38 Studios and Big Huge Games shut down

by Nathan Misa Featured 4 Comments 23 Votes 1497 Views 26/05/2012 Back to News

After week long rumors, reports and articles focusing on the finanicial plight of Kingdoms of Amalur developers 38 Studios and its subsidary Big Huge Games, it has finally been confirmed that the two studios have laid off their entire staff, 379 people in total, and shut down production in their Rhode Island and Maryland-based offices. None of the employees have recieved a pay cheque since April 30th.

On May 15th it was originally reported in The Providence Journal that 38 Studios had failed to make payments on a $75 million loan it received from the state of Rhode Island, given by the Rhode Island Development Corporation development fund, back in 2010 that helped lure 38 Studios to Rhode Island from Massachusetts.

38 Studio's first payment of $1.125 million to the state was due on May 1st, but the company failed to fulfill the payment until May 18th. The Rhode Island governor Lincoln Chaffee and officials with the Development Corporation visited the studio to review “all the financials” in the interest of "protecting the taxpayer dollars" and to try to recuprate losses, and this sparked the first set of rumors that the cheques to the state bounced and the companies faced closure.

The first sign of trouble was when 38 Studios CEO Jen MacLean, who had been on maternity leave for the past two months, removed the title of chief executive of the company from her LinkedIn profile on May 23rd, and listed the date of her departure from the company in March.

38 Studios’ senior vice president of product development John Blakely also revised his LinkedIn profile to show that he left the company this month.

A rumor from an anonymous former employee who contacted Kotaku on May 24th was the first confirmation of the company's serious financial problems. The source stated that both studios were shutting down and that they had found out about the cut off of pay and health insurance.

Unfortunately, a few hours later Gamasutra managed to find an email sent to employees of the two companies:

"The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012."

During a Rhode Island press conference later on May 24th, Governor Chafee said that 38 Studios ran into finanical maliase because Kingdoms of Amalur: Reckoning failed to live up to expectations.

"The game failed," Chafee said.

The finanicial turmoil of 38 Studios and Big Huge Games is more complex given the fact that it goes beyond the video games industry as something that could potentially end Chafee's governorship.

Chafee later added: "If the company's not going to be profitable and can't give us the confidence [it can get] on solid footing, then we have to deal with the ramifications.

"Industry experts tell us this is very, very expensive and it's not only the cost of producing the game, but then maintaining it once it's released, and then tens of millions of dollars to market it.".

Kingdoms of Amalur: Reckoning was 38 Studios's debut title, an epic RPG fantasy adventure written by acclaimed writer RA Salvatore with art from renowned comic book artist, Todd McFarlane and work from lead desgner of The Elder Scrolls III and IV, Ken Rolston.

KoA garnered a generally positive critical reception and sold more than 400,000 copies in North America alone. Curt Shilling, owner of 38 Studios, stated on his Twitter on May 12th that KoA had outperformed EA's projections by selling 1.2 million copies in the first 90 days, which signified a good start for the company's debut title and seemingly proved its success as a new IP.

But KoA's combined international sales weren't enough to reach the needed figure of 3 million units to break even. With the entire staff base laid off, this leaves the future of the company's planned MMO, Copernicus, extremely dire.

It is an extreme shame to see two promising gaming developer companies lose their jobs after toiling away on a new, fresh intellectual property, and it only goes to show the fragility and finanicial risks in introducing new IPs into the industry, and how gamers need to support and facilitate their introduction and success more than ever.

Curt Schilling wrote on Twitter yesterday: "Thank you to everyone sending prayers and well wishes to the team and families of 38 Studios."

What do you think about the closure of 38 Studios and Big Huge Games?

Primary Source: Gamasutra

By Nathan Misa- Writer Bio

Tweet @nathmisa

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38 Studios and Big Huge Games shut down Comments

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$75 MILLION loan?! Are they crazy? And they couldn't even make one payment.
Who the hell thought they'd reach 3 million? It's a freaking new IP, one million is high enough of a goal.

3 million... *shakes head* A lot of major franchises would shy away from those numbers... :E
I liked the game :(
It's a shame when a new studio fails. I for one, am afraid of a future where only the big dogs make games. Mind you, 75 million is a lot to pay back.

Dayyyuuummmm

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