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The 38 Studios saga is far from over, despite the Kingdoms of Amalur developer closing its doors and filing for bankruptcy. The company is still facing a court hearing in Delaware, and representatives have just announced a couple of bombshells about the way things unfolded in Rhode Island.
Richard Wester, chief financial officer of 38 Studios from February 2010 surprised the audience by confessing that the studio had not seen a cent of profits from Kingdoms of Amalur: Reckoning, despite the game selling an estimated 1.3 million copies. Under oath, Wester explained that all of the money went directly to publisher EA to recoup a $28.7 million loan. Once that was out of the way, 38 Studios would receive just 30% of Amalur royalties.
Despite the game selling relatively well, it's only halfway to becoming profitable for the developer, said William Thomas, president and chief operating officer of 38. He went on to explain that Amalur would need sales of roughly 2 million copies total for 38 to "potentially" start seeing some cash.
Both men pointed the finger at Rhode Island governor Lincoln Chafee, accusing him of scaring off potentially lucrative Asian investors (Chafee was also accused of labelling the game "a flop", despite Amalur selling better than even EA had anticipated). Back in May, Chafee stated the developer had the threat of insolvency hanging over its head, something Thomas describes as "a serious weight around our neck".
Thomas did also admit that 38 was under a dark financial cloud as far back as 2010, when it secures the $75 million loan to move to Rhode Island. At the time, the company believed it would still need a further $30-50 million to finish Amalur, but struggled to raise the money through investment bankers and private investment.
Instead of a positive domino effect we had a negative domino effect, and things just didn't happen. Nothing happened that we had anticipated would happen from a fundraising perspective, which put us in a position of needing to file for bankruptcy.
By that stage, things were pretty grim inside the studio: $150 million in debt was owed to more than 1000 creditors when bankruptcy was declared on June 7th. Many of those creditors have given up hope of getting their money back as the company now faces investigations by both the state and the FBI, and co-founder Curt Schilling (conspicuously absent from the courthouse) is being sued by RBS Citizens bank.
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