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Chafee: Slim hope that 38 Studios can remain solvent

May 24, 2012

Following the layoff of 38 Studios’ staff today, the Chafee administration is expected to continue talks with the company. But Governor Lincoln Chafee says it’s unlikely 38 Studios can remain solvent.

“Industry experts tell us this is very, very expensive,” Chafee said during a Statehouse news conference, “and it’s not only the cost of producing the game, but then maintaining once it’s released, and also tens of millions of dollars, tens of millions of dollars to market, and that’s just what it costs.”

Chafee blamed the liqudity problems for 38 Studios that developed in April on what he calls lackluster sales for the company’s first game, Kingdoms of Amalur: Reckoning. He says experts tell his administration Amalur needed to sell about 3 million copies to break even. Company owner Curt Schilling says sales of Amalur exceeded expectations.

Some employees of 38 Studios blame Chafee for failing to help the company in its hour of need with tax credits or another revenue source. The governor offers this response:

I would gladly extend the life of the company if I had confidence that it would lead to profitability, and other [EDC] board members feel as I do, that we were just not given that confidence or that avenue to any kind of profitablity and the risk of additional taxpayer dollars. We were just not given that confidence. We all know we’re in for tens of millions of dollars. We all want the company to succeed.

Chafee pointed to a lack of official notification from 38 Studios about the layoffs as a sign of what he calls poor communication with the outfit.

The governor declined to parse out responsibility for the situation, saying that will come later.

The move to bring 38 Studios to Rhode Island was championed by former governor Don Carcieri. House Speaker Gordon Fox and former EDC director Keith Stokes played significant roles in moving foward the loan guarantee fund that attracted the company.

Caricieri and Schilling have declined to speak with reporters about the situation.

In related news, Chafee’s pick to be vice-chair of the EDC, Helena Foulkes, announced her resignation today. Chafee said two board members whose terms have expired, Timothy Babineau, president of Rhode Island Hospital, and Dan Sullivan Jr., president of Collette Vacations.

2 Comments leave one →
  1. May 25, 2012 11:09 am

    I do think we need to hold Carcieri, Fox, ostantino and others who shoved these horrid deal onto the shoulders of tax payers accountable. I support government investment in local companies and playing a rol ein developing our economy, but not in this irrespobsible, trickle down corporate welfare manner, where the top elected leaders of our state we’re dazzled by a famous name and conned. Perhaps Fox and Costantino (and Paiva-Weed) need to consider resinging, and the AG should seek charges against Carcieri.

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  1. Will Curt Schilling really stay quiet about 38 Studios? « On Politics

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