No federal charges for 38 Studios

Federal criminal charges will not be brought against Curt Schilling's famously failed game company; state investigation remains ongoing.

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The fallout surrounding Curt Schilling's bankrupt game company 38 Studios will not result in any federal charges, the United States Attorney's office in Rhode Island has said.

38 Studios still faces a state-level investigation.

A spokesperson for U.S. attorney Peter Neronha told The Associated Press that the office conducted a "narrow and focused" examination of 38 Studios to judge whether or not federal laws were broken, and has decided to not continue the search.

Though 38 Studios no longer faces a federal case, the Amalur studio is not out of the woods yet. A state-level investigation remains ongoing, with Colonel Steven O'Donnell of the Rhode Island State Police confirming that all leads are being pursued.

A federal investigation into 38 Studios began in June, when the company filed for bankruptcy after the studio very publicly crumbled.

Rhode Island lured the developer to the Ocean State in 2010 with a controversial $75 million loan. The company was to create as many as 450 jobs by 2012, but instead shipped only only game--Kingdoms of Amalur: Reckoning--and laid off its entire staff in May.

Discussion

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Gladestone1
Gladestone1

Skrims combat is week compared to this fun game..

terrascythe
terrascythe

Don't forget this was a bonded loan.  There were probably 1,000 bank investors that issued the bonds.  Each of those bonds were sold-resold a dozen times or more.  Each holder probably took 0.1 to 0.5 percent of the coupon interest.  Bottom line is there was probably $1 billion in overall transactions, but the final purchaser gets the shaft.  It's a great way to launder money!  I'm not saying that's what happened, but we all know the bankers (like Corzine) will never get charged. 

 

Schilling should have never signed that contract!  Anyways he's being interviewed on ESPNs "Broke" Oct 2

Hurvl
Hurvl

Rhode Island vs Curt Schilling - who's s(c)hilling who? Either way, it's sad that they had to close up so soon. The epic combo of Ken Rolston (Elder Scrolls series), R.A Salvatore (Forgotten Realms novels) and Todd McFarlane (Spawn) turned into an epic anticlimax.

toddx77
toddx77

I remember last year when the game was announced the developers were saying how amazing the game play was and the combat was like nothing ever done before.  I also remember all the hype around it and when I played the demo there seemed nothing to special.  Ya it was fun but I didn't buy it when it came out since I figured I would wait for a steam sale.  It was like 38 studios thought if there was enough hype the game would sell a lot.  I will say though that a month or so after the games release I was at gamestop and someone came in asking for a used copy of it.  The employee said they had no used copies and neither did any gamestop within the area, if that counts for anything lol.

jinzo9988
jinzo9988

I've said it before, they were way too ambitious for their first game, and had silly expenditures that they didn't need.  Todd McFarlane and R.A. Salvatore have no business being a part of a company's first game.  This game reeked of having money just thrown at it.  If they were more humble with their first couple of games, maybe they'd still be around.

 

In fairness however, I wish more companies took big risks.  I think too many people are playing it safe right now.  I'm just saying, don't put all your eggs in one basket and risk an entire company, especially with that many employees under your wing.  Make sure you can actually take the hit before taking a risk like that.

Victorious_Fize
Victorious_Fize

Who ever thought politics & gaming mix.

 

Is wrong.

Gladestone1
Gladestone1

You no what guys dont hit a guy when hes down..Bongsyas_23 that means you,,He tried to create a game in a genre that only skyrim is king..Cant faul him for trying to enter the industry i thought the game myself is fun to play..Sure some of it fealt bland but the game was differnt...A skyrim type game with diablo loot is a awesome idea..Im hopeful some one else decides to try this idea..Liked the graphics on some of my builds an i still play this game today,,Im sad they didnt make it in the gaming worlld..A new studio is always a good thing for the community..Not a bad thing..

Also thats rhode islands problem..There the ones who sought curts group and brought them over to rhode island..Also there the ones who cashed over that kind of money..1.1 million sales is not a bad first start..Im just glad the people where able to move else where and find jobs..

 

Its a shame curt lost his life savings over this though..Hope you bounce back curt some place..Hope you and your family are ok..

bongsyas_23
bongsyas_23

does this mean Schilling is going back to baseball?

maxwell97
maxwell97

That's the thing about "economic stimulus" - if a company needs government money, it means private investors don't want anything to do with it, because it's going to fail. Hey, GM's doing great! Their stock price surged in Q3 to almost $23, and it only has to hit $53 for the taxpayers to break even on their 500 million shares!

Raeldor
Raeldor

$75M is a LOT of money.  Why didn't they start with a lower budget indie game?  I mean, if this were the movie industry for example, no-one would throw $75M at a first time director.

DevaGolgotha
DevaGolgotha

Well, I guess that means they aren't entirely screwed.

thom_maytees
thom_maytees

This is good to hear, but I would like to hear more on the state investigation.

SolidTy
SolidTy

What an ugly mess, man these damn politicians.

Xian042
Xian042

Quoted from a RI source:

 

"When the RI loan was approved, then govorner Don Carcieri was all for it, his encumbent, Lincoln Chafee, was opposed to it.

Kingdoms of Amalur was never supposed to be the money maker, it was the appetizer to the main course which was Copernicus.

Now, Chafee is elected into office replacing Carcieri, he looked at the books and Shilling misses a loan payment. Chafee now has a great opportunity for an "I TOLD YOU SO" move, he exploited the Amalur "failure", and did all he could to dismantle the company and come out the wiser. It didn't matter if there was a bailout or viable plan for profit, 38 Studios HAD to fail so Chafee could save face."

 

I guess the IP is now Rhode Island property, it will mostly likely go to auction the rest of the assets. Perhaps another developer will adopt the unfinished Copernicus and release it after all. This is a lesson to keep politics out of gaming.

Hellsasin
Hellsasin

I knew 38 wouldn't last when i heard of them. Out of the blue a new developer trying to impress the audience with "new" and "innovative" things. End result is a boring Fable rip off that obviously ended in failure.

Smokescreened84
Smokescreened84

It's a great shame what happened to the studio, Kingdoms of Amalur was a very enjoyable and fun game that while it wasn't perfect, it was a very good first and sadly last attempt from them.

 

They deserved better than what happened to them, Kingdoms Of Amalur showed a lot of creative potential.

grokh
grokh

i dont get it, they made the game i bought it. they sold a lot. and yet the company failed.... its one of the problems with economy these days, theres always someone on the background pulling strings no one sees, and making money out of destroying things.I wouldnt doubt a lot of politicians made money out of this.

Surllio
Surllio

Seriously, why should there be an investigation?  The company failed.  It was RI that made the decision to loan them WAY too much money.

CaptWaffle
CaptWaffle

 @Crush_Project Yeah, except for the part where it created Western Society and the World's Dominant Superpower.  You don't want capitalism, just go to the Soviet Unio...... oh wait.... they got tired of failed 5-Year-Plans and really, really long lines for bread and dissolved.  Capitalism is one thing that doesn't end in a 0-sum game..... you have a situation where you can have more than one winner for every loser.... deals where all sides benefit and not just one. 

(sorry, I just feel the need to defend Capitalism when people speak ill of it.... it has done more good in the world than most ideologies put together.)

Agronot
Agronot

@Suikogaiden Can't steal something if it's given away...

Ringx55
Ringx55

 @SolidTy If there's anything to take away from this is that Politics and businesses (especially video game) do not go together.

scottabc
scottabc

 @Xian042 In principle I agree that politics should be 'kept out of gaming' but unfortunately I dont think its any more likely than keeping 'business' out of gaming (which I would love if actually possible). Because business is politics and vice versa.

ProjektInsanity
ProjektInsanity

 @Hellsasin

 As others have said, you're a little off the mark.  It was reminiscent of Fable, but nowhere near as boring and simplistic.  Admittedly, neither was it remarkably complex.

SolidTy
SolidTy

 @Hellsasin No, it wasn't as bad as Fable, which itself is a mishmash of action games.

FarBeyondThe
FarBeyondThe

 @Hellsasin wow no game deserves to be called a Fable rip off, you are going too far. Ya the game was nothing new but fable is the ultimate crap.

blackothh
blackothh

 @buccomatic i hate to burst your bubble, but EA is nowhere near that smart or capable

TrueGB
TrueGB

 @buccomatic No, that's wrong. EA was only a partner. They wouldn't have gained much no matter what happened. The fingers can be pointed at Schilling for thinking he could jump into the MMO space with no revenue stream, since he funded the majority of development at first, and the politicians. EA even gave 38 a loan (the money they would have gotten for Amalur sales). 

It's really not that complicated. Someone spent too much money and some dumb politician wanted to one-up his predecessor. Case closed. Now let's hope EA is interested enough in the IP to buy it.

---Cipher---
---Cipher---

@buccomatic So EA (evil as they may be), went through all that just to steal a new IP that couldn't make it's money back? THEN, EA actually failed to realize that ownership of the very thing they sought the whole time, would go to the primary investor? Then, EA expected a f2p mmo, with no track record, would "crush" all other mmo's (sort of how every other MMO that comes out crushes the competition). And when was any of this a multi billion dollar project? In summary, EA decided to go out of their way to not gain the IP they so desperately wanted, and, one that couldn't sell enough to get back the losses?

Suaron_x
Suaron_x

I don't think Amalur or Copernicus was ever worth "billions."  Further, I don't think EA masterminded your conspiracy.  They negotiated a very, very favorable publishing deal with an extremely naive gaming company.  Likely they sold 38 Studios on the F2P model, after all it's better that companies they don't own try the F2P models out before EA owned studios commit to them.

Stiler
Stiler

 @grokh The problem is two fold. KoA sold well, and was a success. However 38 studios did not start out with it.

 

38 studios started out making an mmo, codenamed Project Copernicus

 

Early on the studio moved from where it was to Rhode Island because Rhode Island offered them a huge loan, but the loan had strings attached that they should not have taken, mainly the 450 employee issue. (many major AAA developers don't even have that many people working for them).

 

Part way through their developing of Project Copernicus they ended up buying Big Huge Games, who were working on a single player game. They ended up making this single player game that they were working on into Kingdoms of Amalur. 

 

So they now had two games being developed, KoA and Project Copernicus. For a new studio, with no known IP and a limited budget with no real investors outside of the state loan, this was a terrible business move.  On top of this Project Copernicus was late and kept falling behind schedule.

 

They shipped KoA and it got favorable reviews, sold VERY well for a new IP and overall was a success. however because of their mmo that was in developed for the entire time it had drained their funds, they needed investors and supposedly they were about to get some, however the RI governor publically came out and attacked the studio, flaunting it's financial issues in public for everyone to see and scared any  potential investors away (at least according to Curt).

 

Company could no longer afford to pay it's employees and had used up all the loan money with no investors. PE was far overdue and they just couldn't afford to pay their own employee's even, so it went belly up.

 

38 studios would have been smart if they didn't jungle two games at once, and ESPECIALLY if they didn't try to develop an mmo off the bat with no real experience. They dove straight into the deep end. MMO's are the most costly games to develop on  top of which if they fail you can lose big. Not to mention most mmo's fail these days, especially ones built to offer a similar game experience as WoW or not built around the changing mmo model (Free to play, microtransaction, etc).

 

They should have simply bought Big Huge Games, released Kingdoms of Amalur (which was a success) and THEN after the IP was well known and did well either make a sequel to it that was better, or go for an mmo then.

 

Taking the loan (whichi they should have never taken) and developing two games at once, one being an mmo, for a new studio was the mistakes they made.

Lhomity
Lhomity

 @Surllio As I recall, there were questions about the financial decisions within the company.. Most was speculation, but if there are allegations of fraud and the like, sometimes investigations are a formality.

 

Example:

Mass Effect 3 senior designer Manveer Heir @manveerheir:

"The amount the ppl at 38/BHG have been lied to by executive management is ASTOUNDING. If they aren't lies, then it's just gross incompetence. Either way, I hope the execs who made this bungling worse than it needed to be are held accountable and never work in this industry again."

 

http://gamespot.com/features/amalur-developer-shuts-down-industry-sounds-off-6378624/

Ratatoskr321
Ratatoskr321

 @CaptWaffle  @Crush_Project To hijack Churchill's quote: Capitalism is the worst economic system except for everything else. :)

 

When it comes down to it, whatever your feelings about capitalism may be, it's hard to say alternatives have worked out better lol.

blackothh
blackothh

 @Xian042 as soon as i heard that they were shutting down the studio, i shook my head, anyone who runs a project that they need up front would be an idiot to can the plan and lose all your invested money BEFORE they start pulling money in from their product that was most likely going to sell. but then again they were also the idiots that baited the company into the state.

 

Of all the stories ive heard in the gaming world, this is the one i most want to know the absolute truth about because it smelled the most fishy.

Lhomity
Lhomity

 @buccomatic P.S. I don't personally believe that Alleged $50 million figure that EA advanced to 38 Studios btw. I tried finding a source to back it up, but there isn't one. Its just a number that's been thrown around on various forums and such. In other words, its most likely completely false. There's no way EA would have paid a $50 million advance without taking more control and future publishing rights. So just a rumor.

Lhomity
Lhomity

 @buccomatic Sorry, but your conspiracy is flawed, naive and clearly influenced by your dislike for Electronic Arts. There is no evidence that EA even had anything to do with 38 Studios at the time the deal with Rhode Island was made in July 2010.

 

38 Studios became involved with EA through EA's partner program, which is typically provided to 3rd parties seeking cheap and usually non-restrictive publishing terms. Though contracts may vary, it is known that EA also put money (Alleged $50million) into the project - most likely for the ME3 crossover promotion, a few tweaks here and there, and the demo that 38 studios apparently didn't want to do.

http://www.ripten.com/2012/06/25/in-first-interview-after-38-studios-collapse-schilling-still-blames-chafee/

 

EA did not obtain full rights to 38 Studios IPs, especially Copernicus. EA didn't even sequel rights or the industry-standard "right of refusal" for a sequel, that 99.9% of every publishing deal ever made includes. Indeed, 38 Studios were negotiating with Take Two to publish a sequel.

http://au.ign.com/articles/2012/07/24/grand-theft-auto-publisher-nearly-financed-amalur-sequel

 

EA did later express an interest in partnering for a sequel.http://www.videogamer.com/xbox360/kingdoms_of_amalur_reckoning/news/ea_would_love_to_partner_on_kingdoms_of_amalur_reckoning_sequel.html

 

At present, 38 studios IP remains property of the State of Rhode Island. Your hate for EA is misguiding you (A common flaw among passionate EA bashers)

 

See also:

http://web.archive.org/web/20100731001844/http://www.projo.com/news/content/38_Studios_vote__07-27-10_JIJB71G_v18.3dd3796.html

 

 

Nice effort though. Fox Mulder would be proud.

CyhortI82
CyhortI82

 @buccomatic  @el_danny_m Shhh! Don't say that! Don't you know they're watching you RIGHT NOW? You need to stay alive so you can keep fighting the good fight brother. We'll take down those corporate sons of b****es one day! How dare they make money! Their evil conspiracies will be exposed! VIVA CHE! VIVA CHE!