Updated: 38 Studios Loses Two Executives, Big Huge Games Closure Rumored

Updated Thu, May 24, 2012 by Martuk

Reports came to light this week indicating that two of 38 Studios leaders have departed the company. According to a report from WPRI, 38 Studios CEO Jen MacLean and Senior VP of Product Development John Blakely have departed the company. WRPI cites recent updates to the LinkedIn profiles of the two.

38 Studios revealed its first trailer for the upcoming MMORPG Copernicus last week and earlier today we reported on a leaked set of screenshots at 38 Watch for the game, but a pair of new reports brings more bad news for the studio.

A report from Joystiq that cites a source with “knowledge of the situation” reports that 38 Studios employees have not been paid since May 1st. The report explains that payments are usually made on the 1st and 15th of each month. Unfortunately, that’s not all of the bad news. When asked if 38 Studios would shut down this week, the source replied, “Unknown at this time. Outlook is not good."

According to a report from Kotaku, Big Huge Games, which was acquired by 38 Studios in 2009 and developed Kingdoms of Amalur: Reckoning, is rumored to be facing a possible shut down. For now, this remains a rumor as 38 Studios had not responded for comment at news time.

The future of 38 Studios has been in question since it missed a loan payment earlier this month. Stay tuned and we’ll update you when we learn more about the fate of 38 Studios.

Update: Kotaku has received a report from an anonymous source stating that all of the 38 Studios and Big Huge Game staff has been laid off and that the medical insurance for employees will expire tonight at midnight. Stay tuned and we'll attempt to get confirmation on the news.

Update 2: WPRI has posted an internal company email reportedly sent to 38 Studios employees stating:

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.

Sources: WPRI, Joystiq, Kotaku

oh man. Talk about a downward spiral, those guys are hitting the ground hard. Feel awful for the employees. There's no excuse for that situation. Any decent CEO should have a handle on the money and know when to start dumping stuff before it's too late... and moving in the middle of all that. Man, that's just horrible management, or sure appears that way from what we're seeing out here.

It's not as easy as you think. MMO projects have two options: Either amass that $50-$100 million development costs up front, or get enough of it to start and hope that they'll get mezzanine venture capital (middle-project funding) throughout the course of development. Sometimes - I speculate is the case for 38Studios - that doesn't come through. Without constant influx of venture capital and no income (or little income in the cast of KoA), they don't have enough money to pay their bills and they have to shut their doors.

What this means is that owners (read: Curt Schilling and his financial backers) will need to go hat in hand to re-open the doors. Or they may sell the project to another developer.

Still, it's crappy news for the rank and file at 38 Studios - my condolences to them. Hope they were able to horn in on the developer open house that took place last weekend.

Consider me educated then. =)

Thanks for taking the time to comment. I hadn't realized that games relied so much on mezzanine venture capital, though it does rather make sense in hind-sight. You see it in real estate sometimes for similar reasons. Too risky for me, though. Running a company on debt is gambling with pretty high odds. Though I guess it's hard to do anything else in such a high-risk/high-reward industry.

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