Rhode Island Taxpayers Lose $75 Million Trying To Make A Video Game

Last Thursday, Rhode Island-based 38 Studios laid off its entire staff of nearly 400 people, which presumably included many artists and animators. The unceremonious layoff notice sent to their employees can be read on Gamasutra.

The game studio was started by former baseball player Curt Schilling, and had received a $75 million loan guarantee from the state of Rhode Island (population 1 million), which gambled that Schilling’s company would bring high-paying tech jobs to the state. The company managed to slip out one game before collapsing, Kingdoms of Amalur: Reckoning, which both looks and sounds like the creation of a sweaty-palmed, pimple-faced high school student.

Amalur shipped 1.2 million copies in its first 90 days (according to Schilling). The governor of Rhode Island, Lincoln Chafee, said in a press conference a couple days ago that the game would have needed to sell more than twice as many copies just to break even.

There’s a lot of lessons to be learned here, the first of which would be that just because you know how to throw a ball doesn’t entitle you to tens of millions of taxpayer dollars so that you can pretend to run a video game technology company. Schilling just made it that much harder for legitimate video game entrepreneurs to receive any type of investment for their companies.


  • Trevor

    Well there it is. I’ve read the most simplistic and ignorant analysis of this story yet. I’ll give you points for ridiculing the work of the artists and showing a complete lack of sympathy for how many of them are now out of work.

    I didn’t really know if CB would even care to report a story involving the video game industry, but I honestly would have at least hoped you would want to share the uplifting parts of this story, namely how the animation community has come together to compile contact information and notify about openings in other studios.

    https://docs.google.com/document/d/1b8Gf2wud3OB_IgcypevqNF4MENhivccu2lKWceO-cUI/preview?pli=1&sle=true

    • http://www.tubbirdbelty.com Barbara

      that’s awesome. I would add to anyone working for a company to always have a back up plan. Things can go to crap anywhere, at any time. And make sure you get paid! It sounds like a lot of people at this studio were denied paychecks…see if there is a way to make a collective grievance and take them to court.

    • http://www.cartoonbrew.com/author/amid amid

      Trevor – You call the post simplistic and ignorant, but fail to explain why or offer any insights of your own that would help others understand the story better.

      The only thing you did was link to some random document of artists purportedly helping one another, except that the document has been vandalized so many times that the author had to block others from editing it. That’s a fine example of people stepping up to help each other in a time of need.

      • buh

        one view of it coming across as simplistic and ignorant is that you’re just now jumping on this story, long after the important parts have happened. johnny-come-lately kinda thing “oh look, the animation blogger jerk-extraordinaire has an opinion about an industry he knows nothing about, long after it’s been discussed further in depth in many other places. awesome.”

      • Trevor

        If you were more familiar with the story, the document is the result of a twitter campaign of artists and recruiters working under the #38jobs hashtag to help all of the artists out of work try to find placement as soon as possible. At first, everyone was welcome to edit it as they pleased, but that clearly was not the best way to go about it so it was locked. Regardless, you’re welcome to search #38jobs on twitter to see this campaign unfold.

        Your post is simplistic because the tone of your writing, as evidenced by the childish namecalling of pimply faced teenagers both making and playing the product in question shows your ignorance to the situation. What is funny is that you may have heard of some of the people involved in the art on this game: R.A. Salvatore and Todd MacFarlane.

        I will further detail what I meant by ignorant by showing you a few resources, but I fear that you may not even care. Anyway, please check out http://www.vgchartz.com/ This is kind of a “boxofficemojo” if you are familiar with that site. As a new IP released by a new studio, 1.2 (this site lists 1.13 million units sold) is a very good outing for this type of game. I am going to assume that you are not very familiar with the video game industry, seeing as you still are referring to gamers as pimply faced high schoolers, so I will list a few recognizable games with similar sales figures, but this is mainly for the benefit of the rest of the readership here.

        Kingdoms of Amalur: Reckoning = .57
        Dragon Age II = .91
        Two Worlds = .66
        The Witcher II = .35

        So for a first studio with its first IP, it’s not a bad release. What was bad was the expectations were even higher. The deal that RI made is similar to several states wanting to get film and TV deals into their state. They believe it will bring in revenue to the local businesses, and bring in talent. The should have researched this business more.

        I would just ask that you have a bit more empathy in your posts, especially regarding artists in a more commercial field. Your articles give off a tone that you have very little respect for these artists, and this is just one example. You gloss over that you just “presume” that maybe some animators might have been laid off, then you set out and attack the entire venture. I think the loan was absolutely stupid with impossible expectations, but I think any time a studio goes under that this is bad for the entire industry.

        I would come to expect this blog to be a place for the animation industry to lift itself up, and not bring itself to make childish posts like this.

        I’m not really going to bring myself to continue this argument. If you want to call me names or claim some sort of “victory” in the debate over this, that’s fine. I just felt the need to call you out over this post, and I respect you in that you’ve given me that chance.

        Oh, and feel free to IP check me to see if I somehow have a personal stake in this situation. I don’t. I just know I would have felt horrible waking up 2 days after being laid off to find an article like this on a website I thought respected what I did for a living.

      • http://www.cartoonbrew.com/author/amid amid

        Trevor – Thanks for contributing so many details to the converation. Well worth reading! Regardless of how we interpret the situation, I think we are both in general agreement that the situation sucks royally, and the people who have had to pay the price are the employees of 38 Studios and the taxpayers of Rhode Island.

      • GhaleonQ

        Amid, there is much more to the story, but don’t let Trevor talk down to you. VGChartz is notoriously inaccurate, Salvatore and MacFarlane do peddle to “pimple-faced teenagers,” and the idea that “any time a studio goes under that this is bad for the entire industry,” is indefensible.

        Obviously, full employment for talented workers is ideal, but imbecilic ventures like this one have become commonplace in the last 6 years. Mid-tier developers in Japan and elsewhere are dying in droves and good people are fleeing to 2-hour indie trifles. That’s largely thanks to overcrowded, cash-hungry ventures like this one, which deserve nothing but scorn. Nothing but good wishes should be extended to the animators in their personal and financial lives, but please don’t call the death of this nonsense a tragedy. I hope the Shrek franchise’s tenders have happy, peaceful lives, but I don’t want Dreamworks to quintuple in size and crowd out the Marcell Jankovicses of the world, either.

        That said, Amid did substitute snark for entirely relevant and more positive details about the aftermath.

      • Jennifer

        Thanks Trevor.

        There are countless animation studios that were poorly run and shuttered – Richard Williams for one. Where they all baseball players? Where all the animators pimply faced kids?

    • Ron R

      Little known fact – prior to forming Laugh-O-Grams Walt and Roy both played for the 1919 Coffeyville
      Bricks.

      Also, Ub Iwerks had a lot of pimples and grew aloe vera plants to help his condition.

      So, technically, Amid is correct – ball players and pimply faced kids have no right to start animation studios.

    • Daniel

      Thank you Trevor for giving this post some worth.

      Amid said, “which presumably included many artists and animators.”

      translation: I guess animators work on this crap, I really can’t be bothered.

      Amid said, “looks and sounds like the creation of a sweaty-palmed, pimple-faced high school student.”

      translation: Did I mention video games are crap for children? Just making sure I’m clear.

      Animators do work on games Amid and talented ones at that. Here’s a reel for one of the affected: http://youtu.be/QqTPXsGZWQI

  • Conor

    “…which both looks and sounds like the creation of a sweaty-palmed, pimple-faced high school student.”

    *cough*artbyToddMacfarlane*cough*

  • The Gee

    This was just another example of an entrepreneur trying to make a big company too fast. It happens quite often just not always with government loans backing the venture. What made it worse is that Curt Schilling probably has money from his playing days and could have possibly funded some start up himself. He probably could have had a small staff/crew to make something and build on that possible success. But, he went for the big ring, got a huge loan and didn’t make it work.

    Look at some of the related links at the bottom of what Amid wrote. Michel Gagne, who designed his game himself and presumedly made some or a lot of the assets for it, made a huge investment in his time and talent to make his game happen. I don’t know if his rewards were great or not. But, that doesn’ t matter because he made it work.

    Whether or not Schilling put a lot of sweat and his own money into this company, If Schilling had started smaller, he would have lost less, won more or won less the first time around. Instead, from a business perspective, he went in too deep and it didn’t work. Unfortunately, like Amid wrote, the workers are out a lot, too. It sucks.

    Maybe it is commendable that Shilling tried to build this type of company. Maybe he wanted there to be games he loved playing. Maybe the entire venture was a wrong choice. But, it sucks to know people who worked there got their hopes up and had to move on that quickly.

    • James

      I agree–he seemed to want to fund a AAA game series right off the bat. The problem is, most companies that release those kinds of games have other more minor games/franchises or assets to fall back upon in case the AAA title flops. And these days, AAA titles take an enormous amount of capital to have an edge on the current leading rival companies.

      I’m surprised the company didn’t attempt to co-produce lower budget games on the side at least to get some out the door sooner and attempt to make some money during the long production of Alamur. Did 38 Studios ever make a profit during its 8 years in business?

    • Brent

      With regards to Curt Schilling, while I’m unaware of the sort of experience he has had in computer gaming prior to the 38 Studios project, he is quite well known and generally well regarded in the board wargaming community. His company Multi-Man Publishing is responsible for rescuing the Advanced Squad Leader after the collapse of their original publisher Avalon Hill back in 1998 and that company is doing quite well, with an extensive line of games. So it’s not like Schilling has inexperience in operating or creating a company.

      I think that Amid was being more than a trifle unfair when he wrote, “There’s a lot of lessons to be learned here, the first of which would be that just because you know how to throw a ball doesn’t entitle you to tens of millions of taxpayer dollars so that you can pretend to run a video game technology company.” As I’ve said, Schilling expertise is not just in throwing a ball. I think he may have underestimated the value of his expertise in the board game industry when it came to creating something new in the video game industry. They are two different types of business.

  • akira

    the free market works best. govt should not be involved in picking who gets money to start new businesses. if someone needs money they need to find people who believe in them and are willing to risk loosing that money based on the prospects that they weigh themselves… it should not be dumped on innocent taxpaying citizens who did not have any say in the matter. there is so much govt. corruption it makes me sick.. this whole deal could have gone through just because some governor’s nephew got a video game job out of it, or maybe there were some sweet kickbacks, who knows. and if animators lost their jobs because they didn’t make something that made enough to pay for their salaries, then what do you expect? in tv animation, if your show blows, you get laid off too. and you are partially responsible if it blows. you can ask yourself if you were aware that you weren’t making anything good did you speak up about your product sucking? if not, was it so you wouldn’t get fired? well guess what happened anyway… i’d guess the average animation gig is about a year, am i wrong?

    • Daniel

      This is very similar to tax incentives given by state governments to other industries to try and bring revenue and jobs to the state and many of those have been successful. The stats say their games didn’t suck, however, in this instance the loan and repayment terms were basically unreasonable (or rather ill suited for) considering they were making a highly time consuming, expensive, and risky MMORPG. Given the buzz from World Of Warcraft and when this deal was penned it’s not hard to imagine the zeal behind the agreement. I doubt any sort of corruption etc. was necessary to make it seem like a wise investment. It’s more mundane and unfortunate than a conspiracy or the political talking point you wish it to be.

  • SKent.

    When I heard that some baseball guy was making this major game, I thought it was pretty cool. I figured here was some sports star putting their (presumably stratospheric) salary into something artistic, and providing employment for a lot of modelers, animators, texture painters etc.

    Now I find the thing was underwritten by taxpayers.

  • http://pitchbibles.blogspot.com Steve Schnier

    “Now I find the thing was underwritten by taxpayers.”

    Never mortgage your house or sell your children to finance a project. <– Sage advice given to me many years ago, by one who knows.

  • Brad Constantine

    Since I know many of the Artists involved, I will just say that many of them are the best in the business. The exact same thing happened to Walt Disney during the making of Snow White. Walt and Roy actually did run out of money, and had to convince Bank of America to give them the rest to finish up Snow White. Fortunately for Walt, That particular banker knew a good thing when he saw it, and was able to give Walt and Roy the money to finish the film up based on seeing the work in progress. Imagine what would have happened to animation and Walt had that film not been finished. I believe Mr Schilling had enough finished to show the State where he was headed,and definitly of a quality on par with the best of the gaming business, he just didn’t find the find the right visionaries to take a chance!! Sounds again, like the Zappa article all over again!!I wish all affected by the layoffs the very best of luck. As well as Mr. Schilling.

  • James

    In all fairness “Kingdoms of Amalur: Reckoning” is a pretty darn good first effort for a new company, though. It seemed to suffer in comparison to the previously released Skyrim RPG.

    Being funded by taxes is weird, but its goal at least seemed to have some benefit to the community if the business had succeeded.

    My guess as to why they failed is that the banked too much on that one game and didn’t start out on a more economically safe footing. The problem seems less of Curt Schilling lack of video-game making experience than one of fiscal responsibility. Sending a rubber loan check to Uncle Sam is a sure sign of 38 Studios’ inability to balance its books.

    Sounds like a less extreme similar situation with 3D Realms putting so much money into Duke Nukem Forever. Realize that 38 studios was pumping capital in a long-in-development “Project Copernicus,” which included Amalur but also ambitious plans for a MMORPG. Who knows how much capital bled into that project?

  • Jon H

    “which both looks and sounds like the creation of a sweaty-palmed, pimple-faced high school student.”

    It’s like I’m back in high school, good ol’ tough guy Amid showing those nerds what’s up!

  • Rich Tom

    There isn’t a shred of originality in this whole project. I wish that the game industry would stop recreating old concepts.

    I’ve worked for a dozen or so game companies, and they’ve all been run by people with no creative experience who are only in it to get rich and get out. Every last one. Rhode Island had better take a careful look at the way this money was spent, because I can almost guarantee the folks at the top of the food chain took a nice chunk of the budget from the get-go.

  • http://www.toonocity.com Fremgen

    Not sure if you are still here Trevor, but I don’t quite get your point. Yes, it’s true that Amid is often flippant to things that aren’t to his tastes- that’s just the way he expresses himself. But this is a blog, not a news site, so the personal opinion of the writer is to be expected.

    That said I don’t see what the beef is. Amid posted this to point out that deals like this should be better constructed, because in the end they could do more damage than good to the industry- Not sure where you disagree with that.

  • Ryoku

    Since this studio was just starting out they should’ve tried something that would require a bit less in budget, like a game for Smartphones.

    As for Amid’s comment, well its a bit harsh but I can’t argue. A more modest way of putting it would’e been “Derivative” or “Geeky”.

  • Jeff

    Here’s what everyone should learn from this: THE GOVERNMENT NEEDS TO STAY OUT OF PRIVATE BUSINESS! Anyone know a solar panel company I can invest in?

    • Jason

      Yep! Google is a great resource for gathering information for investments in upcoming solar panel companies.

  • A Writer

    the game sucks though. Amid right *kanye shrug*

  • Massman

    There is another layer to the political aspect of this story. Schilling tried to negotiate a deal with the state of Massachusetts for his company and they wisely declined. He got his sweetheart deal with the then Republican Rhode Island governor and moved his Massachusetts based company to Rhode Island. The state has subsequently elected a democratic governor.When things went south with the company it was reported that Schilling wasn’t being very forthcoming with details of how he was going to save the company with another infusion of government money, which he was requesting and he wasn’t being very enthusiastic in selling it to the current governor. Ironically, Schilling has campaigned with and supported a number of republican candidates in the region and publicly stated that he believes in…….you guessed it…..smaller government and personal responsibility.

    • Ryan

      Well, make him personally responsible for seeing that everyone gets paid what they’re owed.

  • obo

    The governor of RI is a former republican turned independent. He is not a democrat.

    The rest of your post seems irrelevant. Do democrats not believe in personal responsibility.

  • Massman

    You are correct obo, Chafee is an independent. I wasn’t making any political case for one party or the other and I think it’s pretty clear my last sentence was a direct reference to the hypocrisy of Schilling. The rest of the post’s intent was to relate the political landscape when Rhode Island agreed to the loan as to how it exists now.

    There were reports today of Schilling blaming Governor Chafee for the failure and 38 Studios being in default of a federal law for companies over 100 employees to notify the government 60 days in advance of laying off 50 or more employees. Chafee is being praised for his scrutiny and handling of the situation. I think it’s very relevant that he felt Schilling was uncooperative in their discussions to try to save the company and the investment, especially since Schilling ultimately chose to pull the plug.

    It’s a sad situation all around. I was personally rooting for them to succeed but I’m definitely not happy how it ended. I hope everyone who worked there gets new jobs and goes onto bigger and better things.