38 Studios and Big Huge Games. Sell 1.2 million, go broke.

A partial cover image of Kingdoms of Amalur: Reckoning, flanked by the logos of 38 Studios, and Big Huge Games.

38 Studios (and its subsidiary Big Huge Games – Rise of Nations), developers of Kingdoms of Amalur: Reckoning (2012), has apparently effectively closed. Selling 1.2 million copies of the game across Steam, Origin, PS3 and Xbox 360 in 90 days just wasn’t enough to pay the bills (though it outperformed the expectations of publisher, Electronic Arts). The break-even point apparently was 3 million copies (or even more), according to Rhode Island Governor, Lincoln Chafee.

Everything seemed to be going well, with word that a bungled loan repayment had finally been made, it looked like 38 Studios would hang in there for another few months, and that the attention its woes brought to its game might spark enough sales to keep the lights on.

No such luck, apparently.

According to Gamasutra, staff received the following email:

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.

38 Studios (formerly Green Monster Games) was founded by Major League Baseball pitcher Curt Schilling (the 38 is the number from his jersey) in 2006. Over the next several years, the company put together an exciting line-up of talent, such as the notable F/SF writer R. A. Salvatore, and Big Huge Games, developers of Rise of Nations.

A lot of people were very excited about this line-up of talent, and more-so when the state of Rhode Island arranged a $75 million dollar loan to 38 Studios in 2010 in exchange for it bringing 450 jobs to the state by the end of this year. 38 Studios relocated to Rhode Island in early 2011, and began working on Kingdoms of Amalur: Reckoning, and an unannounced MMOG with the working title “Project Copernicus.”

Kingdoms of Amalur: Reckoning was released in North America on 7 February 2012, to the EU on 9 February 2012 and to much of the rest of the world about a week later. Reviews of the game were generally very positive. Reports are that the title sold just 410,000 physical copies, with the remaining ~800,000 being digital downloads through Steam and Origin on the PC, for a total of approximately 1.2 million units sold.

That makes it a complete flop in the console market, and I’m wondering if the 38 Studios even made back the money it cost to ship to that market (just getting a title onto the PS3 or Xbox 360 involves some not inconsiderable fees). The PC numbers look far better, but even three additional pay-for DLC bundles (Weapons and Armor Bundle, Legend of Dead Kel, and Teeth of Naros) didn’t apparently do much to keep things afloat.

After missing a round of payroll to meet a US$1.12 million loan-repayment, the cheque bounced, and it looked like it was all over, however, the payment was made on the 18th of this month, and the next payment was not due until late in the year. You can find copies of the public financing paperwork on the Rhode Island Economic Development Corporation Web-site.

Today, however, it seems that there has been a 100% layoff of staff and executives, with only the company directors continuing to operate. Job offers and word of job openings for those affected are flying around Twitter in the last few hours.

It isn’t at all clear whether Kingdoms of Amalur: Reckoning will continue to sell, or will be withdrawn from sale in its current distribution channels. Today, it is still there. Tomorrow? It might or might not be. Some games continue in the market despite the termination of their developer, and some are withdrawn from the market almost immediately.