38 Studios quickly degrading situation

***solidsnakejej*** · 05-25-2012, 03:19 AM

Good gesture by game companies

The sudden firing of all 379 employees at 38 Studios and Big Huge Games today was a blow to the industry, even for those of us who expected it. Soon after news broke, many developers, artists, designers, PR people, journalists and fans took to the Internet to express frustration and anger -- and to help.

On Twitter, the hashtag "#38jobs" rose to trending in the US, with people shouting out which studios were hiring and generally sending support to those let go today. A Facebook group titled "38Jobs" popped up around the same time. Freelance games journo Alex Rubens gathered all of these jobs tips into a Google Doc that currently sports 84 studios with openings, including Irrational Games, Bungie, Activision, Klei Entertainment, Rockstar and other major and indie companies.

Access the full list here; it is still in the process of being updated and refined, courtesy of Rubens and The Side Of The Gaming Industry That Proves We're Not All Trolling Douchebags.

http://www.joystiq.com/2012/05/24/in...e-games-staff/

Documentation of the loan

Email sent to the 38 employees

The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012.

Also:

38 Studios founder Curt Schilling announced on Twitter yesterday that Reckoning sold 1.2 million copies. Chafee said the game needed to sell closer to three million.

http://www.giantbomb.com/news/report...-updated/4172/

***solidsnakejej*** · 05-30-2012, 05:55 AM

Originally Posted by Viper

Bullshit. The proverbial writing was on the wall for the past week or so.

Reading some of the responses I don't think the regular employees knew anything, It seems that they found out their health insurance was being cancelled when one of the employee's wife was being check up when here baby was close to due.

And then you have this.

@nickchester hearing that 38 took over mortgages in MA so ppl could buy in RI, failed to pay taxes, now ex-38ers have dbl morts + back taxes

Some of the hundreds of 38 Studios employees laid off yesterday were hit with a second round of bad news this week when they were told by banks that homes they thought the company had sold for them hadn't been and that they may be stuck with a second mortgage, Polygon has learned.

Several sources directly impacted by the mortgage issue confirmed the news today and a 38 Studios official, who asked to not be named, said the company is working to try and get to the bottom of the notifications and find a resolution.

One former employee said they discovered this week that their Massachusetts home, which they had been told was sold last year, actually hadn't been. The bank contacted them this week to ask why they mortgage wasn't being paid.

It is unclear how many of 38 Studio's 288 Rhode Island employees may be impacted, but it will likely only affect some of those who were part of the company's relocation program. The program, we were told, was used to help employees moving from Massachusetts to Rhode Island when the company relocated.

The bank notifications raise the specter of how the financing for the relocations were handled. If the company used state-backed money to finance homes or pay mortgages while the homes were being sold it could mean that 38 Studios violated the terms of the agreement with the state.

Reached for comment this afternoon, state officials told Polygon they had no independent knowledge of the mortgage issue.

During an afternoon press conference today, Gov. Lincoln Chafee told a gathering of press that because 38 Studios didn't alert the state ahead of time about the layoffs the company is once more in default on the agreement.

Chafee spent much of the conference answering increasingly hostile questions and reminding the gathering that he opposed the deal, which was made under another governor.

He also said that celebrity may have played a factor in the state making the agreement, but that it never impacted his opinion on the deal.

"When I looked at him I saw a business man, not a baseball player," he said.

38 Studios laid off all 379 employees, 288 of them in Rhode Island, yesterday afternoon in a terse email. Sources tell Polygon that the company had not been communicating with employees, or paying them, for nearly a month prior to the mass layoffs.

Schilling's only public response to the financial turmoil that has embroiled both his company and the state of Rhode Island had been a tweet thanking people for sending "prayers and well wishes" to the team and families of 38 Studios.

Curt Schilling@gehrig38
Thank you to everyone sending prayers and well wishes to the team and families of 38 Studios.
25 May 12 ReplyRetweetFavorite
A similar post on his Facebook account was met with a tide of well wishers including a number of former employees and John Smedley, president of Sony Online Entertainment who wrote, "Curt – the game you are building is amazing. Find a way. I'm sorry you're having a tough time right now."

The studio's financial turmoil came to light earlier this month when it first missed and then later made a $1.125 million payment to the state of Rhode Island.

Founded in 2006 in Massachusetts as Green Monster Games, 38 Studios was lured to Rhode Island in 2010 by a $75-million loan guarantee from the state. At the time state officials argued that the studio would bring hundreds of jobs and millions in tax revenue to the state.

While 38 Studios made its first partial payment, it then missed a $1.125 million loan payment to the Rhode Island Economic Development Corporation on May 1. During a series of meetings with the state, 38 Studios said it couldn't pay its employees and asked for more help from Rhode Island. The studio later delivered a payment to the state, but then said it couldn't cover the check. On May 18, it made good on the payment.

Schilling, and the state, both continue to hunt for private investors for the company.

If 38 Studios remains closed, the state says it has the money to make the first year of payments on the loan from a reserve they set aside pulled out of the loan amount. But after that the state would then have to start making the payments to the bank.

The developer was working on a massively multiplayer online game codenamed "Project Copernicus." It released Kingdoms of Amalur: Reckoning through publisher EA in February. The game reportedly sold 1.2 million copies in the first 90 days, according to Schilling, and was positively received by critics. Last month, 38 released a downloadable expansion pack for the game titled "Teeth of Naros."

Gov. Chafee dismissed the possibility of the state taking over the studio during a press conference earlier this week, saying it would be too costly to create and maintain an MMO.

The director of the Economic Development Corporation resigned earlier this month and today the governor said that two other members of the board have asked not to be reappointed and another resigned this week. The state is also discussing asking for the resignation of other board members who supported the decision to back 38 Studios.

A slew of developers from around the country have been Tweeting that they are hiring in hopes of finding the hundreds of displaced employees jobs.

Catch up on the history of the studio and its deal with Rhode Island here.

http://www.theverge.com/gaming/2012/...some-employees

Curt Schilling is blaming the state for what happened

PROVIDENCE — Curt Schilling sits in a glass-walled conference room in the video-game company that he built. The former Boston Red Sox pitching star is gaunt, unshaven and wearing a wrinkled 38 Studios T-shirt and green camouflage shorts.
He is not sleeping and has lost 33 pounds in the past 45 days, which he calls a “surreal” stretch that has seen 38 Studios — the company that he and Rhode Island have bankrolled to the tune of more than $100 million — brought to the brink of financial ruin.
His controversial partnership with the State of Rhode Island, forged with $75 million in taxpayer-guaranteed bonds two years ago, is hanging by a thread, in large part, he says, because of broken promises by the state and damaging public comments by Governor Chafee regarding 38 Studios’ finances.
If 38 Studios fails, Rhode Island taxpayers will be liable to repay more than $100 million. Also, Schilling says, he stands to lose $50 million of the fortune he earned as a likely Hall of Fame baseball pitcher and committed to the venture — “everything I have.”
In exclusive interviews with The Providence Journal over Memorial Day weekend as he struggled to save his

Blames state for problems company, Schilling broke his silence, defending his beleaguered company and denying that he sought a government “bailout.”

Seems the state lied about tax credits:

Well now that I'm a little more free to talk about this Jesse. The million dollar + payment that went to Rhode Island was in assurance we would receive the tax credits of 8 million. We even had buyers lined up for the credits and the government was sitting there telling us "You give us the million, we give you the tax credits."

We gave them the million. They did not give us the tax credits, which would've not only payed the employees, but saved the studio most likely as we had several publishing deals in the works. The government flat out lied to us (big surprise).

I don't fault upper-managemenet too much, they've actually been pretty open about what's going on and really thought the studio was going to pull through this. They've even been allowing us access to the building to obtain as many assets as we need to build our portfolios back up. I'm sure the full story will eventually come out.

http://www.examiner.com/article/38-s...ut-tax-credits

***Viper*** · 05-30-2012, 12:05 PM

Originally Posted by solidsnakejej

Reading some of the responses I don't think the regular employees knew anything, It seems that they found out their health insurance was being cancelled when one of the employee's wife was being check up when here baby was close to due.

Didn't that article just say that employees hadn't been paid in a month? Had could they not know something was wrong?

***solidsnakejej*** · 05-30-2012, 01:39 PM

Originally Posted by Viper

Didn't that article just say that employees hadn't been paid in a month? Had could they not know something was wrong?

They were led to believe that paying the loan payment would give them $8 million tax credits that would have been used to pay them off.
http://www.examiner.com/article/38-s...ut-tax-credits

***Viper*** · 05-30-2012, 01:48 PM

Originally Posted by solidsnakejej

They were led to believe that paying the loan payment would give them $8 million tax credits that would have been used to pay them off.
http://www.examiner.com/article/38-s...ut-tax-credits

That payment was made on the 18th. They had already missed payroll back on the 1st and the 15th. So employees had already gone without 2 full bi-weekly week paychecks before 38 Studios ever made the $1.125 million loan payment.

**venomv** · 05-30-2012, 03:33 PM

I didn't realize it was that Curt Shilling, I read the name when it was posted earlier and thought about it for a second, but then thought that must be another guy.

***solidsnakejej*** · 05-30-2012, 03:42 PM

Originally Posted by Viper

That payment was made on the 18th. They had already missed payroll back on the 1st and the 15th. So employees had already gone without 2 full bi-weekly week paychecks before 38 Studios ever made the $1.125 million loan payment.

They made payroll for the 1st, they missed payroll on the 15 to make the payment to get the $8 million credit.

***Crazybone126*** · 05-30-2012, 04:41 PM

Originally Posted by venomv

I didn't realize it was that Curt Shilling, I read the name when it was posted earlier and thought about it for a second, but then thought that must be another guy.

Really? They made such a big deal out of it.

"He's retiring from baseball to make VIDEO GAMES?!?!?"