Ex-Red Sox pitcher Kurt Schilling’s game company (Studio 38) cannot pay back a $75 million loan from the state of RI.
It has developed the “Amalur” game-which I understand is not selling well.
My question-is this operation doomed? It seems (to me) that developing and selling a new computer game is a very difficult job-in addition, you must pay hefty licensing fees to Microsoft, Sony, etc., and others (who’s softwear and patents you use).
Schilling went to banks and venture capitalists-all of whom turned him down.
Will he survive?
Ex-Red Sox pitcher Kurt Schilling’s game company (Studio 38) cannot pay back a $75 million loan from the state of RI.
I thought the game was selling fairly well… like over a million units.
Wait… it cost them 75 million to make that game? That can’t be right. Or was that what they spend on marketing it to console gamers?
Unless you spend a hundred million in marketing, an unknown, first title entry in the console market is going to have a very hard time breaking the 1 million mark.
They should of gone the way a lot of small devs go these days. you release a Pc version, sell a million copies (maybe more if your game is really good), and then you have capital to invest on a console version, AND you have the word of mouth and awareness from the press to get you more console sales.
It’s what the Witcher 2 guys did. Though it looks like their console sales haven’t broken the 1 million mark either (it sold 2 million on PC though).
Apparently they’ve removed the page with the Bios for all of their executives from their website.
They sent a check to RI offices for the $1.25 million they owe for this year, but there were insufficient funds to cover the check.
This seems like a money grab to me by the leaders of this company. They’ve got their corporate welfare check courtesy of the RI tax payers and now they’re bailing.
I’d be surprised if that were the case. They only sold 330k units in the US in their first month of sales.
They’re also working on a MMORPG and also own Big Huge Games which is presumably working on something or other.
Supposedly R.A. Salvatore was paid five million for the writing in the game- and, frankly, the writing bored me so much that I couldn’t finish the game.
From what I’ve read, and my friends who work there, 38 hasn’t been able to make payroll. In my experience, that’s the kiss of death for any studio- when that happens, you start hemorrhaging employees, and the best employees are the first to leave. I’d put my money on “doomed”.
Everyone I’ve known who played it enjoyed it but releasing it between Skyrim-mania and Mass Effect 3 was some very unfortunate (or stupid) timing.
So a brand new company with leaders who know nothing about game development decided to take on several huge projects at once?
Also, I thought Amalur WAS the MMORPG. Half way through development they abandoned the RPG and released it as a single player experience.
That was a bad sign right there.
I hadn’t played the game they produced but I was a little worried when I saw some of the financial moves they made.
It seems like Curt Schilling, who is a huge computer gaming fan, basically went into it with the thought of “hey, I’m a decently smart guy and I’m a multi-millionaire who is sitting on $100m+ in assets from 20 years playing baseball I can just start my own big time game studio.”
I get the impression he threw in a lot of his own money, and used his name recognition to get even more money from others, and basically grew way too fast.
I’ve read enough Curt Schilling interviews / seen enough to know Curt is a pretty smart guy, for a ballplayer. He has no professional business management experience and no professional video game industry industry prior to this. I was really worried that he was growing his studio way too fast.
It looks like his first game sold 300,000+ copies, that in and of itself wouldn’t be terrible. A lot of small game studios could release a first game that sold that many and use it to build into a larger company. The problem was, Schilling’s company was already really big at that point, this wasn’t some small dev house that released a 300,000+ sales volume game. Schilling should have tried to grow his business more organically, and used his vast personal fortune as sort of a “back stop” to smooth over some of the hiccups newer small businesses have.
If he had done that I think he could have had success, but it looks like he was more about getting real big real fast, to the point where the business got so big with so many liabilities that his personal fortune isn’t enough to be able to save the day.
Also, the $75m is some sort of development loan from the state of Rhode Island. It looks like Rhode Island basically solicited 38 Studios to relocate to providence with a sweetheart deal on leasing some property and getting a loan. In exchange RI gets rights to all of 38 Studios games and etc if 38 Studios fails in its obligations. I think Rhode Island made a bad decision here, and I think 38 Studios made a bad decision in accepting this loan. I think they looked at it as quick easy money, but accepting that loan money actually probably put them in worse shape overall.
Spending 75 million on that game is crazy, how did they manage that?
Well they might live yet apparently.
The 1.25 million dollar check has now cleared, and they are talking about a June 2013 release window for their MMO code named Copernicus.
If it’s an Astronomy MMO, I know a certain doper who would pre-order in a sec!
Actually, the Amalur MMO was never abandoned. And they never spent $75 million on a single game. Before 38 bought Big Huge Games, they were working on an Amalur MMO by themselves. After they bought Big Huge Games, they started work on Reckoning. The money sink was never Reckoning (which did pretty well for a new franchise). The money sink was always the MMO.
How do you know how much was spent on each individual project?
I don’t believe they did, part of the requirements of the loan were hiring some 450+ people by a certain date. A lot of those people were probably on the MMO team or etc. $75m can go really fast with 400 employees. You’ve got their annual salary, the cost of setting them all up (new computers, office equipment etc.) I don’t remember the particulars of 38 Studios occupancy of the Rhode Island facility but it could be some sort of advantageous lease, but that would still involve them having to pay for it and some fees to a maintenance company most likely.
Looks like Schilling invested $30m of his personal fortune into the company.
Baseball-Reference indicates he earned about $100m in salary over his career, with endorsements and investments, minus living expenses I would hope his personal fortune is probably right around that ~$100m level. So he’s in for about 30% of that, which is pretty significant.
It really seems like even taking this loan was a bad move. Sure, it brought a ton of capital into the company, but it obligated them to grow big fast (450 employee requirement for example.) With $30m Schilling came in with vastly more funds than the small shops that created very good selling indie games like Torchlight or Minecraft had, I think he should have kept his company in “small game incubator mode” until they came up with a solid revenue base. That’s just my opinion, and based in part on the fact Schilling isn’t an experienced video game industry executive of any sort.
If he ends up blowing his entire fortune on this business venture, he’ll neither be the first nor the last professional athlete to do such a thing. (Didn’t Frank Thomas blow all his money trying to start a record label or something like that?)
38 Studios said so:
Coincidentally, I just bought Amalur to play for research … .
There were multiple really bad decisions here:
If Rhode Island was interested in funding games to create jobs, this was a horrible way to go about it. It would have been much smarter to give lots of little grants to an assortment of small start-ups. That would have spread the risk around and created a high-tech incubator that would have had the potential to spin out multiple success stories down the line. $75 million would have provided seed capital for a LOT of indie developers.
If RI was going to pump all that money into one company it should have been an established developer with a reputation for shipping successful product. Not a start-up run by an industry outsider.
“I’m going to make my own MMO!” is classic fanboy fantasy, only most of them don’t have the money or connections to act on it. Schilling might have played a lot of games, but he had NO experience making them. Starting a company with an MMO as your first title is like a toddler trying to run a marathon. Hell, making an MMO scares the hell out of me and I’ve been professionally designing games for 15 years! 38 Studios should have gone through at least 2 dev cycles of smaller projects before attempting something so ambitious.
38 Studios should have sought an outside investor who understood the industry. Making games is a risky business and sometimes it makes sense for an investor to pump more money into a stuttering company to get to the finish line. Sometimes that’s worth it and sometimes it’s not, but in order to make that call you need to know the business. Instead 38 Studios owes a whole lot of money to an entity who wants it paid back NOW, regardless of the long-term value of the franchise they’re trying to create.
38 Studios is toast. They’re at least a year out from shipping their MMO. Some money will keep trickling in from Amalur, but they’re already past the big cash spike they should have received from the first few months of sales. If they’re out of money now, they’re going to need tens of millions of dollars in additional funding to keep them afloat until the MMO hits the shelves. I can’t imagine who would be willing to invest in them now.
RI should just bite the bullet and shut the operation down. They should at least be able to sell off Big Huge Games (which is a decent development house) to get a little of their money back.
On the plus side, I might score a sweet deal on KoA when Steam has its summer sale in about six weeks.
Yeah, an MMO, specially one of the type they appeared to be working on seemed like really crazy for them to take on. Did no one say anything?
There are MMO’s from small devs that have been tremendously succesful, but they aren’t traditional. MOBA’s like League of Legends have made a ton of money by trying something fairly new.
Well, that didn’t take long. Kotaku is reporting mass layoffs.
Here’s my guess as to what happened:
Their MMO had an insane monthly burn rate and a long dev cycle. They realized that they needed some source of revenue in the interim. Big Huge Games was working on a single-player RPG. So 38 Studios bought BHG, reskinned their RPG so it was in the same world as the MMO, and released it as Kingdoms of Amalur. The plan (I imagine) was that *Amalur *would quickly make back all the money they spent to acquire BHG. *And *it would give them a steady revenue stream to help them make it to the finish line with the MMO. *And *it would provide the eager public with an advance taste of the Amazing World they invented. Genius! What could go wrong?
Only … *Amalur *didn’t sell very well.
So now they’re in trouble. They’re out the cash they spent to buy BHG. They don’t have a reliable new revenue stream. And, even worse, the MMO has slipped from 2012 to 2013 as big projects often do. If they had normal game industry investors they could go to them and beg for more financing. And maybe, if the work so far on the MMO was promising enough, they might get it. But they don’t have normal game industry investors. They have the State of Rhode Island who doesn’t give a flying fuck that the bump maps on that ogre model are really amazing … .