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Friday, 18 May 2012 08:35

38 Studios unable to meet payroll

Written by David Stellmack



Temps and contractors shown the door


38 Studios is apparently struggling. Despite getting their first release out the door with Kingdoms of Amalur, the studio that is headed by former baseball player Curt Schilling was unable to meet payroll this week, according to sources. It could be that an overdue payment made to the Rhode Island Economic Development Commission (RIEDC) for $1.125 million is the reason cash flow is strained.

Sources say that Schilling has already let all of the temporary and contract employees go as the company looks to streamline its financial commitments. The studio had about 380 full time employees as of March this year, but it is unknown if that count included the temporary employees and contractors. We also have sources telling us that a number of permanent employees have also been laid off, but we are having trouble confirming this rumor as accurate.

While the RIEDC met yesterday to decide what action it would take, including taking steps to keep the company solvent, no decision was announced. The RIEDC will meet again Monday. Should the developer go out of business, things could get interesting for the State of Rhode Island, as the taxpayers there would have to pay off the remainder of the 38 Studios’ loan; however, if that happens, Rhode Island would then own the studio’s intellectual property (IP) and could auction it off to the highest bidder.

So far, the studio has only released one title, which is Kingdoms of Amalur. Worldwide sales have not been announced for the title. 38 Studios does have more things in development, but sources’ stories conflict on how many titles are in development and how close they are to release. Some seem to think that the company only has an MMO title that they are working on, while others believe that both the MMO title and a sequel to Kingdoms of Amalur are in development.

We also are hearing rumors of a check for $1.125 million being rushed to RIEDC by 38 Studios and the check then being returned to 38 Studios when the studio’s CFO called RIEDC at the last minute and advised that there were insufficient funds to cover it. Should 38 Studios be able to pull the cash together to make the payment, the following payment would not be due till 2013. However, if 38 Studios can’t even pay their employees, there is really not much point in scrambling to keep the company going.

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