38 Studios and Big Huge Games Shutting Down
Rumors about the demise of 38 Studios are now confirmed. In addition to CEO Jen MacLean and senior VP of product development John Blakely, 38 Studios and its subsidiary Big Huge games have laid off all employees and will shut down.
Despite the generally positive response to debut game Kingdoms of Amalur: Reckoning, 38 Studios has been battling insolvency since mid-May, when it missed a $1.12 million loan payment owed to the state of Rhode Island as part of a $75 million underwriting deal designed to lure the company to Providence. Attempts made last year to apply for tax credits ended in failure, and the crisis was compounded when it was revealed that the studio was unable to meet payroll expenses.
The fallout has spread to the Rhode Island Economic Development Corporation, which brokered the loan deal despite warnings about potential risk. RIEDC Executive Director Keith Stokes tendered his registration to Governor Lincoln Chafee last week; he was followed today by Helena Foulkes, vice chairwoman of the RIEDC board.
Though Chafee opposed the loan deal as a gubernatorial candidate in 2010, he now has to deal with the consequences of 38 Studios’ collapse, which could put Rhode Island taxpayers on the hook for up to $112.6 million (though that number could also be considerably less).
Since 38 Studios is now shuttered and soon to be in default on its loan, the state of Rhode Island, under the terms of the loan deal, is the new owner of all of the company’s IP, including the anticipated Kingdoms of Amalur MMO tie-in “Project Copernicus.” According to experts, however, selling these assets at auction is unlikely to recoup enough money to defray the loan.
The founder of 38 Studios, former Red Sox pitcher Curt Schilling, refused to comment on the situation today, despite repeated attempts by various media outlets. Given his high profile and the political context of the company’s demise, more developments in the story are expected soon.