"R.I. races to save Curt Schilling’s company; Default feared in $75m loan deal" by Hiawatha Bray | Globe Staff, May 16, 2012
Curt Schilling’s video game company was the one that got away - and as it turns out, maybe that is OK.
The former Red Sox pitcher, and avid video gamer, moved his 38 Studios LLC from Maynard to Providence last year after Rhode Island officials offered him $75 million in loan guarantees. Massachusetts officials tried to convince him to stay, but wouldn’t match an offer that rich - or that risky.
Related: Schilling Makes His Pitch
Slow Saturday Special: Schilling Strikes Out
Schilling Hits the Showers
Schilling's Wild Pitch
Called a strike?
Also see: Video Game Schills
Now Schilling’s company appears to be in financial trouble, and Rhode Island officials are scrambling to save their investment.
Whose investment?
Following reports that 38 Studios recently defaulted on a $1.1 million loan payment, the state’s economic development corporation called an emergency meeting for Wednesday morning to “consider an unexpected occurrence that requires immediate action to protect the public regarding the 38 Studios, LLC financing.’’
Schilling had promised to bring 450 high-paying jobs to Providence, and help establish the city as a major video game development center. Under the terms of the loan program, 38 Studios must pay $5.3 million in interest this year, and $12.7 million in interest and principal every year from 2013 to 2020.
I'm sorry, but I don't play video games. I f***ed up all these years buying and reading newspapers instead.
The deal makes Rhode Island taxpayers liable for repayment of the money if 38 Studios fails. The state is entitled to seize the company’s equipment and software as partial payment of the loan.
Governor Lincoln Chafee, who fiercely opposed the loan guarantees during his 2010 campaign, said Tuesday that he is determined to help 38 Studios survive. “The most important thing, going forward, is the viability of the company,’’ Chafee said. “We’re looking at everything.’’
Gary Sasse, former director of administration under Governor Donald Carcieri, Chafee’s predecessor and a strong supporter of the loan guarantee, said the 38 Studios deal has proved unwise.
Now director of the Bryant Institute for Public Leadership in Smithfield, R.I., Sasse had left state government before the loan guarantee program was launched. While it’s sometimes appropriate for states to offer loan guarantees to businesses, he said, the $75 million for 38 Studios was too much.
“We were putting a lot of our eggs in one basket,’’ Sasse said. “If I was there, I would probably have advised the governor against doing the deal.’’
Even though he supported.... SIGH!
Massachusetts economic development officials met with Schilling in 2010 in an effort to keep his company in the state, but ultimately declined to match Rhode Island’s offer.
“Was it a risky investment? Absolutely. Massachusetts passed on it, and I wish we had, too,’’ said Ken Block, a Rhode Island businessman who opposed the deal during an unsuccessful campaign for governor.
The crisis at 38 Studios follows by three months the release of its first product, a role-playing video game called Kingdoms of Amalur: Reckoning, set in a medieval fantasy world. The game has earned good reviews from industry critics, and has sold about 1 million units at about $60 each, according to market research company VGChartz.
So where did the $60 million dollars go?
Michael Pachter, a video game industry analyst for Wedbush Securities in Los Angeles, said that 38 Studios would probably get about half the revenue generated by sales of the game, or about $30 million - enough to make its loan payments. “I cannot believe that they are borderline insolvent,’’ Pachter said. “That makes no sense to me at all.’’
Neither Schilling nor 38 Studios returned calls for comment.
Timothy Loew, executive director of the Massachusetts Digital Games Institute, a state-sponsored game development center at Becker College in Worcester, worried that troubles at Schilling’s company could hurt efforts to build the video game sector here.
Good. We waste enough tax loot around here.
An advocate for tax breaks to encourage video game companies to set up shop in Massachusetts, Loew said it could be difficult to persuade lawmakers if 38 Studios goes under. “It makes it harder to articulate a persuasive argument when you have a high-profile failure,’’ he said.
Aww, the poor looters will have a harder time picking taxpayer pocket!
Massachusetts economic development officials declined to comment....
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Related: R.I. official out amidst Schilling controversy
Schilling asks R.I. for more money
Talk about gall.
"Schilling asks for more aid in R.I.; governor skeptical" by Gail Waterhouse and Todd Wallack | Globe Correspondent | Globe Staff May 16, 2012
PROVIDENCE - Former Red Sox pitcher Curt Schilling scrambled to prop up his ailing video game company, asking Rhode Island officials Wednesday for more public aid while Governor Lincoln Chafee questioned whether the state should cut its losses in the firm, 38 Studios LLC.
“How do we avoid throwing good money after bad?’’ Chafee asked after an emergency meeting of the Rhode Island Economic Development Corp., which provided $75 million in loan guarantees two years ago to woo 38 Studios from Massachusetts to Providence. “The difficulty we face is protecting the taxpayers and looking ahead to the future -whether there’s viability that’s worth any further investment.’’
What governments do best!
The board of the Rhode Island agency did not take action Wednesday on Schilling’s request. It will resume discussion at another meeting scheduled for Monday, Chafee said.
Schilling said little after a closed door two-hour meeting with Chafee and other officials. His only comment afterward was, “My priority right now is to get back to my team.’’
Rhode Island officials declined to say how much money Schilling is seeking and in what form. Moreover, neither officials nor 38 Studios would say what precipitated the company’s financial problems.
Some people in the local video gaming community have long been concerned 38 Studios might run out of cash, because it hired so aggressively and took on ambitious projects so early on in its life. Massive multiplayer online games such as 38 Studio’s next product, code name Copernicus, have a reputation for taking heavy investment and lots of testing before they can be released. Many games never ship, ship late, or never catch on with users.
“We’ve all been rooting for 38 Studios,’’ said Dan Scherlis, a consultant and former chief executive of Turbine Inc., the Needham gaming company that developed the Lord of the Rings Online game. But “we’ve all been worried for 38 Studios for quite some time.’’
On May 1, 38 Studios missed a $1.1 million payment it owed the Rhode Island agency, and twice in the last two years 38 Studios’ auditors warned the company was in such shaky condition there was doubt it could remain in business without additional funding. The company also faces an obligation to pay $1.45 million to the author whose science fiction books inspired its games, R. A. Salvatore, in October 2012 under a consulting agreement signed five years ago.
Moreover, loan documents filed with the state revealed that 38 Studios was trying to line up an advance payment from a publisher for Copernicus. 38 Studios also set off concern within the game world that Copernicus could be delayed when the company was not included among the exhibitors scheduled to appear at the video-game industry’s major trade show in Los Angeles next month.
Officials said the company has been current on its other loan payments so far. Under the terms of the Rhode Island deal, 38 Studios must pay $5.3 million in interest this year, and then $12.7 million in interest and principal annually thereafter through 2020. About $23 million of the original subsidy has been set aside to cover interest payments and as a reserves in case 38 Studios encounters trouble.
The public subsidy was controversial when then-Governor Donald Carcieri struck the $75 million deal with 38 Studios in 2010, with political opponents, including Chafee, criticizing it as an excessive investment in an untested company. 38 Studios was located in Maynard at the time, and while Massachusetts sought to keep it in the state, they ultimately elected not to match the rich loan deal Rhode Island offered it to relocate to Providence.
Chafee says his role as governor requires him to help the company work through its problems because “Rhode Islanders’ hard-earned money is at stake.’’
***********************************
The company has been ramping up employment significantly. As of March, it has had 414 full-time employees and contractors in Rhode Island and Maryland, according to state bond documents, and advertised 18 job openings on its website Wednesday. As part of its deal with Rhode Island, 38 Studios had promised to bring 450 jobs to the state, and Rhode Island officials hoped it would anchor a new video game sector there....
Given the nature of 38 Studio’s business model, Scott Steinberg, chief executive of TechSavvy Global, a consulting and product testing company, said Rhode Island’s decision to invest $75 million in the company was a poor one.
“An unproven studio, no matter the star power attached, that’s one hell of a risky gamble,’’ he said. “It’s like giving money to a film studio that hasn’t made any movies.’’
Maybe I'm wrong, but I don't recall that entering the debate and discussion back then.
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"High-risk video game venture has R.I., Curt Schilling reeling" by Mark Arsenault and Todd Wallack | Globe Staff May 18, 2012
In the final months of two mostly unmemorable terms in office, Rhode Island Governor Donald Carcieri boasted about his little state’s big splash - stealing former Red Sox pitcher Curt Schilling and his nascent video game company from Massachusetts.
“This is a risk worth taking,’’ said Carcieri, a Republican, announcing the 2010 deal that lured Schilling’s company, 38 Studios, to Providence, and put Rhode Island taxpayers on the hook for up to $75 million in guaranteed loans to an athlete who liked video games but had never developed one.
Where is he now, and why isn't he in a jail cell?
Oh, right, it WAS NOT HIS MONEY he was RISKING!!!!
“I think the governor had stars in his eyes, the whole idea of playing ball with a baseball player intrigued him and others,’’ said Republican state Representative Robert Watson, former Rhode Island House minority leader. “And I think they got blinded by that celebrity.’’
And LOOK WHO is PAYING the PRICE!
What Carcieri and supporters saw as the seed of a glittering new business sector for Providence, which has struggled for decades to replace jobs lost with the decline of its jewelry industry, now seems to be crashing down....
In a bizarre twist, at one point Thursday, company representatives hand-delivered a check to the Rhode Island Economic Development Corporation, apparently to cover the late $1.1 million payment, but then later said the company had insufficient funds to cover it....
Isn't that FRAUD?!!!!
Schilling has long been interested in gaming. As a baseball player, he collaborated on “massively multiplayer online’’ games - called MMOs - with Sony Online Entertainment. His office in Maynard was filled with decorative swords, a sign of the fantasy world his new company planned to create. From its infancy, 38 Studios imagined it would elbow into a multibillion-dollar market filled with games such as Blizzard Entertainment’s World of Warcraft, which boasts millions of fans.
MMOs are hugely elaborate and expensive, with the potential to become either blockbusters or giant busts, analysts say.
Because the games are so expensive to produce, strong funding is critical. “It does take hugely deep pockets,’’ said Barry Gilbert, vice president of Strategy Analytics, a Newton consulting firm that advised the Rhode Island agency during its negotiations with 38 Studios....
Schilling had originally hoped to launch the game’s first product in 2010. But he immediately hit trouble raising money. He shocked venture capitalists with an audacious pitch for $48 million - far more than gaming companies typically receive in an initial round of funding. In addition, Schilling was reportedly reluctant to give up much stock in exchange for funding. Flybridge Capital Partners and several other Boston area firms passed on 38 Studios....
In March 2010, Schilling finally found his cash cow....
“I had heard rumors that both the governor and House leadership were desperate to cut a deal with Schilling,’’ Watson said. “Nobody was admitting to anything at the time. Frankly, Keith Stokes [director of the Rhode Island Economic Development Corp.] and Governor Carcieri’s office were full of obfuscation, camouflage, and possibly outright lies.’’
Acting like a newspaper were they?
Watson said he opposed the program as “a scandal waiting to happen.’’
And here it is!
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"Curt Schilling a hypocrite about smaller government" by Brian McGrory | Globe Columnist, May 18, 2012
Curt Schilling spent no small amount of time in his career preaching the Republican mantra of smaller government and personal responsibility. He did this fresh off the historic Red Sox World Series win when he backed George W. Bush in the 2004 campaign. He did it on the stump on behalf of John McCain in 2008.
He did it for Scott Brown in January 2010, when he wrote in his blog, “He’s for smaller government,’’ and lauding Brown’s opposition to “creating a new government insurance program.’’
Smaller government? Call me crazy, but I’m betting that wasn’t exactly what Schilling was extolling when he sat behind closed doors on Wednesday pleading with the members of the Rhode Island Economic Development Corp. to put more public money behind his fantasy video game venture....
Yes, he is not the only one who noted this.
Apparently smaller government, in Schilling’s world, applies to other people, maybe city kids stuck in underperforming schools or disabled adults looking for help back and forth to medical appointments.
Yup, he's a Repuglican.
But for a former six-time Major League Baseball All-Star pitcher whose business venture can create jobs (!), bask in the greatness, people, and open the public vault.
Let’s stipulate here that the Rhode Island officials who committed this public money to 38 Studios are idiots. I mean nothing negative by that; it’s just the only possible adjective that applies. All right, maybe “sycophants’’ works as well because they were probably hyperventilating at the sight of his World Series rings and that he knew their names. Really, what public official bets the farm on a video game called “Kingdoms of Amalur: Reckoning,’’ while Central Falls is in receivership and Providence is fending off bankruptcy?
Related: The Falls of Rhode Island
Also see: Police say Nicole Cianci died of apparent overdose
Former Providence Mayor Cianci eulogizes daughter
By the way, a special word of thanks to everyone on Beacon Hill who took a pass on Schilling’s little post-baseball indulgence. Kind of ironic that the guy who preaches smaller government had to leave Massachusetts to find a program big enough to back him.
Schilling’s hypocrisy is really a nation’s hypocrisy in this era of unparalleled greed. Look no further than Wall Street bankers for the biggest hypocrites of them all.
Hypocrites AND criminals!!!
JPMorgan Chase, to name one firm, happily took $25 billion in federal bailout money in the Troubled Asset Relief Program when the bottom fell out the autumn of 2008.
But like virtually every other bank, JPMorgan then railed against government regulations designed to prevent another meltdown, with the company’s chief executive, Jamie Dimon, recently terming some of the federal proposals as “infantile’’ - that last revelation courtesy of a New York Times column this week. Those proposals don’t seem quite so infantile in light of JPMorgan’s latest loss of $2 billion-and-rising in trading risky credit derivatives.
See: The Jerks at JPMorgan
It may be worth mentioning that Schilling earned $114 million in his illustrious career, including $8 million in 2008, his final season, when he signed a one-year deal before injuries prevented him from throwing a single pitch. It must’ve been his left arm he thrust out for public funds.
Maybe this experience will give Schilling a greater appreciation for government. But that, like his video game, is probably pure fantasy.
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Related: Curt Schilling’s firm may get more aid
What?
"Schilling’s 38 Studios may get more aid from R.I.; Beleaguered game developer makes $1.1m payment" by Todd Wallack | Globe Staff, May 18, 2012
Rhode Island, which has provided $75 million to former Red Sox pitcher Curt Schilling’s troubled video game firm, may be on the hook for millions more in subsidies to the company, Governor Lincoln Chafee revealed Friday.
You have GOT TO BE F***ING KIDDING!!!!
Schilling’s firm, 38 Studios LLC, has qualified for state tax credits available to film companies and video game makers, and, Chafee said, Rhode Island may have no choice but to pay them, no matter how shaky the venture’s outlook seems. So far 38 Studios has qualified for $2.1 million in credits for 2011 and has applied for another $6.5 million that the state is now reviewing.
The company’s deteriorating finances have put Chafee in a bind. He
has long opposed the $75 million state-guaranteed loan his predecessor
arranged to lure 38 Studios from Massachusetts to Rhode Island but now
is struggling to protect the state’s investment by helping 38 Studios
stay afloat without putting additional tax money at risk.
Chafee also revealed that 38 Studios finally brought its loan up to date Friday with a belated $1.1 million payment that was originally due May 1. In an embarrassing turn of events that underscored the company’s financial woes, 38 Studios earlier this week asked for more state money after missing the May 1 payment, and then wrote a check for the amount Thursday evening - a check the company admitted it didn’t have the money to cover.
38 Studios also told state officials it would not be able to make payroll this week.
The company did not return repeated calls and e-mails seeking comment on Friday.
However, Schilling took to Facebook on Friday morning to deny online reports that implied he used state funds to repay some of the personal funds he has poured into 38 Studios.
I didn't know Schilling also stole bases.
“That is not true,’’ Schilling wrote. He also expressed confidence that his fledgling firm would survive.
The company has disclosed that state funds were used to pay off a $2.5 million credit line 38 Studios took out with a private lender and which Schilling had personally guaranteed.
While Schilling has said he invested $30 million of his own money in the company, it appears he has trouble persuading many others to join him in doing so. Chafee also said on Friday that the 38 Studios troubles may rest in part on its inability so far to raise additional funds from private investors.
“Their excuse is no private capital has materialized,’’ Chafee said.
Meanwhile, 38 Studios is burning through cash. It has used up all the funds available to it currently under the Rhode Island loan, and is spending $4 million a month in Providence developing an elaborate new online video game, nicknamed Copernicus. It addition to 307 workers in Rhode Island, 38 Studios has 106 in Maryland, where it bought video game company Big Huge Games in 2009.
Copernicus is a so-called massively multiplayer online game, a kind of product that experts in the industry say is notoriously difficult to make because it requires so much time, money, and testing.
“It’s a very risky category,’’ Billy Pidgeon, senior analyst for M2 Research, a market research and strategic consulting company. “A burn rate is not uncommon because there’s a lot of overhead.’’
Completing the game also appears to have taken longer than expected, creating a further drain on the company’s treasury....
That's what taxpayers are for, right? To fill up corporate treasuries!
In addition to the $6.5 million application that is now under review, the company has indicated it may seek another $12 million in state tax credits for this year’s expenses.
Chafee indicated the state is probably legally obligated to provide the additional tax credits....
Schilling is still screwing you!
The remarkable turn of events this week appears to have crippled hopes that luring Schilling’s company to Rhode Island would trigger a prosperous new business sector the state desperately needs to overcome massive economic problems, including an unemployment rate of 11.2 percent....
The low point in this week’s drama may have been Thursday night when state officials rejected the $1.1 million check from 38 Studios for insufficient funds. Rhode Island criminal law bars people from knowingly delivering a bad check with the intent to defraud, with penalties that can include prison time.
But in this case, the governor’s office said 38 Studios was upfront about the insufficient funds, and the check was never accepted.
“Clearly, there was no intent to defraud,’’ said Andrew Horwitz, a professor at the Roger Williams University School of Law who specializes in criminal law.
Are you kidding? When they submitted the check they were intending to defraud because they knew it would bounce!
Meanwhile, Needham gaming company Turbine Inc., which also makes multiplayer online games and has more than 50 job openings, took advantage of 38 Studios’ woes by scheduling a recruiting event in its backyard, the Hotel Providence, Tuesday night.
Schilling, after a week in which he was apparently unable to pay his employees, sought to exhort them on with a second message on Facebook.
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"Rhode Island’s fool’s game with Curt Schilling" by Tom Keane | May 19, 2012
States love to compete against each other for economic development, using loan guarantees, tax breaks, and other favors to lure companies away. It’s a fool’s game. Absent extraordinary circumstances (such as a failure of capital markets), making such investments in individual businesses is the province of private investors, not government. (The unwillingness of private investors to put money in 38 Studios itself speaks volumes.) Government shouldn’t be picking winners and losers. Indeed, it is uniquely unsuited for the job. Success to investors is measured by profits. Success to government is measured differently — jobs created, taxes collected, social welfare, environmental concerns, and so on. When the two conflict (e.g., if productivity improvements mean shedding jobs), government will be under pressure to make decisions that undermine the long-term profitability of a company.
Now you can see why AmeriKa is in such sad shape. None of those things are being done by government anymore. They are too busy spending tax loot on debt interest payments to banks, corporate welfare, well-connected concerns, and lavish political lifestyles.
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"Curt Schilling’s bloody stock" May 21, 2012
Now would be a good time for Rhode Island to cut its losses with Curt Schilling and his video game company, 38 Studios. Two years ago, the former Red Sox ace received $75 million in loan guarantees from that state as an incentive to move his fledgling firm from Massachusetts; on Thursday afternoon, Rhode Island Governor Lincoln Chafee’s office disclosed, the company had tried to pay an overdue $1.1 million payment with a bad check.
The company’s woes validate Massachusetts economic development officials’ decision not to get into a bidding war for Schilling, the often outspoken hero of the 2004 Red Sox championship. They also raise the question of how big a risk a small state should take on a private firm in the interest of economic development — or on a celebrity athlete with a big dream.
Massachusetts should look at Chafee’s current plight with a high
degree of humility; Governor Patrick and his administration bet big on
Evergreen Solar, a local clean-energy firm that seemed to fit in well
with the Commonwealth’s environmental and economic-development
priorities.
Related: Slow Saturday Special: Evergreen Turns Brown
Slow Saturday Special: Evergreen Solar Burns Massachusetts
Taxpayers lost how much on a company that never made a profit?
Evergreen Defaults
Evergreen Grows Tall in China
Also see:
Massachusetts' Lost Decade of Jobs
When will they ever learn, 'eh?
The notion that a video game industry is worth cultivating — in Rhode Island or in Massachusetts — is hardly foolish. Games have grown into complex, intensely plotted, high-budget productions, and the throngs of game companies and players at the recent PAX East conference in Boston testify to the amount of money to be made.
Yet it’s fair to ask whether the administration of former Rhode Island Governor Donald Carcieri viewed Schilling’s company with adequate skepticism. It’s unlikely that a firm owned by an unknown would have received the same treatment. And Schilling’s celebrity, which no doubt impressed Rhode Island officials, surely should have opened doors with private investors, too. The fact that the company was utterly untested likely scared them away, and its current woes argue against putting any more money into it.
Related: Slow Saturday Special: Evergreen Turns Brown
Slow Saturday Special: Evergreen Solar Burns Massachusetts
Taxpayers lost how much on a company that never made a profit?
Evergreen Defaults
Evergreen Grows Tall in China
Also see:
Massachusetts' Lost Decade of Jobs
When will they ever learn, 'eh?
The notion that a video game industry is worth cultivating — in Rhode Island or in Massachusetts — is hardly foolish. Games have grown into complex, intensely plotted, high-budget productions, and the throngs of game companies and players at the recent PAX East conference in Boston testify to the amount of money to be made.
I'm f***ing tired of the damn agenda-pu$hing.
Yet it’s fair to ask whether the administration of former Rhode Island Governor Donald Carcieri viewed Schilling’s company with adequate skepticism. It’s unlikely that a firm owned by an unknown would have received the same treatment. And Schilling’s celebrity, which no doubt impressed Rhode Island officials, surely should have opened doors with private investors, too. The fact that the company was utterly untested likely scared them away, and its current woes argue against putting any more money into it.
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Related: Schilling, R.I. officials meet again, with no resolution
Chafee says Schilling is 'stonewalling'
Two top employees leave Curt Schilling’s ailing video game company
"Curt Schilling’s 38 Studios lays off entire staff; Prospects called bleak for ailing R.I.-based video games maker" by Todd Wallack, Mark Arsenault and Hiawatha Bray | Globe Staff, May 25, 2012
Curt Schilling’s troubled 38 Studios laid off its entire staff in Rhode Island and Maryland on Thursday in a stunning turn of events for the former Red Sox pitcher’s ambitious gambit to build a video game franchise off the back of a winning baseball career.
The decision comes less than two weeks after 38 Studios’ financial woes surfaced and deep cracks began appearing in the six-year-old company. It was lured from Maynard to Rhode Island on the promise of a $75 million loan guarantee from a state hoping Schilling’s vision could bring high-paying jobs.
“I’m stunned, and I’m heartbroken,’’ said R.A. Salvatore, a
Leominster fantasy author who was a consultant to 38 Studios and whose
son worked at the company. “This is one of the best teams I’ve ever seen
assembled. They were doing amazing work.’’
But 38 Studios missed its May 1 payment of $1.1 million to Rhode Island and did not have enough cash to meet its payroll on May 15. To stay afloat, it asked Rhode Island for more money, applying for $8.4 million in film-tax credits, which it could then sell to other companies seeking to lower their tax bills.
Wow, Rhode Island lets Hollywood roll credits just like Massachusetts.
Yeah, taxpayers are being well-served in New England!
The company did not inform Rhode Island Governor Lincoln Chafee about the layoff. Chafee said the state has not been able to confirm how many workers were let go and has struggled to get other critical details since 38 Studios ran into financial trouble.
Still, Chafee said he is open to working with the company to help find ways for it to survive.
“I have not given up,’’ he said. “But I am also a realist. What we’ve learned from [industry] experts is grim news. Very, very grim.’’
Chafee said he believes 38 Studios executives have tried hard to find additional investors, such as venture capitalists, but have not had any luck so far. Schilling has publicly said he already put $30 million into the company, and he told state officials he did not have any more money to invest, despite a lucrative baseball career during which he earned $114 million.
“He says he’s all in,’’ Chafee said. “Tapped out.’’
Schilling could not be reached for comment.
Rhode Island has already provided the company with about $49 million of the $75 million loan. Chafee said he continues to oppose giving the company tax credits because of concerns it is likely to fail anyway and cost taxpayers even more.
And yet he's legally obligated.
He added that the value of the intellectual property and other assets probably would be minimal, reducing the amount of money the state could later recoup.
The original loan package was approved under Chafee’s predecessor, Republican Governor Donald Carcieri; as a gubernatorial candidate, Chafee had criticized the deal with Schilling. The fallout from the loan has already led to the resignation of two officials from the Rhode Island economic development agency.
“If we could get some confidence that any further investment was going to lead somewhere profitable, I would be in favor of that,’’ said Chafee, a former Republican member of the US Senate, now a political independent. “That has just not been the case.’’
Pressed at a news conference Thursday about how the company could have failed so quickly, and whether the state had not provided the proper oversight for its investment, Chafee said the company had anticipated better sales from its first game.
“The game failed,’’ he said. “That was integral to the success of the company.’’
Kingdoms of Amalur sold an estimated 1.2 million units, which Chafee said is less than halfway to the break-even point, according to experts the state has consulted.
Schilling became a legend with Red Sox Nation in 2004 after pitching through an injury complete with a bloody sock during the American League Championship against the New York Yankees. He traded on his star power to build his company, which he renamed 38 Studios LLC, a reference to his Sox jersey number. Schilling retired from baseball in 2009.
The right-handed pitcher has said little to reporters, but has repeatedly taken to Facebook and Twitter to try to rally employees and raise hopes for the company’s future. On Thursday, he tried to rebut Chafee’s repeated claims that the company’s first game was a flop. In a Facebook post, Schilling insisted the game “outperformed’’ the expectations of its publisher, Electronic Arts.
Michael Pachter, a game industry analyst at Wedbush Securities in Los Angeles, said he was stunned by the failure of 38 Studios. He said Kingdoms of Amalur sold well and should have provided enough revenue to help the company stay afloat until its major project, Copernicus, was ready for release.
Pachter said the company must have lost control of expenses. “Clearly they spent more than they took in,’’ he said. “That’s just poor planning. What were they thinking?’’
Thinking TAXPAYERS are on the HOOK!!
But there was no guarantee that Copernicus, an elaborate online role-playing game set to be released in 2013, would be a big hit. Such “massively multiplayer online’’ games are notoriously costly and difficult to develop. Schilling estimated he might need more than $100 million to complete the game.
In addition to 307 workers in Rhode Island, 38 Studios had 106 employees in Maryland, where it bought the video game company Big Huge Games in 2009.
“It’s an incredible tragedy,’’ said Brett Close, a former 38 Studios chief executive who now works for Frog Design in Austin, Texas. The company’s trouble is a “testament to how difficult it is to create that type of product they were trying to build.’’
Video game experts say that 38 Studios could try to find a buyer or investor to salvage the company and remain in operation, but that scenario is unlikely.
“The consensus seems to be that it’s dead,’’ said Hank Howie, chief executive of Beach Cooler Games, a mobile game start-up in Boston.
Howie said part of the problem is that the company spent far too long working on Copernicus, in part because 38 Studios may have lacked enough experienced managers. He said the game should have taken the company no longer than three to four years, since it didn’t have unlimited funding.
--more--"
Also see:
Politicians can find start-ups hard to resist
Lawmaker considers bill to offer tax credits to video game makers
Patrick vindicated for passing up Schilling's pitch
Next Day Update: Curt Schilling’s dream died quite quickly at 38 Studios
Nothing but a rehash of all above.
