38 Studios - Last Remaining Assets Auction

I still can't understand how it went bankrupt in the first place.
Grinders were mainstream in 2012, still are, and I'm sure they sold several million copies.
Something smells fishy there.

And they're selling 3+ years old hardware now?
LOL
 
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Read the article from Ripper's link. IMO this sentence seems to sum it all up "One former employee describes it (Schilling's behaviour - DP) as “rampant and destructive optimism.
 
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I had fun with the demo of Kingdoms of Amalur :) And I thought it was a really good game :) And as I understand it sold 2-3 million copies or more? As other have said, Curt Schillings problem was that he went a bit - or way - too much overboard with the checkbook. Ands just bought everything he thought was nice to have. And that's exactly why people like him need to to be reigned by what we call bean counters here - someone needs to make sure that the company has enough money to stay in business....after the release of the first video game.

And as I understood it, part of the problem was that they 38 Studios couldn't get any funding for their next game....
 
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38 Studios had a unsustainable runrate. In addition to drunken sailor spending gone wind, the Rhode Island loan structure was such that payments were contingent on new hiring which only compounded the problem. RI wanted a "jobs creating company". You can imagine the inefficiencies of hiring people you don't need. 38 Studios was very inexperienced financially and didn't have a cash flow model to pay the bills operationally. It was constantly up against the wall right up to the point the first loan repayment. The runrate overwhelmed whatever flows were coming from The Reckoning. When the first payment came due the sh*t hit the fan and the check literally bounced.

Jumping ahead RI corruption kicked in. 38 Studios needed a tax exemption package to say afloat while seeking new investors for additional cashflows until the MMO was released. RI governor Chaffe said he was working with 38 Studios to help secure an investor while sabotaging it by talking to the media about their insolvency. When they got close to signing he refused the tax exemption. It was game over.
 
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ToddMcF2002 said:
When they got close to signing he refused the tax exemption. It was game over.
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Signing what? There never was (except in Schilling's fevered mind) any last minute saviour and tax exemption would keep Studio 38 going only for a couple more weeks.
 
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The tax credits were a condition for foreign capital. The credits themselves weren't going to save them. Killing the foreign capital deal killed them. Long term they may have gone under anyway but we will never know.
 
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Once again Todd there was no foreign capital. Read the article.
 
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ToddMcF2002 said:
...the Rhode Island loan structure was such that payments were contingent on new hiring which only compounded the problem.
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Great example of why you don't want government involved in business. How the hell can anyone plan exactly when new hiring is going to make sense in a free market. Trying to hammer a 'planned economy' ideal into the loan T&Cs should have been yet another warning sign for 38 studios.
 
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Oh come on TMG! Poor, innocent businessman stitched up by a government? Both sides were guilty of crass stupidity.
Governor shouldn't have gambled 75 million of state's money on a CG company and Schilling shouldn't have taken such a deal. Problem was that Schilling was desperate for extra funding and knew shit about how to run CG company (or, in fact, any company).
 
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Yeah, I really don't think this is a Big Government story. Schilling was determined not to give up any equity in the company, which private investors would obviously demand, so he went to the state. Most of the money wasn't even dependent on creating jobs - he just got some more money if brought a certain number of jobs to the state. Sounds pretty reasonable to me - it's on him if he goes on a hiring spree just to unlock a bit more borrowing. Crazy, really.
 
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Ripper said:
Yeah, I really don't think this is a Big Government story. Schilling was determined not to give up any equity in the company, which private investors would obviously demand, so he went to the state. Most of the money wasn't even dependent on creating jobs - he just got some more money if brought a certain number of jobs to the state. Sounds pretty reasonable to me - it's on him if he goes on a hiring spree just to unlock a bit more borrowing. Crazy, really.
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It is a big gov story though. If the game does well it will bring on new business and create new job opportunities driven off demand. That's capitalism. Mandating job counts with or without demand - that's socialism. That's what you can expect from any deal cast with a New England government. Schilling should never have gotten entangled with RI. Big mistake right there. Add massive corruption to the equation (RI is a huge mess) and things get even worse.
 
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ToddMcF2002 said:
Mandating job counts with or without demand - that's socialism.
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But a free choice to enter into a deal with a state is not a government mandate. Schilling simply didn't like the terms he was offered from private investors, and chose to do a deal with RI instead - that's pure free market.

States and nations offering companies perks and breaks to come and create jobs in their region is a pretty standard part of how contemporary capitalism operates.

I do agree that setting X number of jobs to be created as a criterion to access extra funding was a silly idea. They should have seen that this created a perverse incentive
 
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zahratustra said:
Oh come on TMG! Poor, innocent businessman stitched up by a government? Both sides were guilty of crass stupidity.
Governor shouldn't have gambled 75 million of state's money on a CG company and Schilling shouldn't have taken such a deal. Problem was that Schilling was desperate for extra funding and knew shit about how to run CG company (or, in fact, any company).
Click to expand...

I don't disagree with your criticisms of schilling and 38 studios though I still stand behind my point theoretically.
 
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The upside of this, hopefully, is that people will think twice before hiring Ken Rolston to hype their game in the future.
 
Will never figure out why people still care about this company, at least on a gaming site. Their only real claim to fame is making one of the worst AAA RPG's of all time, but it's been almost 4 years...
 
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Stingray said:
Will never figure out why people still care about this company, at least on a gaming site. Their only real claim to fame is making one of the worst AAA RPG's of all time, but it's been almost 4 years…
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The story is an interesting one. You may not care about ships or the ocean, but the sinking of the Titanic is an interesting story.
 
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It's also interesting that the publisher, EA, promised one million of $ bonus if the game gets at least 85% on metacritic.
 
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