38 Studios, the game development firm behind Kingdoms of Amalur, is in a bit of a tight spot. Recently, the state of Rhode Island announced the company had defaulted on a rather large state-paid loan, and as you can probably imagine, officials are concerned. 38 Studios executives met with state leadership last week in a closed-door meeting, but it sounds like the problem isn't resolved yet.
38 Studios is known for more than just its well-received first title, action role-playing game Kingdoms of Amalur. The company's founder is Curt Schilling; a retired Major League Baseball pitcher with three World Series wins. 38 Studios began its life as Massachusetts-based developer Green Monster Games, before a 2007 name change.
Back in March of 2010, discussions began between the state of Rhode Island and Schilling, contemplating a possible relocation from Massachusetts. The talks apparently began after Schilling spoke with then-Governor Donal Carcieri. In July of that same year, the state approved a $75 million loan to 38 Studios, with the understanding the company would bring 450 new jobs to Rhode Island.
38 Studios moved to Providence, Rhode Island, received the first two installments of the loan – which amounts to over half of the approved amount – and gets to work. Amalur was released to great success in March of this year, and the company employs over 300 people. Sounds great, right?
Well, unfortunately it seems not everything was so perfect. The Rhode Island Economic Development Corporation revealed this month 38 Studios had missed its loan payment of over $1.1 million dollars. Obviously, this means the company has defaulted on the loaned funds – that's taxpayer funds – and the status of the company is in a bit of legal limbo.
See, the details of the loan stipulate if 38 Studios is unable to come up with the cash to pay back the loan, the taxpayers of Rhode Island are on the hook. According to local news station WPRI, state residents could wind up owing a maximum of $112.6 million if the game developer doesn't pay. Moreover, that means the state would own 38 Studios and its properties. Accordingly, current governor – and prior opponent to the loan – Lincoln Chafee is interested in finding a way to help 38 Studios come up with the money.
Schilling met with Rhode Island officials in a closed-door meeting last Wednesday, asking for state assistance with the loan problems. If 38 Studios can pay its past due payment, the problem would essentially be resolved – for now. But seeing as how that hasn't happened yet, it appears fairly obvious the company simply doesn't have the money. No word yet on the future of 38 Studios, unfortunately.
"Well we had a very generous proposal that 38 Studios took advantage of," Governor Chafee told WPRI after the meeting. "Now we're in some difficulty with that. Very generous proposal."
While Kingdoms of Amalur has performed exceptionally well, the developer is currently at work on a new massively multiplayer online game, codenamed Project Copernicus. Large-scale MMO development is notoriously expensive, so I'm assuming the company has hit a cash-flow problem, hence the default.
Hopefully, this all works out. But if doesn't, a small American state is going to own a video game company. Weird.