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An Epic Win Helps Repair a Big Huge Fail

Posted by Rampant Coyote on June 5, 2012

38 Studios pretty much bit the dust a couple weeks back, which took Big Huge Studios – which by most accounts had a reasonable freshman success with their first (and, sadly, only) RPG, Kingdoms of Amalur. Maybe not enough success to pay for its initial development, and definitely not enough success to carry 38 Studio’s massive MMORPG-in-development on its back, but still a reasonable (to me) number sold that reportedly exceeded publisher EA’s expectations. This is especially sad for me, as I’ve enjoyed their games since Rise of Nations. Of course, this is only the bullet that they didn’t dodge – they’ve dodged at least a couple over the years, but it seems their time was up.

But wait! What’s this?

As Epic Games’ president explained yesterday, they had a problem of a different sort: “Epic’s directors had spent the morning discussing how we’d love to build even more successful projects with our growing team, but that we’d need a dramatic infusion of top talent to do so.  Which, we all knew, was impossible.

Then some of the former principle folks from Big Huge Games called.

Need meets need. And happens to coincide with some good will. When people ask me what capitalism is good for in the future, I’ll have to cite this example. So now Epic Games is opening up a new studio where Big Huge Games used to be, and many of the former BHG folks may find a home not far from their old one. And in the meantime, many will be retained as contractors for Epic until things work out.

It’s not a perfect solution. The white knights are riding in to save the village after the looting but before the burning. But it’s just how it goes.  Still, while it’s not the happiest ending ever, it’s a pretty decent one in what was otherwise a big huge pile of suck.

Filed Under: Biz - Comments: 3 Comments to Read

  • Ahtchu said,

    All’s well that ends well.
    All too soon we demonize capitalism when people are down and out, but forget what is made possible because of it.
    A heart-lifting tale!

  • twb said,

    Not sure we could say that capitalism is to blame for the 38S saga; 38S was running on Rhode Island loans and a bunch of lines of credit *because* the market wasn’t interested in financing their MMO play.

    Reportedly, Schilling refused to back down on an absurdly high pre-revenue, pre-product valuation at the same time as he was looking for nearly $50m in seed in a high-risk industry that he had no experience in — no one was going to touch that deal with their own money. Instead, Carcieri (who met Schilling at a fundraiser hosted by the ballplayer) stepped in and, after a series of secret meetings, co-signed the state to a loan for an enterprise it wasn’t qualified to assess. That’s cronyism, not capitalism.

    As it is, it’s going to be a long time untangling the mess 38S left behind. In addition to the obvious payables (looks like the company was being run off a credit card and a couple of bank loans at the end), former employees are probably on the hook for expenses they reasonably believed to have been paid: there’s over $100K owed to Atlas Van Lines for re-lo expenses, some $750K to BCBS for employee health insurance, and employees’ houses on the company’s books that were evidently supposed to have been sold during re-lo but never were, leaving the employees looking at a bunch of accrued mortgage payments and possible foreclosures.

    Former 38S and BHG employees are naturally angry right now, and I don’t blame them for focusing on Chafee, but I’ve seen a lot of failed startups that sang the same tune: the company’s lying on the ground, chopped up into its component assets, and it’s still insisting that “It’s just a flesh wound!” 38S couldn’t manage its burn rate on the AP side, and had nothing coming in on the AR side. I don’t care how good their art assets were, or how many jerseys Schilling bought employees as gifts: no liquidity, no company, and, thanks to the EA deal, 38S was revenue-free until it could launch or lock up another publisher deal.

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