The big news yesterday and today is the reported closing of Curt Schilling's 38 Studios. 38 Studios laid off their entire staff and the CEO, Jennifer Maclean, and the Senior Vice President of Product Development, John Blakely, have both updated LinkedIn to show that are no longer with the company. This move leave the taxpayers of Rhode Island on the hook for an unpaid loan of $75 million. And that's not just what's left of the loan, 38 Studios defaulted on the first payment, so they're out the whole kit and caboodle. Basically, that amounts to a huge gift.
So, 38 bought Big Huge Games, had experienced staff, and funding from the state. What went wrong? Well, 38 gambled big and lost big, to oversimplify the situation. Amular wasn't a bad game, in fact it got some great reviews. Most of the criticism was that it was a bit buggy and the art was lacking on some areas. Basically, they made a big expensive product, ran out of money and rushed it to market before they were ready. A common problem in today's gaming marketplace.
If it's so common, why did it kill 38 and not others? Well, Amular was their fist release. The company was founded in 2006 and actually had no releases for six years and when the game did finally hit the market sales were not fast enough to cover the investment put into it. If another studio, let's pick Valve just for fun, started a project right now and spent six years making it and that game flopped Valve would still have other sources of revenue to keep them running. 38 didn't, so when game finally hit the shelves, it was all or nothing.
What could they have done differently? Well, most gamers I know rolled their eyes when Schilling started a game company and didn't really have an interest. Most baseball fans that I know took a mild interest and just kind of tuned it out because they're not into RPGs (unless you count fantasy baseball as an RPG). 38 could have capitalized on their founder's fame a bit more to produce a game that required a smaller investment that might have appealed to baseball fans and Schilling's fans in particular. A Home Run contest game, a baseball game that centers on the pitcher rather than the whole team, an RPG starring baseball players who get sucked into a game world (like Tron). That could have produced an initial stream of revenue to fund the projects that they really wanted to work on. or they could have branched out into subgenres for funding - Alumar was said to have a pretty good story (I have not yet played it) but maybe they could have set up a webcomic to generate ad-based income to help fund it.
All in all, starting a major studio is a risky effort. And while the rule of "risk big, win big" does apply, there are ways of minimizing risks so that the people who depend on you the most - your employees, are not unemployed when the job market sucks.
Now, if the state is smart, they might be able to take ownership of 38's IPs and sell them to recoup their losses. If the state is smart and lucky, they may be able to lure another game maker to open shop and buy those IPs with a plan that the state will make money to recoup their losses and will be able to increase employment in the state. Rhode Island and Massachusetts are two major college states. Any company that sets up there will have no problem finding talented people to work there. The company might be able to purchase the right to Copernicus, which is mostly finished and put out an MMO quickly and keep afloat on that income.
I will be watching this to see where it goes. I'm very interested in how this will turn out.
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