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Editorial: Who’s To Blame For the 38 Studios Fiasco?

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At first it sounded too good to be true.

Curt Schilling, who at one time was part of the championship Boston Red Sox team that made baseball history (remember the bloody sock?), was convinced that he could open a good game studio, and 38 Studios was born soon after.

It almost seemed like the company was making all the right moves.  They made a $75 million deal with the Rhode Island Economic Development Corporation, promising to bring big revenue and jobs to the state upon a relocation from Massachusetts.  And shortly thereafter, the company struck a huge deal with Electronic Arts to public Kingdoms of Amalur: Reckoning, a game featuring the talents of Todd McFarlane (art direction) and R.A. Salvatore (author) and introducing the kind of adventure engine that fans have been craving since Fable went a “little dry” in its latest release.

The game released as expected earlier this year, and sold a significant amount of copies, proving that 38 Studios had what it took to stick around in the long haul with RPG developments, with a rumored MMORPG on the way for a 2013 release.

So, with that…we have to wonder.  What went wrong?

Well, pretty much everything.  Earlier this month, the state of Rhode Island showed concern over a missed scheduled payment, following rumors that employees had been missing out on their paycheck, spelling a rough situation since most of them had relocated with mortgages covered by the company.  To make matters worse, an attempted payment to the state ended up bouncing, resulting in a returned check.  The company did manage to make a successful payment a few days later, but to no avail.

A few days later, it was reported that higher-ups for the company, namely CEO Jennifer Maclean and Senior Vice President of Product Development John Blakely parted ways with the company, updating their Linkedin files.  Meanwhile, the state of Rhode Island grew a little iffier on the issue, insisting that the proposed MMO project was still due in 2013.

But then, like a nightmare coming true, the development studio shuttered completely on May 24, with all 400+ employees being let go by Schilling.  Worse yet, some folks found themselves up a creek without a paddle, saddled with a second mortgage that they couldn’t afford.

Now it’s easy to point fingers at an issue like this.  Fund mismanagement, promises made by governor Lincoln Chafee that weren’t kept…and then there’s Schilling.  But we may never find out the truth, like why Rhode Island government didn’t attempt to cut 38 Studios a break until an explanation was in order, or why Chafee acted the way he did instead of trying to support the team.  Worse yet, the closure may have affected the state in itself, with local businesses suffering as a result.

But that doesn’t mean Schilling is squeaky clean on the whole thing.  According to several online reports, Schilling made a $4 million investment in the company, but rather than use it to flourish the payroll and get things done, he paid himself back using part of the Rhode Island loan.

WEEU columnist Kirk Minihane wrote on Schilling, “The $4 million Schilling quickly snatched back would've bought a couple of weeks worth of payroll, no? If he truly felt, as he wrote on Tuesday afternoon, that the people at 38 Studios were "determined to stand together as hard and as long as they can," why not keep the taxpayers and the government out of it and be the picture of personal accountability for a month or two? Better yet, why did Schilling even accept the loan in the first place? A real limited government guy might have punted when he couldn't raise enough private equity, or would have paused before going into business with a group as inept as the Rhode Island Economic Development Corporation.

“The answer to both is this: Because Curt Schilling isn't pro-business, isn't pro-limited government, isn't pro-conservative, isn't even pro-38 Studios. He's pro-Curt Schilling. Whatever's best for Schilling is what will be done.”

So ultimately, it sounds like a combination of things – the Rhode Island government not giving the team the chance it deserved, and Schilling not standing up for his employees after realizing, too late, that game development may not have been his bag.  Either way, there’s no excuse, and now 400+ people are paying the price, scrambling to find new work and make ends meet, while not being compensated for the work they should’ve been rewarded for.

It doesn’t really make much sense at all, especially considering how well Kingdoms of Amalur performed for the parties at hand, selling more copies than anticipated.  But perhaps it serves as a hard reminder that not everyone is cut out to make a game development studio, especially if they’re not understanding of whose jobs are at stake, or how the slightest little move can turn you from hero to villain.

Here’s hoping those folks land on their feet.  There are plenty of studios throwing out job offers, so we believe they will.  Just watch out for those legislators and those who don’t understand how operating a game studio is supposed to work.  We’re looking at you, Bloody Sock.

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Robert Workman
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