MMO, Project Copernicus. They originally were located in another state working on it, RI offered them to move for this loan. The only thing Reckoning has to do with this is that it's collateral if they go under, as well as the potential revenue stream that it supplied. IT STOPS THERE.They employ over 250 workers at their RI location, for several years now. They have been working on the MMO for about 5-6 years. They're an independent company and this is extremely difficult finance wise.It takes a ton of time and money to make an MMO, and with no revenue stream and no giant publisher to have a ton of money it's hard.Also for an update to the article: "A check from 38 Studios was hand-delivered to the Rhode Island Economic Development Corporation at approximately 5 o’clock this evening. However, upon learning from the Chief Financial Officer of 38 Studios that there were insufficient funds to cover the payment, the check was returned. The EDC remains willing to accept readily available funds." via WPIC.

mkaliaz
mkaliaz

Seems like starting this game as an MMO was a huge costly mistake. That must be where so much of the money went. Hope they can somehow pull through this, I actually really enjoyed Amalur and was looking forward to the next game.

BrianGyrofire
BrianGyrofire

Applied to this company about two years ago. Now I'm pretty glad that I didn't get a call back!

Petnos
Petnos

Ouch, 38 didn't have that one coming. They made a pretty good, polished game, they don't deserve this. Where did it all go wrong? :(

 

69ingChimpmunks
69ingChimpmunks

If you can't afford the money to stay in buisness then you shouldn't have started said buisness in the first place. Now all the people who worked hard to make this game get to suffer because of it. Great job 38 Studios.

kattamuuran
kattamuuran

just another voice in the chorus i is, but this certainly is a shame. i have greatly enjoyed the game myself, and thought that it had a nice look to it, and it plays so smooth. however, if i was an employee for the company, i'd be beyond pissed right now. i suspect this would be one of those cases where upper management choices negativly impact alot of good, creative people. i am a social worker and often meet with young people who express such passionate interest in being involved in the VG business, and all i can say is when i read stuff like this and other stories like fallout from LA noire, i suspect being in this business does not offer alot in terms of secure, stable employment. for my part, i will always do my best to buy and support the games that feel like they were made with some love and care, and the rest of the shovelware? well, i have to admit, that is what the sale bin at gamestop is for.

 

YummyMango
YummyMango

Sad news. I feel bad for the employees. 

vernholio
vernholio

Real bummer news. Got a buddy that works for them... He even picked up from SoCal and moved all the way to Rhode Island for the gig.  Really hope this all works itself out.

ChameleonX
ChameleonX

I really hope this thing works out for everyone involved.  I'd Hate to see another gaming company go down.  

 

That said, I'm almost 30 hours into KoA: Reckoning and am enjoying it thus far...haven't even scratched the surface yet.  Not too bad for their first effort.  It's too bad it came out mere months after Skyrim and only 1 month before Mass Effect 3; without much fanfare from EA that I recall.

HonorOfGod
HonorOfGod

This is very sad news. They should try and partner with another Dev and ask them to pay off what they own and than work for less and let the other company get the bigger profit on the new games until they make up for how much they need to give them. After that all can go back to normal and we end up with bigger and better games from a bigger and better company.

sonicare
sonicare

Wonder why they are having so much trouble?  I thought their game did pretty well in sales and reviews.

oldschoolvandal
oldschoolvandal

At this point the only real concern is with their employees....sad news.

Let's hope some solution is found, employees and debts get paid.

Regardless of the sequel being released or not.

deathblow3
deathblow3

this is why more companies are moving to the cheaper indie titles and mobile market 330,000 copies is not going to cover the cost of making this game. and keep the company open or food on the table and rents paid. just terrible

J-Boogie
J-Boogie

 @ryan_sr97c_1 I think you said it well.  I prefer action games and it interested me enough at first to download the trial, but that's as far as I went.

SirNormanislost
SirNormanislost

 @naomha1

 those 370 employees  are busy working on other games so "cut that shit down to 20" is not possible try checking your facts

aznj03
aznj03

I'm not going to bother to repost what I said earlier, but I think they made the right decision by choosing not to play their employees. Remember, if they do and up entering bankruptcy, employees are considered high priority creditors. The only people in front of them creditors that hold secured loans with PP&E as collateral. It was the better decision to make to keep the company alive. They didn't need to pay their debt, they had a choice, and I think they made the right one.

nathangray
nathangray

 @richten71 "if the game is good" I should think, is precisely part of the problem.

goldenocean
goldenocean

 @Ringx55

 I think the core problem here is really that they were expecting Reckoning to be a HUGE success, when it was only a moderate success.  Seems pretty obvious that they planned their expenses based on it being a lot more profitable than it was, since no half-way competent company would go this deep into their projects without some idea of how they're going to cover the loan repayments.

 

Unfortunately it's a pretty common problem with new businesses that see a little success, or have a great idea/good prospects, to over extend themselves too quickly or let their expenses get out of control - and plenty of fairly successful companies have ended up going belly up that way.

Ringx55
Ringx55

I apologize for the spacing, it seems Gamespot didn't like how I had formatted it originally....

Bozanimal
Bozanimal

 @69ingChimpmunks "If you can't afford the money to stay in buisness then you shouldn't have started said buisness in the first place."

 

Starting a business is risky. If everyone were to adhere to this philosophy, nobody would ever start their own company.

 

What's happening is a shame, because 38 Studios made a great game and they obviously have many talented employees, but that doesn't make this comment right.

cogadh
cogadh

 @kattamuuran 

Because stories about secure, stable game companies are such big news (sarcasm). No one actually writes news stories about companies that are just doing their jobs, are not hugely in debt and can still pay their employees because that is not news, that is the norm. When you only hear the bad news about the gaming industry, you get a warped perspective on it and a couple of companies having issues does not mean the dozens, if not hundreds of other studios out there are perfectly secure places to work. As a social worker, you should have more than just "suspicions" about an industry or what you read in a handful of news articles, especially if you are going to be giving others advice about that industry.

mkaliaz
mkaliaz

 @sonicare Sometimes its a lot more than sales and reviews. Good example is LA Noire and the failure of Team Bondi. Debt and cost overrun can kill young companies even if they made a great game.

vernholio
vernholio

 @deathblow3 Understand where you're coming from on the sales numbers... Doing the math, though (330K @ $60 a copy), it's hard for an "Average Joe" to fathom how $19.8 million can run out so quickly (and I work for a software development company, so I actually do understand the "why's" and "how's") .  Regardless... it's bummer news.

naomha1
naomha1

@SirNormanislost If you know absolutely anything about the games industry, you know you keep a small dev unit while games are in their infancy. Amalur 2 and this project Copernicus are both in their infancy of development so both teams should be small right now. Maybe 20 a piece. Check your facts you moron. In fact, maybe I'll just call you moron2, for wanting to jump on the nonsense bus.

Ringx55
Ringx55

 @goldenocean I don't think they believed creating Reckoning was just for some revenue and to keep them afloat while they make the MMo. It was more about building the brand, lore and world.

kattamuuran
kattamuuran

 @cogadh well, i didnt really consider it giving advice. funny, i never thought of news as having a warped perspective (sacrcasm). but clearly, i should do more research before i post something, like the majority of the other comment posters i encounter on video game websites (sarcasm).

brindlefox
brindlefox

 @vernholioBecauise at best, even fully self funding, the developer will only get about 40% of the retail and that only after months and months of delay due to retail lag.  the game probably cost around 20M so they are really underwater with only 330K sales. 

 

JimmeyBurrows
JimmeyBurrows

 @naomha1  @SirNormanislost Although I think they do need the staff to get the games out fast to have any chance of repaying (the games aren't in early dev, they've been developed along side each other and you will do better to have the same people working on the sequel rather than firing and hiring new people)... There's also the fact that the loan was to bring jobs to Rhode Island, so cutting back to 20 people would really screw that up too...

Personally I think the whole mess is on the head of those who decided relocating them was a good idea, shouldn't have been a damn loan either, they get nothing out of moving so they should either pay them to move or leave them be, rather than taking the opportunity to try and bleed them dry of money, which is clearly what their plan is since they're willing to let those people who've been relocated go without money so they can get a first chuffing payment.

secher_nbiw
secher_nbiw

 @nathangray It didn't get hammered, and you know it.  It's not great, it's not crap, it's decent. You may think the game was crap, but that is not what the general consensus says. 

nathangray
nathangray

 @Ringx55 The game didn't get universally decent reviews, it got hammered for being a single-player game filled with Kill X Quests. Don't let a few glowing, paid off press reviews fool you. It's common sense by now you don't go to the people who actually get paid for reviews, like Gamespot, you go to the forums of the game and see what actual players are saying, and you go to the smaller blogs that don't have anything to benefit. That the game sold only 330k copies should tell you something. That only sounds like a lot, 330k*Box price probably didn't even cover development costs, let alone the price of continued development on DLC, the price of development for sequels, and the price of development on the MMO. If it did, none of their money woes would be happening, I would think.

goldenocean
goldenocean

 @Ringx55

 I never said that Reckoning was JUST for revenue, I said that they overestimated future revenue and based their decisions on that overestimation instead of being cautious about an unknown future result and not gambling the company on it.  Classic over-optimism from some types of people who start up new ventures (since optimism is required in the first place).

vernholio
vernholio

 @brindlefox Thanks for the explanation.  Fleshes it out for the Average Joe, as I mentioned.