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38 Studios and Big Huge Games shut down

38 Studios and Big Huge Games shut down

Thu 24 May 2012 8:58pm GMT / 4:58pm EDT / 1:58pm PDT
RumourDevelopment

Update: "A companywide lay off is absolutely necessary. These layoffs are non-voluntary and non-disciplinary," reads email to staff

Big Huge Games

We exist to create best-in-class games with broad commercial and critical appeal in an environment that...

bighugegames.com

UPDATE: WPRI has obtained the email reportedly sent to all 38 Studio employees.

"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," reads the email.

"This is your official notice of lay off, effective today, Thursday, May 24th, 2012."

According to WPRI, 38 Studios employed 379 full-time employees.

Original story:

Sources have told Polygon and Kotaku that 38 Studios and its subsidiary Big Huge Games have both laid off all employees. This follows the departure of 38 Studios CEO Jen MacLean and senior vice president of product development John Blakely. One of the sources sent Kotaku an email detailing the ongoing situation.

"38 Studios just laid off its entire staff, both Providence and BHG studios are being shuttered," began the email. "We have not received a paycheck since April 30th. On May 15th, we found out we were not getting paid when our checks did not hit our accounts. Our medical insurance runs out tonight at midnight. We found this out when an employee's pregnant wife was told by her doctor, this was on Tuesday 22nd May this week."

"The company has not communicated anything concrete to the team throughout this process, leaving team members to figure out insurance stop-gaps (where people could afford it), etc. on their own."

Sources also mentioned the same situation to Joystiq. The news was seemingly confirmed by Big Huge Games lead world designer Colin Campell on Twitter.

"Big Huge Games was home for my wife and me for our adult lives so far. I'll miss it terribly, but so proud. Good night and good luck," he tweeted today.

38 Studios has been dealing with financial trouble since it missed it loan payment of $1.125 million to the Rhode Island Economic Development Corporation. The company later made its payment, but doing so put the studio in a dire financial situation. There is a press conference being held this evening to give an official statement of the status of 38 Studios.

Like many times a studio shuts down, it's a damn shame. We hope that those affected find new work soon.

19 Comments

John Bye Senior Game Designer, Future Games of London

484 456 0.9
I'm sorry, but that's disgraceful. Hundreds of people have now lost a month's pay, they won't get any redundancy payment, and they've been laid off and lost their medical insurance with little or no notice. The fact that the company's owners apparently spent the last money they could scrape together to pay off a state loan instead of covering payroll makes it even worse.

This kind of behaviour is sadly far too common in the games industry, we've seen it happen a couple of times with prominent developers in this country recently too.

I've said it before, but if your company's that far in the hole and there's no realistic prospect of turning it around, it's time to wind it down gracefully and make sure you look after your employees, not play for time and expect them to (unwittingly, by the sounds of things) work without pay and benefits for almost a month before telling them they don't have a job anymore.

At the very least you owe it to your employees to be straight with them about what's going on, and warn them in advance that they might not get paid.

Sadly, in cases like this the people responsible for the train wreck generally go merrily on, often picking up the company's remaining assets at a knock-down price while the people who worked for them end up out of pocket and out of work.

Posted:2 years ago

#1
From what I've read - being out of a job without medical insurance is pretty big stress/worry in the states. Perhaps this lesson only goes to solidify that NO giant loan deal by the state should be offered to any company, no matter how lucrative it sounds if there is NO previous history of solid financial governance. The hands off appraoch by the state is also partly to blame for lack of due diligence.

Posted:2 years ago

#2

robert troughton UK General Manager, Epic Games

222 96 0.4
I've seen the transcript of this email elsewhere... is that all that it said..? There's not even a hint of regret there, no apologies to the staff - just a very matter-of-fact "we're out of money, you're redundant".

When you hear of things like this, you do start to appreciate some of the things that we take for granted in the UK - the NHS and redundancy pay amongst other things...

Hopefully everyone from these studios will find their feet again... and hopefully the residents of Rhode Island won't, as earlier reported, be left footing the bill for this.

Posted:2 years ago

#3

John Donnelly Quality Assurance

313 38 0.1
Best of luck to the employees impacted by this news.

Posted:2 years ago

#4

Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd

196 164 0.8
Shameful.

Posted:2 years ago

#5

Bruce Everiss Marketing Consultant

1,692 594 0.4
In economics this is called Creative Destruction and is a key part of how any market develops.

Seems to happen a lot more in video games than most other things.

Posted:2 years ago

#6

Morville O'Driscoll Blogger & Critic

1,613 1,475 0.9
Surely the company's CFO/accountants must have had an inkling of what was going on with the money situation? You don't just end up being unable to pay staff or a loan out of nowhere. Yeah, sure, they wanted to sell more copies of KoA, but everything I've read says that sales of the game were above expectations, which means it isn't even a projected sales vs actual sales problem.

@ Bruce
Seems to happen a lot more in video games than most other things.
Maybe because long development times and all associated costs aren't weighed up against number of possible customers? Other industries go overboard on expenses, but make them back over the long-run due to sheer numbers of customers in foreign markets and home-media (and by "other industries" I'm mostly thinking of the TV and movie industries).

Edited 1 times. Last edit by Morville O'Driscoll on 25th May 2012 11:31am

Posted:2 years ago

#7

Kingman Cheng Illustrator and Animator

955 184 0.2
Oh dear God...good luck to all you guys affected.

Posted:2 years ago

#8

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
Good luck to all affected.

So sad to see this STILL happening because studios aren't adapting to development costs on current machines.

Edited 1 times. Last edit by Daniel Hughes on 25th May 2012 12:47pm

Posted:2 years ago

#9

Rob Jessop R&D Programmer, Crytek

37 35 0.9
Having been through a redundancy in the UK and speaking to my former bosses after the fact (you may recall Steve Ellis and Dave Doak being interviewed about Free Radical Design on this very site) it's unfortunately not as simple as knowing exactly how much time/money you have and being able to set it aside for any particular purpose.

That's about as much as I dare say on the subject.

Posted:2 years ago

#10

Rick Lopez Illustrator, Graphic Designer

1,269 941 0.7
Another company bites the dust. Its almost like companies are set up to make 1 or 2 games. Id love to make video games. Just dont think its a good career choice because your always looking for a job. Its not about how good you are, its that if the boat you are on sinks, you go down with it. And the failure of one game can drive a company to the ground.

I really feel for these guys, its really bad to lose your job and medical insurence.

But i keep wondering, why game developers keep adding people to their development teams if costs are so high. Games like the original Bioshock, half life 2 even resident evil 4, I doubt had as many people, yet Resident evil 6 has 600 people to make the game? Seriously??? Resident Evil 4 was easily the best and didnt require that many people. i dont know how true the article is but damn... thats alotta people. Then they complain that they are losing money.

http://www.destructoid.com/600-people-involved-in-making-resident-evil-6-220408.phtml

Posted:2 years ago

#11
I think for core games and MMOs, to reduce this cycle of production/and post production lay offs, why not have a core team with a variable set of contractors rather than a mega team that has to constantly be shed off after each cycle?

Posted:2 years ago

#12

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
In this case though, it doesn't seem to be the game that came out, which seems to have done ok, but rather the ambitious MMO. Unfortunately sounds like there are parallels to Real Time Worlds, except the game unfortunately didn't get a chance to recoup. When you hear rumours of the Old Republic budget, you have to wonder if some companies with less resource than EA know what they are getting into going for the premium MMO experience, especially when so few are making a splash before going free to play.
It is such a shame, obviously for all the staff, but also because interviews indicated a very interesting, ambitiously scoped project.

Posted:2 years ago

#13

James Wells Gaming Contributor - digboston.com

72 32 0.4
Looks like Schil was a little too ambitious for a start-up...
In all honesty, his expectations were never grounded in reality, and therefore not feasible. He should've spent more time studying business, and less time playing WoW.
I feel sorry for the poor staffers who were stuck working for a month with no pay, and will likely not see it. They deserved better. RI's taxpayers deserved better, too. Not cool of Curt to stick an already cash-strapped state with another $50mil in debt.

Posted:2 years ago

#14

Jeff Wilson

46 0 0.0
This article really pissed me off, man. This maltreatment is typical of the American mentality, sorry to say. Many company directors treat their staff solely as commodities and don't give a damn about their future job prospects. It makes me wonder how many directors have had any real management experience or were offered the job just because they won an Emmy for Art Design or played golf with the CEO at the weekend.

There were nearly 400 people here suddenly left high and dry without salaries which I am sure they desperately needed - some men had very pregnant wives who needed the medical insurance too.

The 38 Studio Directors and CFO sidekicks are a flipping joke. They are a disgrace to their fellow Americans - the games industry as a whole and should all be sent to prison for what they did.

Surely there ought to be some federal accountability to the US government here ?

Let's hope all the staff find new jobs soon. Don't misunderstand me - The States can be a good place to work for a fast buck - just make sure you keep enough money in the bank, just in case.

Posted:2 years ago

#15

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
Well the HD generation was brutal to production costs. As much as the press loved to lay into the Wii, I think the industry would have been better off if everyone had taken it easy on the tech leap. 38 Studios said they would have had to sell 3 million units of Kingdoms of Amalur to make back their money, and that's insane. Mind you, this studio clearly had some major problems with budgeting their games, and not everyone is like that (many small developers, especially Japanese ones, are consistently profitable on HD consoles like NISA, Natsume, Atlus and XSEED).

Regardless, this has been a dangerous generation, and 38 Studios shouldn't have tried to leap straight into full-on AAA development. Safe and successful (and cheap) projects that could make good money would have been a better start. They should have taken a smaller start-up loan and started with a smaller studio. You have no buffer if you fail, and they did fail.

I really hope Sony and Microsoft are smart enough to see the danger a major tech and cost leap could pose to the console industry next generation, and I hope publishers start taking more cues from the balanced PC market, where games of various levels of production cost and marketing are successful, rather than only blockbuster AAA projects and the occasional PSN game.

It's a tough industry right now, and it's going through major changes with publishers failing to find a balance in budget and production quality. I hope the best for all the former 38 Studios members. This was an unfortunate incident that may have been avoidable with more restraint and foresight in development.

Posted:2 years ago

#16

Gary LaRochelle Digital Artist/Game Designer, Flea Ranch Games

73 72 1.0
@Rick:
"But i keep wondering, why game developers keep adding people to their development teams if costs are so high."

I heard that one of the conditions for receiving the loan from the state was that the company had to hire around 300 people. It was kind of like a jobs program.

Edited 2 times. Last edit by Gary LaRochelle on 28th May 2012 6:50pm

Posted:2 years ago

#17

Jan Almqvist Senior Artist, Electronic Arts

26 10 0.4
Too bad. I really quite enjoyed KoA.

Posted:2 years ago

#18

Dominic Jakube Student

92 13 0.1
Ouch that sucks for the workers.But surly a big budget MMO is a risky venture?EA with their billions and the mega Star Wars license just managed to pull it off but its still earl days there.Or was this a more moderate budget free to play model?

Posted:2 years ago

#19

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