Editorials

The 38 Studios situation…

June 7, 2012, Author: Stephen King, 2 Comments

The games industry is a cut-throat one, and many developers have felt the sting as they have lost their battle to remain open in times of hardship. Thursday, 24th of May, 38 Studios became another company on the list. Their subsidiary studio, Big Huge Games also found themselves facing immediate closure.

38 Studios had only just released their first game in February this year. Kingdoms of Amalur: Reckoning saw positive critical reviews, but unfortunately this did not convert into high sales figures. In the end, the title managed to sell 1.2 million copies, which by standards for a new franchise is not a small amount, but it was not enough to stop the inevitable. While still trying to create content for their only title by way of downloadable content, they were in the middle of creating a new MMO codenamed Project Copernicus. This was to be based on the universe that created for Kingdoms of Amalur. So what is it that happened here?

From a casual viewpoint, it seems as though a perfectly capable developer has taken a risk on producing a new intellectual property and it has failed. However, a closer look reveals a more complicated story involving large loans to relocate the company, long development cycles and as I previously stated, low sales figures. This was a passion project for Curt Shilling, Todd Macfarlane and R.A. Salvatore; sadly it turned into a nail in the coffin for both 38 Studios and Big Huge Games. You have to ask yourself, “What is wrong with being passionate about something?”. The honest answer is absolutely nothing. I have a firm belief that great games are created from people who have a true passion.

Trying to pinpoint exactly what went wrong here is complicated, but in reality it boils down to money. Unfortunately, the company had been given a substantial loan to move their offices to the state of Rhode Island, and the payments became difficult to keep up with. At one point the company couldn’t even afford to pay their staff and had to ask the state for help.

When a company goes under, there is no real silver lining for the employees. That said, you would like to think that when an announcement as grave as the mass lay-offs of nearly 400 employees spanning two studios was made, that tact and empathy would be used. In the case of 38 Studios and Big Huge Games, they were met with neither tact, nor dignity, but instead, a cookie cutter email template:

“The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a company wide 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.”

This isn’t the first occasion in which a studio has been faced with this kind of heartless attitude. Towards the end of 2008, Free Radical staff found out that their studio was to close by turning up at work to find that the doors were locked. Beyond anything else I think there is a grave lack of respect shown to staff at studios. I can imagine that in 99% of the cases, the people who are being let go are not responsible for the closures, and yet they are shown very little regard.

I have personally been a victim to a large-scale layoff, which left me unemployed for a while, so I can sympathise. I think what made it easier for me to digest was that when I was given the bad news, you could tell that all involved were devastated. At the time it was a bitter pill to swallow; but looking back, I realise that at the very least I had someone’s heartfelt apologies.

The games industry in its infancy was small, tight-knit and fun. Development teams were smaller, and length of development was often shorter, which allowed games to be produced cheaper. Today, however, games are huge and studios employ hundreds of staff, which leaves little margin for error on the release of an unsuccessful product. The games industry at the end of the day is a business, and a business is there to make money. So you can understand why closures and mass layoffs happen.

38 Studios and Big Huge games are just other examples of how low or non-existent profits can cause drastic results. The whole industry is trying to feel its way through a very difficult economic slump, and sadly there are going to be more these kinds of closures before it gets any better. That being said, 38 Studios were the ones who took out the large loan and struggled with the payments, so the matter of who’s to blame is a little more of a grey area.

However, there is a bit of a happier ending to this than most would have thought. Just a day prior to the start of E3, Epic made the announcement that they would be purchasing Big Huge Games. Not only that, but they would allow the studio to maintain operations in their current location. The only difference being that Big Huge Games would be re-branded as an Epic Games studio, Epic Baltimore.

It seems like Epic have been trying to formulate a way to expand to cater for the number of games they are trying to produce, and fortunately for them (not so much for others) the closure of Big Huge Games brought them an opportunity.

A last-minute reprieve for some staff employed at Big Huge Games, but this still leaves a large amount of staff from 38 Studios out of work.

Comments (2)

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  1. Trent said:

    I think it's astonishing that a great game that sells really well for a new IP leads to the closure of the studio that made it. It seems the success of the games a studio produces is no longer tied to the continued operation of the studio which is a fucking sorry state for the industry to be in. Innovation will suffer greatly and only giants like Capcom and Epic have any chance of making sure some semblance remains after the dust settles post-recession. I mean it's not like EA or Activision give two shits...

    Posted on: June 07 2:44 PM || Report || Reply

  2. VP Dad said:

    I think this is better seen as a case study of the fallacy of government intervention. No private company or individual was willing to take a risk on the studio, their plans, and an MMO. The government has no such qualms about risk or spending since it isn`t their money. It`s also a complete mis-allocation of resources. The money the government has taken from other people could have been put to far better use..

    Posted on: June 20 4:15 AM || Report || Reply

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