38 Studios Hit With Layoffs, State of Rhode Island Is “In Deep”


38 Studios and Big Huge Games, creators of Kingdom of Amalur: Reckoning, have officially laid off all employees today in a turn of events that saw the beleaguered company spiraling out of control over the last few weeks.

The Associated Press obtained a copy of an email sent to all employees at 38 Studios stating that the layoffs were “non-voluntary and non-disciplinary”. The email continued to say, “The company is experiencing an economic downturn. To avoid further losses … the company has decided that a company wide layoff is absolutely necessary.”

Gov. Lincoln Chafee is resolute in trying to save the company and the state’s investment. That doesn’t seem possible with 38 Studios seemingly throwing in the towel. Gov. Chafee described the situation as “grim times” and the state of Rhode Island being “in deep”.

Curt Schilling, former Boston Red Sox pitcher, as head of 38 Studios was given a $75 million dollar loan to move from Massachusetts to Rhode Island. 38 Studios would get a cash infusion to help develop an MMO, recently revealed to be Project Copernicus, and Rhode Island would gain hundreds of jobs and millions of dollars in tax revenue. Sadly, the way the deal is structured, thanks to interest on the loan, the taxpayers of Rhode Island may be on the hook for over $112 million dollars

In recent days, 38 Studios has seen high level employees abandon ship. Payroll hasn’t been met since May 1. Curt Schilling has been mum on the subject. The Gov. Chafee is under fire and members of the Economic Development Corporation board, the governing body in charge of loaning 38 Studios the $75 million dollars, are resigning.

Not even the intellectual property of Kingdom of Amalur could pay off the entire debt as it has been valued at about $20 million dollars. No doubt Chafee is reaching out to anyone he can, including Electronic Arts who published KOA. The game sold 1.2 million copies, which is a pretty good number for a brand new IP. It even outperformed EA’s expectations. Unfortunately, KOA needed to sell 3 million copies for 38 Studios to break even. As Chafee put it, “the game failed.”

The scenario is disastrous for the gaming industry and for the state of Rhode Island and it appears that this is a long way from being resolved.

We will keep you posted of further developments.


About Mike M

Recovering Alcoholic. Addicted Gamer. Street Fighter Enthusiast. Writer. Graphic Designer. Comic, Movie and TV Show Lover. Ninja. All in those order.