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Curt Schilling's vanity project strikes out | 10 Years Ago This Month

38 Studios is a cautionary tale about the dangers of leadership with unshakable confidence

As far as industry cautionary tales go, 38 Studios is a first ballot Hall of Famer.

In 2006, Boston Red Sox pitcher Curt Schilling set up the studio (then known as Green Monster Games) with lofty ambitions, promising to revolutionize an MMO space dominated by World of Warcraft with an original property created with the help of comic creator Todd McFarlane and fantasy novelist R.A. Salvatore.

"The challenge is not simply in publishing a game but in publishing a game that changes the landscape of the online marketplace," Schilling said at the time. "Our company motto is 'If you can't do it better than it's ever been done before, work for someone else.'"

He was also determined to treat his staff well, promising a 50-50 profit share with employees and acknowledging the industry's often shoddy treatment of developers.

"GMG's team of employees will more closely resemble the pride and respect I experienced in my years as a baseball player," he said at an MIT Enterprise Forum event.

Things did not go as planned.

A shot from the never-finished MMO code-named Copernicus

In 2010, the studio changed its name to 38 Studios and relocated from Boston -- where Schilling was virtual royalty for helping bring the city its first World Series championship in 86 years in 2004 -- to Rhode Island, lured there by the state government's Economic Development Corporation with $75 million in loan guarantees in exchange for its commitment to create 450 new jobs in the state by 2012.

The guarantees were part of a program offering $125 million in such backing to create new jobs in the state, and the fact that 60% of that amount was being swallowed up by a single business did not go unnoticed at the time, with the campaign of then-gubernatorial candidate Lincoln Chafee saying that investing so much in "a single individual who does not have an established record in business... was an unacceptable gamble to ask the taxpayers of Rhode Island to take."

"[Investing $75 million in] a single individual who does not have an established record in business... was an unacceptable gamble to ask the taxpayers of Rhode Island to take"

Lincoln Chafee, in 2010

By that point, 38 Studios had added another game to its portfolio by acquiring Big Huge Games from THQ after the publisher said the studio was on the chopping block. The Rise of Nations developer had been working on a role-playing action-adventure game at the time, and 38 Studios opted to graft its original IP onto the title and turn it into its first published game, Kingdoms of Amalur.

Kingdoms of Amalur launched in February of 2012 to fairly positive reviews and a promising start in the sales charts.

But while Schilling's efforts over the previous six years were just starting to bear fruit for outside observers, the company he built was falling apart on the inside. In May of 2012, 38 Studios missed a $1.13 million payment on those loans, and Chafee, who had since become the state's governor, confirmed in the middle of the month he'd been working with the studio to keep it solvent.

In a pinch, 38 Studios said it would make the loan payment, but in order to do so it would have to fire all its temporary employees and contractors, and miss payroll for its remaining employees. (And even then, the loan repayment check bounced and it was another day before the payment was made.)

It would have been bad enough if the company simply wasn't paying its employees in a pinch, but 38 Studios had been negligent about all kinds of expenses for months. The first hint of this came from a "38 Studios Spouse" letter published on Gamasutra. (As a side note, it's horrifying that between EA Spouse, Rockstar Spouse, and this, the gaming industry produced its very own formula for family members publicly detailing the abuse heaped on developers.)

In the letter, the wife of a 38 Studios employee talked about receiving a collection letter from a moving company demanding payment for bringing her family to Rhode Island. When her husband landed a job with 38 Studios six months earlier, the company said it would cover the costs of the move. But it didn't, and after months of not receiving its due, the moving company gave up on trying to collect from 38 Studios and went after the family with a demand for payment in ten days.

Instead of facing the prospect of being out of work with a house mortgage to worry about, some employees were out of work with two mortgages to worry about

Some others found themselves in even deeper holes. When the company moved to Rhode Island, it had promised to take over employees' mortgages in the Boston area and sell the houses so they could more easily find new homes in Rhode Island. But some employees' houses weren't sold, and when 38 Studios stopped making those mortgage payments, banks came after the developers who originally bought the house. So instead of facing the prospect of being out of work with a house mortgage to worry about, those employees were looking at being out of work with two mortgages to worry about.

The company also had been neglecting to pay the premiums for employees' insurance, as 38 Studios Spouse discovered in May when a pregnant employee who had gone in for a checkup was told that her insurance coverage would be ending in two days for non-payment. This obviously didn't sit well with the company's hundreds of employees, some of whom obviously had pressing needs for medical coverage. Like the 38 Studios vice president of online services whose wife needed a bone marrow transplant.

"Are you going to admit that your stupid hubris, pride, and arrogance would not allow you to accept that we failed -- and help shut it down with dignity?" that executive asked Schilling in response to a private Facebook post in which the company founder said he'd go on a sports radio show and talk about how the studio's collapse was Governor Chafee's fault.

He did not admit that on the radio show, saying instead that Chafee telling people the studio was in trouble made a publishing deal with Take-Two fall through. A Take-Two representative said the company doesn't comment on rumors or speculation, but tellingly added that he was not aware of any such negotiations.

Interestingly enough, Schilling did basically admit that his stupid hubris, pride, and arrogance wouldn't let him accept failure a couple months later on in a Boston Magazine article that contained some of the above revelations.

"I never doubted I was going to do it," Schilling said. "My whole life was spent doing things that people didn't believe were possible, because God blessed me with the ability to throw a baseball. And I carried that same mentality into everything I did here."

When one former employee said Schilling couldn't imagine a scenario where the game failed, the former pitcher more or less agreed.

"We never had that sense of urgency or panic. I think there was a sense of invulnerability -- I don't want to say invulnerability, but I think we were comfortable"

Curt Schilling

"That's the way I'm built. I think it's one of the reasons I was able to do what I did playing baseball. And it's not fake. I've been around situations where you can make people believe something they don't believe... We never had that sense of urgency or panic. I think there was a sense of invulnerability -- I don't want to say invulnerability, but I think we were comfortable."

Comfortable. 38 Studios had been so strapped for months that it wasn't even paying for employees' health insurance, and Schilling was comfortable. The company had been recruiting developers and asking them to uproot their families and move them to the development notbed of Rhode Island even as the financial picture was so desperate that it wouldn't even pay for the movers like it agreed to, but Schilling felt comfortable. He was about to leave hundreds of employees in the lurch, some of them stuck with two mortgages and no income, and he felt comfortable.

You would think this level of callous disregard for the well-being of one's employees would be criminal, but neither the state nor the feds thought so.

38 Studios formally declared bankruptcy in June, owing $151 million to over 1,000 creditors, $116 million of which was to the EDC.

The EDC sued a bunch of people, throwing around accusations of fraud, negligence, conspiracy, larceny, and more. The state managed to make back a chunk of the money it lost in settlements with the lawyers and firms that advised the EDC, as well some of the agency's former leaders.

Schilling and 38 Studios management settled for $2.5 million, which would be paid out by 38 Studios' insurance company because clearly, they felt some insurance premiums were more important to keep on top of than others.

As for the nearly 400 employees that 38 Studios missed payroll on, they eventually got paid. Granted, they had to wait nine years, and they received as little as 14% of what they were owed.

It might not be much consolation to those employees, but Schilling has since burned through much of the good will and fortune his playing career brought him. He put around $50 million of his own money into the studio. His penchant for xenophobia, bigotry, and far-right memes has also cost him a fair chunk more; a post comparing Muslims to Nazis got him suspended from his ESPN job as a baseball analyst, and later posts about anti-trans bathroom laws convinced ESPN to fire him outright. Despite his on-field accomplishments, he has also not been voted into the Baseball Hall of Fame, and actually asked to have his name withdrawn from consideration in what would be the final year he could be admitted on a vote from baseball writers.

In asking not to be considered, Schilling took exception to being considered alongside Roger Clemens and Barry Bonds, two players implicated in steroid use investigations.

"I'm now somehow in a conversation with two men who cheated, and instead of being accountable they chose to destroy others lives to protect their lie," Schilling said with an apparently total lack of self-awareness. "I will always have one thing they will forever chase. A legacy."

You sure will, champ.

Pressure makes diamonds. Coprolites too

"Specific tweaks and improvements."

That was the reason Ken Levine gave in early May of 2012 for delaying BioShock Infinite from its planned October 2012 release date to February of 2013. He said he just wanted to make the game "into something even more extraordinary."

"We had a similar experience with the original BioShock, which was delayed several months as our original ship date drew near," Levine said. "Why? Because the Big Daddies weren't the Big Daddies you've since come to know and love. Because Andrew Ryan's golf club didn't have exactly the right swing. Because Rapture needed one more coat of grimy Art Deco. The same principle now applies to BioShock Infinite."

Just attention to details, right? It suggests one last coat of polish by a team of craftspeople who could probably call it done right now, but think they can still make it that little bit better to really separate it from the pack.

That description of delayed games is often a poor match for reality.

That was certainly the case here, as the last leg of BioShock Infinite's development was such a cluster that it received its very own chapter in Jason Schreier's book Press Reset: Ruin and Recovery in the Video Game Industry, which detailed the efforts of BioShock Infinite "closers" like Don Roy and Rod Fergusson, veteran developers with a knack for parachuting into a troubled game late in development and helping get something shipped.

Roy came on board in March of 2012, just two months before Levine's delay announcement. And what did he see?

"I get there and there was essentially no game," Roy said. "A tremendous amount of work had been done. It just hadn't been stood up as a game in any particular form. To the point where the first thing I did was go, 'Can I play a build of the game?' The answer was no. They said, 'You can play these pieces of things, but there's not an actual functioning game.'"

Of course, fixing a situation like that requires a fair bit of work, and the solution is often absurd amounts of crunch. ("BioWare Magic" was the term given to it by one studio I won't name here.) Level artist Chad LaClair told Schreier that he was in the office at Irrational for 12 hours a day for most the game's final year of development, saying, "I've never crunched on a game as much as I crunched on BioShock Infinite."

The game would be delayed one more time before finally launching in March of 2013. In early 2014, after Irrational wrapped up work on BioShock Infinite's downloadable content, Levine shut the studio down because he wanted to make a different sort of game.

"To meet the challenge ahead, I need to refocus my energy on a smaller team with a flatter structure and a more direct relationship with gamers," he explained at the time as he laid off all but 15 Irrational developers who he used as the core of Ghost Story Games.

Eight years later, Ghost Story Games has yet to even announce its first title, and judging by the accounts of those who worked for Levine over that time, it's possible the BioShock Infinite developers who lost their jobs were the lucky ones.

What else happened in May 2012

● Diablo 3 launched and was unplayable for many consumers for days.

● Japan banned "complete gacha," a version of loot boxes where players would obtain a set of specific items via loot boxes, and when they had the complete set, they would receive another rare item.

● Activision settled its lawsuits with Electronic Arts and Infinity Ward co-founders Vince Zampella and Jason West that stemmed from it unceremoniously firing the duo in March of 2010.

Thankfully, this happened only after some airing of dirty laundry, like Activision's IT head testifying that the company's chief legal officer told him to dig up dirt on Zampella and West and hack into their email and computers, with the reassurance that "[Activision Blizzard CEO] Bobby [Kotick] will take care of you. Don't worry about repercussions."

Activision's contract with Bungie for the Destiny franchise also became a matter of public record, which doesn't serve the public good as much as knowing what kind of character the person running Activision Blizzard has, but was a rare and fascinating glimpse at how the sausage gets made. (Did you know there were originally going to be four mainline Destiny games released every other year? It seems the plans changed once the games-as-a-service template had been set even in the console AAA space.)

● Silicon Knights lost its lawsuit against Epic Games in definitive fashion. The studio, which licenses Unreal Engine for use in Too Human, had sued Epic for breach of contract in 2007 and blamed its game's delay on having to write its own engine. Epic countersued claiming that Silicon Knights' new engine was based on Unreal anyway.

Silicon Knights said it would appeal, but by the time that appeal was denied in 2014, the studio had shut down and founder Denis Dyack had already formed (and shut down) the Silicon Knights successor Precursor.

● Facebook had a fairly unimpressive IPO, which served to tank Zynga's share price as the social gaming bubble appeared to be bursting.

Good Call, Bad Call

GOOD CALL: Zynga developer Soren Johnson bemoaned the conflation of the term "social gaming" with a very specific type of Facebook game, saying, "The best-case scenario for social gaming is for the term itself to disappear as all games become more social, even ones that are traditionally thought of as primarily single-player."

I don't think the term has disappeared, exactly, but the features and social aspects of those oft-loathed Facebook games have absolutely been co-opted and iterated upon throughout the industry.

BAD CALL: After posting disappointing first-quarter sales figures, GameStop CEO Paul Raines tried to calm investor fears, particularly in light of recent reports that the next-gen hardware platforms would block used games, saying, "We still see growth in the pre-owned business for 2012. We also have seen gross profit growth in this quarter and we'll see it in other quarters. We don't believe that the pre-owned business is in a long-term decline."

As we discussed in detail previously, GameStop's total used sales peaked in 2011, so it would not grow in 2012, and it has absolutely been in long-term decline. GameStop stopped reporting its pre-owned sales and profits separately in 2019 as the downward trend became too obvious to ignore any longer.

GameStop's gross profits on used products have dropped 46% since 2011. (2019 total extrapolated from first three quarters)

BAD CALL: EA DICE interim CEO Patrick Bach said blocking used games would actually be good for consumers because it might result in more games, more new IPs, and more single-player games that companies weren't making for fear of piracy.

"The only thing I know is that people are not doing it to be evil and stupid, it's about trying to create some benefits for consumers," Bach said, conveniently neglecting to mention greed as a possible motive.

With used games in long-term decline, we have perhaps seen slightly more interest in new IPs (Starfield, Forspoken, Elden Ring, etc.) and purely single-player games (God of War, Jedi: Fallen Order, etc.) in the AAA space than we were seeing a decade ago, but any argument to say that trade-off was worth it for consumers hinges on the considerable benefits of the reason for that decline: digital distribution. Platforms blocking used games just because publishers didn't want players to ever actually own anything is strictly anti-consumer no matter how you slice it.

BAD CALL: EVE Online senior producer Jon Lander says free-to-play is a great business model, but making CCP's flagship MMO free-to-play "would be a sign of desperation."

"You can't retrofit it onto the game," Lander said. "What are we looking for: the most people who could possibly play EVE Online, or the most people that are having some kind of meaningful interaction in the EVE universe? It's the latter. We're going to continue to grow EVE by recognising what it is and not ruining that."

CCP took Eve Online free-to-play in 2016, and has since maintained concurrent players on Steam above its previous record for nearly the entire time since.

GOOD CALL: Shigeru Miyamoto joins those shovelling dirt on the PlayStation Vita, saying, "It's obviously a very hi-spec machine, and you can do lots of things with it. But I don't really see the combination of software and hardware that really makes a very strong product."

GOOD CALL: In response to the April NPD sales figures, Sony Computer Entertainment America says that "PS Vita is gaining momentum as major new software titles like Mortal Kombat and social applications, such as Skype, saw strong demand with consumers."

I think that's technically accurate, in the same way a person dropped out of a plane will gain momentum until they reach terminal velocity.

BAD CALLS: Matt Spall and Mark Kern took a well-trodden path into the Bad Call Hall of Fame by joining the industry-watchers proclaiming the death of consoles (although between the Firefall bus and his assessment that the media was the real problem with GamerGate, Kern was absolutely headed there anyway).

As for Spall, his new studio Branching Narrative's decision to adapt Deathtrap Dungeon by having actor Eddie Marsan read the book to the player might seem like a Bad Call to some, but I prefer to think of it as a Bold Creative Choice, like a vintage Nic Cage line reading. I may not get it, but I'm glad it exists.

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Brendan Sinclair avatar
Brendan Sinclair: Brendan joined in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot.
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