38 Studios and Big Huge Games, creators and developers of Kingdoms of Amalur: Reckoning, are no more. After a well publicized run-in with the state of Rhode Island over a missed loan payment, it was announced today that all employees of both companies, 379 in total, have been laid off. No employees have received a pay cheque since April 30th.
Of Kingdoms of Amalur: Reckoning, the Governor of the state of Rhode Island, Rhode Island, Lincoln Chafee, said:
“The game failed,” he said. “The game failed. That was integral to the success of the company.”
He told reporters that experts told them it would have had to sell 3 million copies to break even. Schilling has said that the game sold about 1.2 million copies in its first 90 days.
“Companies fail over night,” Chafee said, in response to a question about the sudden closure.
Now, calling it a failure is something of a misnomer. To “break even” Kingdoms of Amalur: Reckoning had to sell 3 million units. It’s being speculated that where the failure lies isn’t so much with the performance of Reckoning, but with the studios projects and their reliance on its performance to fund the ongoing development of “Project Copernicus,” a long-in-the-making MMORPG. 1.2 million copies in a month-and-a-half is a decent number, even for a game as large as Kingdoms of Amalur: Reckoning. A more conservative estimate in sales and budget might have saved the studio (though this is, of course, speculation on my part.)
This story has been developing for several days, since it was first revealed that 38 Studios had failed to pay 1.125 million dollars to the state of Rhode Island, a payment as part of and agreement for a 75 million dollar state guaranteed loan that helped lure 38 Studios to Rhode Island from Massachusetts. 38 Studios eventually made the payment (after one bounced cheque) at the expense of paying their employees. Failure to make further payments on the loan leaves the tax paying residents of Rhode Island on the hook for the money.
Ploygon paints a grim picture of the studios final weeks:
Sources at the company tell Polygon that internal communication inside the studio slowed to a standstill this month and paychecks ceased to arrive. Shortly after the layoff notice was sent out, we were told, the company’s internal email servers were shut down.
The state of Rhode Island is working to ensure that 38 Studios remains solvent, but things aren’t looking good for the company:
While all employees in both companies appear to have been laid off, the governor’s office is still working to figure out a way to make 38 Studios solvent. That’s because under a loan agreement that the state signed, Rhode Island will be left owing quite a bit of money if the studio goes under.
Founded in 2006 in Massachusetts as Green Monster Games, 38 Studios was lured to Rhode Island in 2010 by a $75-million loan guarantee from the state. At the time state officials argued that the studio would bring hundreds of jobs and millions in tax revenue to the state.
If the 38 Studios remains closed, the state says it has the money to make the first year of payments on the loan from a reserve they set aside pulled out of the loan amount. But after that the state would then have to start making the payments to the bank.
‘We do have some time,” a state official told reporters during today’s press conference. “There wouldn’t be a debt service default within the year.”
The fallout of the closure has already reached beyond the bounds of game development.
And Kotaku adds fuel to the fire, quoting an anonymous former employee of 38 Studios:
38 Studios just laid off its entire staff, both Providence and BHG studios are being shuttered.
We have not received a paycheck since April 30th.
On May 15th, 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 22nd May this week.
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.
Additionally, screenshots of “Project Copernicus” leaked yesterday and were generally well received by gamers around the Internet:
A sad situation for all involved. 379 people and their families are without work; the taxpayers of Rhode Island are on the hook for a hell of a lot of money; and gamers will never get to experience “Project Copernicus,” which looked promising in the recently leaked screenshots. A shame all around for a company that looked so promising.