Schilling's 38 Studios in Financial Difficulty, Circling the Drain

Schilling's 38 Studios in Financial Difficulty, Circling the Drain

  • By: CM Boots-Faubert
  • Posted 25th May 2012

Kingdoms of Amalur: Reckoning

The revelation this week that video game studio 38 Studios -- the love child of gamer and retired Boston Red Socks pro baseball player Curt Schilling -- was unable to make its promised May 1st payment of $1.1 Million (US) to the state of Rhode Island came as further proof that the financial health of the studio is not good.

In the realm of video game developers there is an established pattern that historically dominates the industry as new players emerge, and that pattern generally begins with a modest birth -- often in the garage or basement of one of the principal founders -- that is ordinarily followed by the development of their first game and, when it is successful, is followed by the establishment of more formal facilities, often ending in the deployment of a campus for game development teams and to house the corporate offices, but in the case of 38 Studios that historical pattern emerged backwards.

The troubled video game company, which is run by former Red Sox pitcher Curt Schilling, who is a principal owner, was born in a Massachusetts mill town but relocated to the state of Rhode Island, which wooed the game developer by offering it an unusually large $75 Million taxpayer-backed loan in 2010 on the promise that it would bring jobs and tax revenue to Providence. Part of the commitment by the studio and Schilling was to relocate its offices and development facilities to Rhode Island from its original home in Maynard, Massachusetts -- which it did in 2010.

Loan Payment Promised and Anticipated

The office of Governor Lincoln Chafee says that 38 Studios LLC, Schilling's company, was set to hand-deliver a $1.1 million check to the Rhode Island Economic Development Corporation just before the close of business on Thursday, but it later developed that the check that was delivered was drawn on an account that lacked sufficient funds for payment.

Schilling, 45, helping to win World Series titles for Boston in 2004 and 2007, and was considered to be one of the dominant pitchers in the sport of nearly two decades, and is thought to have invested a considerable amount of his personal wealth into the game company, which was partly established as the result of Schilling being an avid gamer, who having retired from his pitching career was intent upon establishing his next career.

Schilling's video game company is named after his jersey number -- 38 -- and according to the ex-pitcher in a 2011 interview with Reuters news service he has invested around $35 Million of his own money into the company -- and that funding is in addition to the $75 Million loan from Rhode Island, a loan that was made under the auspices of the state's job creation guarantee program, which was created to promote and encourage high-tech and manufacturing companies to relocate to the state.

Formed in 2006, 38 Studios originally established its headquarters in Maynard, Mass., a town famous for its wool mills that dominated its economy for nearly a century, but closed down in the mid-1950's due to the changing economic environments and foreign trade. The town previously enjoyed long-term success as one of the major development and manufacturing hotspots for high-tech products, with Digital Equipment Corporation moving into a former mill complex in 1957, and enjoyed the presence of outposts and research facilities for DoD centric companies like Raytheon in the 1960's and 70's.

DEC made Maynard its worldwide headquarters, earning the city the nickname "Mini Computer Capital of the World" -- but when the company was purchased by Compaq in 1990 its presence was reduced and eventually eliminated from the area, and Schilling's choosing the town as the home for his game studio was understandably greeted with some excitement in the city.

First Game Released

In February 38 Studios released its first, and long-awaited product, the video game Kingdoms of Amalur: Reckoning, that was initially well-received by gamers and critics alike prior to its official release, scoring a 9 out of 10 from IGN, and receiving praise for its customizable gameplay, beautifully rendered game world, and highly-engrossing story, however a series of minor technical issues drew criticism that increased following its release on the Xbox 360, PlayStation 3, and on Windows PC.

The game earned a rating of 8.5 out of 10 from the Official Xbox Magazine, and Gamespot gave it a 7.5, praising the gameplay and visuals, but suggested that overall the game felt too generic, but it was the very public lashing that the title received at the hands of G4 TV's Xplay host Adam Sessler, who gave the game a score of just 2.5 out of 5, declaring that it bug-ridden and advising that the landscape was not as well-crafted as pre-release previews and reviews suggested.

Following its release game reviews of the title remained relatively good, but wandered across the scale as its initial wow-factors of impact, imagery, and combat paled due to its inability to sustain gamer excitement levels, a fault that is generally considered to be a significant issue for the RPG genre, which the game was squarely positioned within.

While details of the money-woes impacting the studio remain sketchy, early in the week their official word was that their second multi-player game, codenamed "Copernicus," remains in development as the studio moved to shore-up its financial situation, but news this morning that 38 Studios laid off its entire staff in both Rhode Island and Maryland on Thursday suggests that the moves may be too little, too late.

The company, which employed more than 400 full-time workers and contractors, did not have enough cash to meet its payroll on May 15th. Schilling could not be reached for comment after numerous calls were made both to his company numbers and home.