38 Studios pays debt, not out of the woods

The latest update in the 38 Studios saga is apparently a positive one, with Rhode Island governor Lincoln Chafee confirming that the developer’s $1.125 million cheque has cleared. The cheque – which reportedly bounced late last week – forms the first required payment on the loan given to 38 Studios from the Rhode Island Economic Development Corporation.

The pressure’s not off yet, however – 38 Studios has to raise $2.6 million dollars for a debt service payment on November 1, but both the government and the developer believe this will not be a struggle.

[img_big]center,52,2012-04-10/reckoning_dlc2_trollfightx.jpg,Kingdoms of Amalur: Reckoning[/img_big]

If you’d been considering following in Curt Schilling’s footsteps and relocating your game development studio to Rhode Island, Governor Chafee explains you’re out of luck. When asked if he’d consider a risky move like this, Chafee responded:

Never, never ever. Not under my watch.

Rhode Island’s state government is closing tax loopholes and changing legislation to protect taxpayers and prevent this sort of video game / motion picture drama repeating. This time around, the state understood the risks of opening a new gaming studio, but believed the state would have benefited from the “huge success” if the game had gone well. At a reported 410k sales, February’s Kingdoms of Amalur: Reckoning didn’t exactly go “well”.

Taxpayers have had a very generous deal for 38 Studios.

It’s time for them to go out and get private capital funding. That’s the deal. It’s a generous deal, but stick to it.

Right up until late April, 38 Studios had told the Rhode Island officials that the repayments would not be a problem, before defaulting on the loan. Rhode Island beleives all of the $49 million loaned to the studio has been spent – and their access to private capital “hasn’t materialised,” says Chafee.

After the November payment, 38 Studios will owe $12.6 million in full annual debt service in 2013. There have been no further updates on the promised Project Copernicus MMO the studio is working on.

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