Curt Schilling's Big Huge 38 Studios Debacle

For me, this week was great. The iOS title I am working on, Foodie Truck, is coming along great. The FPS that I am working on, ReKoil -- Sorry, Adam -- is also looking really amazing; both teams are killing it. And then I heard about 38 Studios.

I have a few friends both at 38 and Big Huge Games; both offices have industry leading talent, both teams have gotten a raw deal.

I want to be crystal clear here: both of those offices were not closed due to inferior teams, they were closed because of inferior management. [Editor's Note: Get up to speed with the collapse of Curt Schilling's studios, which just released Kingdoms of Amalur: Reckoning and were designing an MMO, with this blow-by-blow.]

In particular, as of a month ago, there are two studios that I rate as studios on the verge of a breakout hit: Robomodo -- who are currently working on Tony Hawk HD -- and Big Huge Games. I basically felt that both are/were on the cusp of something amazing.

Sadly, it looks like BHG will never realise this potential.

So when I read the news, I created the hash tag #38jobs and asked people to use that tag when posting jobs for the day. I experienced two things:

  1. The video games industry is filled with unnaturally lovely and brilliant people. The hash tag was trending in the top three at one point. What other industry can boast that, when a business closes down, the industry rallieys around trying to help the remaining staff to find jobs? The other day HP announced a load of layoffs and I didn't see or hear anyone trying to help there. It is quite a great family we have for the most part.
  2. By default Twitter actually sends you a mail every time someone retweets you, so I spent three hours tonight deleting about 4k of mail -- oh the joy of that.

I am quite angry right now; one reason being that I detest seeing waste and BHG closing is a colossal waste.

But, the main reason that I am angry is because of the way the closure was conveyed.

If you are a manager and you are executing layoffs this is precisely how you do not lay someone off:

"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."

I have a theory that Harvard Business School basically set this entire thing up so as to demonstrate how many ways someone can screw up running a business. If this is the case, heartfelt congrats to the Crimson Halls, you owned it.

I literally could not invent more ways to screw up than Curt Schilling has with 38.

You could fill a library with what the management did wrong with this company.

I have been pretty fortunate to have worked on some decent titles over the years that did well, but here are a few things that I have not said at any point:

  1. I like pizza; I know what I am going to do; I am going to set up a pizzeria!
  2. I like the TV show Game of Thrones, I am going to make the Pacific North West my kingdom!
  3. I like throwing balls, why don't I pitch for the Boston Red Sox!
  4. I also like reading about politics, but I would venture a guess and go out on a limb and say that I could run a game studio worse than the Governor of Rhode Island.

The truth is that Curt Schilling was an amazing ball player, the stats don't lie.

It is also true that Curt Schilling is a terrible businessman and judging by the above dismissal letter he is an awful human being. Pro-tip for you Curt: Treating other human beings like... well humans might actually provide you with better support in the court of public opinion.

So I want to break this post down a bit better. I am not a journalist, and I was not blessed with terrific writing skills. I am only writing this because I like to write stuff down,. Think of the worst singer you have heard on Australian Idol auditions.


Alexander Sliwinski of Joystiq camped out at a Dunkin Donuts that was close to 38 Studios this week. I think if he had bought a dozen doughnuts and donated them to 38 Studios that that box of pastry could have done a better job at running the firm than Curt.

Look at the measure of Curt, whilst people were being told that they were being put out of work, this is what Curt was saying on Twitter:

"Reckoning, 38 Studios first game, has outperformed EA's projections by selling 1.2m copies in its first 90 days"

Really, Curt? Wow, just wow.

Whilst people were being told that they had no job, Curt is bragging and giving himself high fives. It's not like he was trying to keep the rest of the team's spirits up, because unless he is counting the Governor of Rhode Island, there was no team.

This is what grownups call "being repugnant".

I have no clue what he was thinking or if in fact he was thinking at all. I can only speak for myself; here is how I would have handled it:

If I were him, perish the thought, I would be re-posting links to other jobs in the industry. Credit to the former CEO Jan McLean, this is exactly what she was doing all day.

The Money And The Suckers

It is a bit of a cliché, but if you cannot figure out who the sucker is in the room, you probably need a mirror.

$US75 million dollars is a lot of money to have to make a game, but in terms of making an MMO, it is like trying to down an African bull elephant by throwing copies of uDraw at it. It isn't going to happen -- ever.

If you want or are crazy enough to want to make an MMO, you need to have around $US180M for development and another $US80 million to support it over the next six months post-launch to develop more content. I am going to leave it at that and not go into the gargantuan sums that you would need for marketing.

The good people of Rhode Island went into this without doing any real due diligence; they did not integrate numerous failsafes into their agreement, and they lacked the sense that god gave goats.

The very first thing that they should have done was to demand a board position. At least by doing this they could have said months ago "Hey Curt, we are spending this much 'X' and we have this much 'Y', what's your plan here?"

Granted this would mean that said board member would have to possess the dark art skills of mathematics, but I am pretty confident that at least one person in the state of Rhode Island has mastered the discipline of addition and subtraction.

The governor of Rhode Island gave a press conference a full hour after the layoffs occurred and everyone in the local press and Alexander went along expecting to hear "we laid everyone off and here is the plan... guess what? Nope, no plan... guess what again? The governor had no clue that everyone was fired.

Personally, I think the decent thing for him to do right now is to resign.

Just on the off chance this ever happens again to said governor, here is the short statement that you make:

"Today we went to the staff of the firm and made them the following offer:

  1. We would not pay them for eight weeks but would give them what they would get from unemployment and in addition issue them with tax credits for lost income.
  2. In return, we will spend those eight weeks trying to sell the firm as a whole or in pieces; for a two year commitment on the execution of a sale.
  3. We will also give them 40 per cent from the proceeds of the sale.
  4. There will still be layoffs, but those people will be taken care of."

Of course, this did not happen and they just devalued the firm by millions of dollars in letting this occur.

The MMO could have been refocused on becoming an RPG and sold to someone like EA. The game actually looked pretty great and I believe that EA would have given them a softer landing. The landing zone for Rhode Island now is littered with thumb tacks.

The Aftermath

I think a few things are going to happen now:

  1. The US politicians need to hang this around someone's neck, and I am pretty sure that the state Attorney General is looking for some way, any way to file charges against the officers of the firm.
  2. Pretty much all of 38 and BHG will dust themselves off and find a new gig. They really are a pretty talented group of people and this was not their fault.
  3. The firm will go into chapter 11 and there will be a fire sale reminiscent of Midway. That said, when Midway sold their assets, Matt Booty -- now with Microsoft -- performed miracles in both selling said assets and saving jobs. Will they be able to sell the IP? I have no clue, I don't know enough about the state of the title to garner a guess on where the risk levels are.

Overall it was a bad day at the office for the industry, the state of Rhode Island and Curt Schilling! Curt should go into politics by setting up the third party, "The Unemployed". He certainly recruited enough new members today.

Thanks for taking the time to read my meanderings.

Republished with permission.

Kevin Dent is a 12-year veteran of the video games industry. He has spent the last four focused on the business and strategy side of the industry and also invests in indie titles. His latest title due for release later this year is a PC based FPS called ReKoil by Plastic Piranha. Follow him on Twitter.

(Top photo: Former Boston Red Sox pitcher Curt Schilling, centre, sits in the back seat of a vehicle as he departs the Rhode Island Economic Development Corporation headquarters in Providence, RI, Monday, May 21, 2012. Schilling and Rhode Island's economic development agency met Monday to discuss the finances of his troubled video company. AP Photo, Steven Senne)


    "I am not a journalist, and I was not blessed with terrific writing skills."

    Welcome to Kotaku.

    "... it is like trying to down an African bull elephant by throwing copies of uDraw at it. It isn’t going to happen — ever."
    I dunno.......that's a lot of ammunition you're talking about.

    "If you want or are crazy enough to want to make an MMO, you need to have around $US180M for development and another $US80 million to support it over the next six months post-launch to develop more content."

    This is one of the most uniformed comments I have ever seen. You only need that kind of money if you're stupid like Bioware and don't know what you're doing. Trion released the development cost for Rift awhile back and it was around $50 mil. There's also some unconfirmed reports that GW2 costs around $60 mil and TSW costs less than $50 mil. Most of the money you spend on MMO development is from developing the original engine. The only reason why Bioware needed to burn through 200 mil is because they spent a crapton of money on VO.

    $80 mil to support it for 6 months post release is even more ridiculous. Assuming that your average game developer(code, QA, artist etc) gets paid 100k per annum (and they don't, most get paid much much less and some get paid a ton more) that's enough to support 1600 developers. No MMO studio has that kind of staff numbers. Blizzard is the sole exception but Blizzard is not a pure MMO studio, most of their staff work on other things. Plus a huge chunk of their employees are customer support, HR etc, not developers. HR and customer service gets paid a whole lot less. Most pure MMO studios only have like 200-400 staff, which is only a tiny fraction of 1600, and most of those will be people who get paid less than 100k per annum.

      oh and let me point to Kotaku's own article from a while back about how much game developers make:

        So who's the "12 year veteran of the video games industry" and who's the guy who just reads a lot of internet?

          as somebody who's worked in a number of different industries over the years (including the gaming industry I might add), I can tell you for a fact that a significant chunk of workers knows very little about their own industries. Also, basic math is basic math, it doesn't lie. Can you justify his figures with well known well published facts?

            oh also, here's some more basic math for you. 500k subscribers at $15 per month gives you $45 mil every six month. EvE has less than that and is profitable. Rift has less than that and is profitable and gets a ton of updates on a regular basis. Many many other MMOs that receive regular updates has less than that and is profitable. So you're telling me that all of these companies are actually millions of dollars in the red every six months?

    They did actually put a few failsafes into the plan, just not enough to protect an entire state. The IP and all future and past games were put up as collateral, and the loan was not a full, upfront payment, but a breakdown across the entire project in which certain parts would only be provided if certain milestones were met (such as employing certain fractions of the target 450 employees at certain times and for moving to Providence by certain dates). As far as I know, a few of these were actually failed so 38 Studios only got up to something like $64 million of the total $75 million with the remainder being tied up in the third party investment companies used to make this whole thing work.

    Was I the only one who thought that a former baseball player leading a game development business and actually using that in marketing was not going to end well?

    Matt Booty performed miracles when Midway went under?

    This is possibly true, but he didn't give a crap 4 months earlier than when Midway went under, when he closed Ratbag Games in Adelaide, back in Dec 2006...

    This is a terrible, uninformed and downright liable article, you should be ashamed of yourself for writing this.

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