Curt Schilling’s dream died quite quickly at 38 Studios

http://www.boston.com/business/technology/articles/2012/05/26/curt_schillings_dream_died_quite_quickly_at_38_studios/?page=full

by ilamont • 14 years ago

47 82 14 years ago

boston.com

imcqueen• 14 years ago

pretty crazy to think that Rhode Island could have financed over 3,000 YC seed investments with this one failure.

Drbble3• 14 years ago

Seems more like intentional corruption than failure. Did Curtis have any bona tides or anything to offer besides photo ops with starstruck officials? The failure was in electing or appointing the bureaucrats who spent public funds for personal entertainment.

mkramlich3• 14 years ago

My bet is a mix of incompetence (on the part of 38 Studios leadership, and government side), plus maybe some under-the-table kickbacks. They could have just started the company the obvious and healthy way, by making a product then selling it, then iterating and scaling up using organic revenue that came from customers. When customers buy your shit, they're voting with your wallet to say, "I want your shit. Take my money", so it solves or derisks the whole "Is there a market for this? Will we burn through this investor cash and ever fail to make payroll?" problem rather neatly. But instead they tried to juice it with investor crash. Which at times is a bit like trying to finish your semester project early by snorting a lot of cocaine so can skip sleeping. It just might work out ok and come to a gentle landing. But all kinds of forces pushing against that happening, and far more risky.

stephengillie2• 14 years ago

Why was Rhode Island trying "to jump start a video game industry in Rhode Island" by investing in only one company? Why not fund 3000 smaller videogame companies?

They could have given $250,000 to 300 videogame companies, or $2.5 million each to 30 companies.

thedaveoflife• 14 years ago

the sad answer is because 38 studios had a famous CEO

VonGuard• 14 years ago

MMO's are fucking money sinks. Investors see the insane profits from selling virtual items and figure "No inventory! No warehouses! Yet they're selling product!" and figure they can just throw money at a game until it's profitable.

Also, after Schilling started, free-to-play became the model. A genuinely doomed company from day one.

jmduke• 14 years ago

MMOs aren't money sinks. Look at World of Warcraft, look at Lineage.

Bad MMOs are money sinks.

Bad anythings are money sinks.

patio112• 14 years ago

US-based AAA MMORPGs have development budgets in the $X00 million range, and only end up profitable if they're World of Warcraft or launched before 2004. They take, minimally, three years to launch. The primary customer acquisition method is a nationwide media buy which costs as much as the development costs do, and if you don't totally saturate the retail channel and then sell all your boxes, you lose.

By comparison, you can launch a social game for five/six figures in two months, your primary acquisition method will be virality backed up by cross-promotions and FB ads, if it doesn't work you shoot it in the head and do another one, and if it does work you double-down on development and quintuple-down on advertising and then print money hats.

pg• 14 years ago

Bad anythings are money sinks.

That's not true, and its falsity is a very important idea. Making mistakes less costly is often a better strategy than trying to avoid them.

CubicleNinjas• 14 years ago

Reality doesn't really match up with this argument. http://en.wikipedia.org/wiki/List_of_MMORPGs

It seems that saying one out of ten MMOs do well would be generous.

jakejake2• 14 years ago

It's hard for me to even understand burning through 75 million, but from what I read I guess that's the cost of making a blockbuster game these days.

frou_dh• 14 years ago

See the MMO game APB and its Scottish developer Realtime Worlds for another debacle. Mad cash was burned, it just managed to get released, then bombed spectacularly, taking the 300+ employee company with it.

http://lukehalliwell.wordpress.com/category/realtime-worlds/

jakejake2• 14 years ago

that's crazy, it's hard to even understand where all of the cash goes.

maybird• 14 years ago

  That same day 38 Studios employees were told their health
  insurance would expire in two days.

It's in times like these that you realize the importance of universal health care. (I'm not talking about COBRA.)

trimbo• 14 years ago

> I'm not talking about COBRA

Public service announcement: you can't COBRA on companies that go bankrupt. COBRA allows you to keep your group plan from your former employer. If that plan goes away, since the company goes away, you will be unable to COBRA. May have changed with Obamacare but this is how it was in the past.

joe_the_user• 14 years ago

Not sure how that takes away from COBRA not being enough...

bhb916• 14 years ago

Someone losing a benefit on short notice does not constitute an argument for tax-payer subsidization of that benefit. There are other options for these people, like individual plans that aren't provided by their employer. If such plans aren't available to these people in the state they live in it's most likely due to the regulatory environment of that state. In the states I'm familiar with (CA, WA, AZ) individual health insurance plans are cheap and readily available. (People with serious, chronic pre-existing conditions are another matter entirely)

The people who will be adversely affected by this layoff in this domain will be those who get catastrophically ill, requiring huge hospital bills, who aren't otherwise individually covered and who don't find employment before they get sick. I expect that number to be really, really low. Insuring this entire population against that event seems silly.

Ultimately, relying on your employer for these things is a ticking time bomb.

asdkl234890• 14 years ago

Someone losing a benefit on short notice does not constitute an argument for tax-payer subsidization of that benefit.

You know there is a whole continent where most people think of healthcare as a right, not a benefit.

And the Hippocratic Oath doesn't mention anything like "only if they have money". And people in the wast majority of other professions don't usually take oaths.

Healthcare and medicine are treated specially around the world.

Isn't it odd how the US mandates car insurance but not health insurance?

jethroalias97• 14 years ago

  (People with serious, chronic pre-existing conditions are another matter entirely)

They may be another matter, but does that mean they don't matter?

  I expect that number to be really, really low. 
  Insuring this entire population against that event seems silly.

That is sort of the definition of insurance: Trading a small regular payment in exchange for being protected against very unlikely events. The argument, "it's ok if some people fall through the cracks because it is so unlikely," in the case of insurance doesn't make a lot sense.

x1• 14 years ago

Don't forget anyone who is pregnant or who might have a pregnant spouse.

jen_h• 14 years ago

People who have serious, chronic pre-existing conditions (or less serious, say, an impending birth...or acne, or asthma, or are a little overweight, or are merely a middle-aged female--insurance companies can and will deny you for any of these things) are the most important matter...and good luck getting stopgap insurance or retroactively-dated insurance. In a lot of states, there's a single insurance provider who does the 'at-risk' stuff and has to cover you (for usurious prices), but you've first got to be denied coverage by a non-State insurance plan before you can go for the state's high-risk stuff (typically and hilariously, it's often the same company - they deny you the cheap 200/month insurance knowing you'll then be forced to fall back on the 1k/month policy from the state). This all takes time...if you're in the middle of, say, cancer treatments or something, damn, this is a nightmare you don't want to have to deal with. Especially on top of losing your income.

There are a lot of things I can sympathize with when a business goes under, but defaulting on your employees' health insurance with a 2-day notice in the US in our current climate (and not really even a real notice, from what I read, someone's doctor told them about it before the company did!) is pretty crappy.

stephengillie2• 14 years ago

For people without serious pre-existing conditions, health insurance is nothing but an extra cost. The insurance industry depends on the healthy to subsidize the sick.

For healthy people, it's usually cheaper to pay your doctor dentist and other specialists in cash...well, if you are healthy, you don't usually need to see any specialists.

temphn2• 14 years ago

After a government project just fails spectacularly...the response is yet more spending of taxpayer money? Why not just free the health insurance market to operate like the auto insurance market, such that individuals can buy on their own without having to go through their employers, and such that insurers must face competition across state lines?

benmathes2• 14 years ago

There are tax breaks to providing health insurance through your employer, so companies are incentivized to compensate you with health insurance instead of more cash.

bluedanieru2• 14 years ago

So your response to a dysfunctional government that can't even implement something as basic as health care is to say "screw it" and cut everyone loose? Health care is a public good, it belongs in the public domain. Quit electing stupid partisan assholes to run your government and you might get some policy that isn't designed for the sole purpose of benefiting special interests.

kiba5• 14 years ago

I prefer insurance only for emergency, and everything else to be shopped. When you're bleeding to death, you don't care about if emergency care cost a lot of money, just that you get to the closest hospital possible.

We need shopping anyway, as people with insurance are quite insensitive to the cost of care. There's no need for hospitals to break someone's leg if competition can lower the price of service to a reasonable level.

wpietri5• 14 years ago

I have never met a person who suggests comparison shopping for health care who has actually been seriously ill.

If you have had a major illness requiring serious care (e.g., heart disease, cancer, organ failure, stroke), please talk about exactly how you would have comparison shopped for the best bargain in hospitals.

naner• 14 years ago

Or simply health-care decoupled from your job.

DamnYuppie• 14 years ago

I find this to be quite sad. I really enjoyed the game and was looking forward to their follow up.

I also don't approve of companies keeping employees in the dark when things are going wrong. I understand why they do it, keeping bad news quite is all the rage apparently, but I can't endorse it.

rsanchez13• 14 years ago

It's a delusion on the part of everyone involve. Management can't see past the next quarter and hopes beyond hope their company won't collapse. Employees don't see the warning signs and just accept what management is feeding them. Management has bad news but isn't willing to share with employees for fear that the employees will leave, even if that bad news means collapse is imminent and all employees will leave anyway.

ZenPsycho• 14 years ago

I wonder if this is another example of Gall's Law at work.

mcav• 14 years ago

for those wondering, Gall's Law is:

> "A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system."

— Wikipedia

bluedanieru2• 14 years ago

Good. These are the same assholes who allowed me to preorder KoA in Japan on Steam, saying "it will be released internationally a few days after the US release". It still isn't unlocked.

soapdog• 14 years ago

As a foreigner, I can't understand why the U.S. has no public free healthcare for all. Its one of the basic rights and one of the first obligations of a government. All governments should provide free and public healthcare and education. Here in Brazil we have a pretty bad government and yet we have those. And if you're seriously injured and it is an emergency, you can go to any private hospital and they are forced by law to treat you and payment is decided later. Sometimes U.S. policies scares me...

learc83• 14 years ago

>And if you're seriously injured and it is an emergency, you can go to any private hospital and they are forced by law to treat you and payment is decided later.

That works exactly the same in the U.S. You can't be denied emergency treatment.

hasker• 14 years ago

The same is true of most if not all hospitals in the US to my understanding. They cannot turn away patients in the emergency room for ability to pay. Still, the hospital can try to bill excessive amounts. Also, this does not guarantee the highest level of care to everyone, but neither private insurance nor most nationalized healthcare programs provide this.

jfb• 14 years ago

Where was Schilling's principled libertarianism when he went begging for taxpayer cash?

/crickets

rsanchez13• 14 years ago

He fell for the lie that the government "invests" when it spends taxpayer dollars on projects doomed to fail.

zdgman• 14 years ago

Funny that this degenerated into a discussion about healthcare. I can almost guarantee this will be a business school case study in the very near future.

The thing is, companies are still putting out MMOs. Guild Wars 2 - Not out yet but looks to be an awesome followup to Guild Wars. Tera, just released in North America and getting some praise (was previously in South Korea). Star Wars The Old Republic also just released and had a pretty successful launch even though now it is seeing it's user base decline.

I would be very interested in seeing how these three titles perform over the next 5 years but it's safe to say that you can still produce an MMO as long as you (a Have actual experience in the game industry (b Have some successful titles under your belt or a publisher willing to bankroll your talented studio.

Also, really great followup article that goes over some of the failures:

http://kotaku.com/5913492/curt-schillings-big-huge-38-studio...

mkramlich3• 14 years ago

It sucks that Curt is going to have this failed thing associated with his name now. Because his prior big splash in the game industry is/was with the board wargame Advanced Squad Leader at his company Multi-Man Publishing. They did a stellar job at bringing ASL back to market and back from the dead, especially with the Starter Kit series -- brilliant design, just what ASL needed to bypass the complexity hairball of the full system, which was so intimidating to potential newbies. So perhaps this was a case of a mortal biting off more than he could chew. I also strongly hope that this doesn't somehow indirectly hurt MMP or ASL and they keep on kicking ass.

ilamont• 14 years ago

One thing that has amazed me since the story first broke a few weeks ago is how little attention has been paid to the actions of 38 Studio's CEO Jennifer MacLean, the CFO, and board of directors. This was an all-star team (see http://blogs.law.harvard.edu/lamont/2012/05/18/38-studios-bo... ). The media attention has been on Schilling, but the senior management and board of directors have some responsibility for this debacle as well.

Curt Schilling’s dream died quite quickly at 38 Studios

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