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Reason On How and Why 38 Studios Went Bust 227

cathyreisenwitz writes "The 2012 bankruptcy of Rhode Island-based video-game developer 38 Studios isn't just a sad tale of a start-up tech company falling victim to the vagaries of a rough economy. It is a completely predictable story of crony capitalism, featuring star-struck legislators and the hubris of a larger-than-life athlete completely unprepared to compete in business." Reason makes no bones about its view of this kind of public-private "partnership."
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Reason On How and Why 38 Studios Went Bust

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  • by Anonymous Coward on Thursday January 03, 2013 @02:12PM (#42464553)

    Neither the article nor the summary says anything that could even be remotely interpreted as an attack on capitalism. And you know it.

    Strawman arguments are lies.

  • Summary (Score:5, Informative)

    by phantomfive ( 622387 ) on Thursday January 03, 2013 @02:58PM (#42465147) Journal
    Looks like baseball player Kurt Schilling (who apparently was very good at baseball) decided to start a video game studio, who knows why.

    He tried to raise $50million from private investors, but they didn't think he could make money.
    He went to the governor to get some money, but the governor didn't think he could make money.
    A new, naive governor was elected in Rhode Island, and desperate to improve the economy of the state, he approved some $75million in loan guarantees.

    They hired some people, built the game Kingdoms of Amular: Reckoning [], and did a surprising number of things right considering a baseball player was the founder.

    It turns out that in making a modern game, one of the hardest things is getting good developers in the right places, and the game turned out to be buggy. Very buggy. And they didn't have a good level designer, so the levels were kind of boring. These things combined to sink the game.

    So, the company failed. And taxpayers now have to pay back the loans.
  • by drerwk ( 695572 ) on Thursday January 03, 2013 @03:01PM (#42465183) Homepage

    The disclosure notice said 38 Studios employed 379 full-time workers as of March 15, with 288 of them in Providence and the rest at its other studio in Maryland. The company also reported 34 full-time contractors and eight interns. The company listed 18 job openings on its website as of Monday evening.

    Almost 400 people - I guess average salary must have been in the $30-$40K range.

  • by Anonymous Coward on Thursday January 03, 2013 @03:16PM (#42465385)

    What we made:

    1) A console game -- Kingdoms of Amalur: Reckoning. Published by EA, you should still be able to buy it even with 38 gone (and it's been a year, it is probably discounted at this point; available for xbox360, ps3, pc, though if you play on a pc you should go buy an xbox controller because the keyboard/mouse control isn't that great). Got mostly good reviews, sold pretty well. It's an action-heavy-RPG, think the combat of God of War with a crunchy MMO inspired "gather piles of loot, explore a big world, do quests for lots and lots of people..." backing.

    2) The Big Project the company was working on was an MMO, just titled Kingdoms of Amalur, set in the same world long afterward; you could think of Reckoning as a kind of teaser to get people excited about the world and story to lead them into the MMO. Think WoW, but with a very different art style (I can't really describe it in text, you can search for the screenshots if you care), and lots and lots of refinements. It was approximately a year from release when the company went foomp.

    3) Assorted tie-ins. Yeah, just like you can get the WoW novels and comic books and action figures, there were plans for that stuff too. Obviously, those things don't get launched til after the MMO does, so they were in early-planning stage.

    Technical and software issues: MMO software is big, and we were chasing a moving target. With an MMO... it's not hard to write an MMO that's better than what WoW was at launch, lots of people have done that. But to make any headway at all in the market, you've got to make something that's better than WoW is Right Now, because to attract a gamer of an inherently social game, you have to pull them not just away from the gameplay of their current game, you have to also lure them away from the circle of friends in their current game. You don't yet have a raiding guild in our game, so our gameplay/art/story/etc has to be enough better than WoW (or LotRO, or DDO or FFXIV or EVE, or whatever you are currently playing that we're trying to convince you to turn off long enough to try our game), that we can convince you to try us for long enough to get a guild going and establish those friendships in our game. That's a high bar, and in a multi-year development cycle, you have to go back several times, look at the new games and expansion packs coming out, and say "hey, WoW just came out with kung-fu panda expansion... is there anything in there that is really compelling? Is there some new piece of gameplay or UI that is good enough that we ought to match it, or is something that we can see how to do better?" If you compare the WoW UI of today to the UI of three or five years ago, there is a world of difference in usability. You don't notice it at the time, since it's growing in bits and pieces, but if you've played an MMO of today, you'd never go back to one of three years ago. Which means... Those design docs from when 38 studios first formed had to go through a lot of revision. Systems written early, we'd go back and say "oops, this needs to be seriously expanded, otherwise we'll look bad by comparison".

    The last week, for example, as we watched the financial axe fall, we were running our one functional raid between sessions of watching the idiot governor holding press conferences about us. And then we'd post-mortem the run, say what was fun, with a lot of comparisons to other MMOs -- "here's why X was more or less fun than it would have been in game Y". That generated a lot of new feature/bug requests; it's often hard to tell what is going to be fun until you actually are running around in the world flinging fireballs... which is great, and very "agile", but unfortunately wrecks havoc with scheduling. In hindsight... Build in more slack in the budget/schedule to pay for revision passes, because with a game (or with art in general I guess), you're likely to do something, look at it, and see a way to improve it. Unless your goal really is to pu

  • by Anonymous Coward on Thursday January 03, 2013 @03:48PM (#42465761)

    Not to mention that this entire deal had nothing to do with capitalism. Government guarantees a giant loan to a business driven by nepotism, greed and lies in an erratic industry headed by a former sports star with no management experience whatsoever? How is that capitalism?

    Capitalism is the private ownership of the means of production.

    When the VCs took a look at Schilling's plan said it sucked balls, that was capitalism in action.

    When the RI governor went to lick Schilling's schlong and suck his balls, that was definitely NOT capitalism.

  • Re:Summary (Score:4, Informative)

    by Anonymous Coward on Thursday January 03, 2013 @04:39PM (#42466431)

    (Rhode Islander here with some context)

    Schilling was not only very good at baseball, but was a legend in New England for helping win a World Series for the Red Sox while pitching with an ankle that was hours from surgery replacing a snapped tendon with one from a cadaver, which wasn't healed, and bleeding profusely throughout the game. This put him in a pantheon usually reserved for mythological creatures in the minds of people in the region (who were Red Sox fans, at least). I assure you, this isn't an exaggeration.

    The general consensus in RI is that Carcieri (who had come into office on the platform of being a business man and knew how to fix the state, and in his first term ran a "Big Audit" to find waste in govt which is what earned him a second term) and other RI politicians were enamored with Schilling and his World Series championship rings, seeing him as a winner they could invest in. No one in RI govt had any clue about the video game industry, and RI's tech history was nary more than a couple college research shops and branches and subdivisions of companies located elsewhere. No one in government there could understand what they we're approving.

    The new governor, Lincoln Chaffee, sought out video game industry insiders for advice when 38 Studios was melting down, unlike anyone else before him, and quickly came to realize that this ship was sunk, and not worth putting money into. Chaffee was critical from the start (not because it was video games, but because of the loan going to one place), and has come out of this looking prophetic, and will certainly win re-election in 2014.

    Its not a surprise that this didn't work to anyone who did a little homework, but it was sad to see it all go down as it did. The truly sad part is that RI is becoming an anti-tech state as a result, and is going to end up scaring away more business and people as a result. It's a worst case scenario.

  • by Xeranar ( 2029624 ) on Thursday January 03, 2013 @05:37PM (#42467477)

    No, that is not a free market at all. That's an extremely well-regulated market. Think of the term "free" as anarchistic in that anything goes barring violence and perhaps that as well. Free markets can't exist because people will go one of two ways, cheat to raise their own profits as an individual or use a trust-like syndicate to protect their interests against consumers. The race to the bottom in prices almost never occurs because the boom-bust cycle eventually plays out to a few huge players who inevitably dominate the market. It happened in trains, steel, the agricultural world, and even consumer electronics.

    Regulations when used correctly create a more competitive playing field. There are those who argue the opposite but they base ir on unbending human greed which is a bad argumentative stance as it is a volatile subjective ideal.

  • by Anonymous Coward on Thursday January 03, 2013 @06:07PM (#42467887)
    I think it's important to note that Schilling has always come out (publicly at least) against public money. He's a classic anti-big-government, pro-free market guy.

    "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.’’

    I like this part:

    "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. 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."

    I'm not against capitalism, but his hypocrisy is mind blowing.
  • by JDAustin ( 468180 ) on Thursday January 03, 2013 @06:24PM (#42468131)

    "Solyndra got their loans under Pres Bush and a republican house."

    Bullshit. The program that Solyndra got there money was started under Bush in 2005 but the credit committee voted against the loans on Jan 9 2009, before Obama took office. The Obama admin reversed this and granted the loans.

Variables don't; constants aren't.