Rhode Island Gov. Lincoln Chafee says the state had no signs that 38 Studios was in financial straits. He told reporters Tuesday that, as far as he knows, state officials did everything right. The video game company was meeting its benchmarks for the state loan. But Chafee says he did not look at the company’s financial statements.
"No, but again, we have communities going bankrupt and budgets to write," Chafee said.
Now, Rhode Island essentially owns a bankrupt video game company.
"When a company goes bad or starts to go bad, you try to sell off the assets," said Alexander Sliwinski, a Boston-based editor at the gaming news site Joystiq.com. "The assets for 38 Studios were put up as collateral against the loan from Rhode Island. So that’s a horrible place to be."
So what kind of collateral is Rhode Island left with? A yet-to-be-finished so-called "massively multiplayer online game." That’s an elaborate fantasy world where you play against other people over the Internet.
A preview video of that game — "Project Copernicus" — released last week shows a fly-through of the fantasy world.
"Yeah, I’ve seen the video," said Kevin Dent, a video game company executive. "The video looked great!"
Dent invests in startup game companies. The video, he points out, just shows landscapes and a fortress city. It does not show characters or game play.
"Anybody could make that video and they’d probably be able to make it for $1 million," Dent said. "Curt spent $75 million."
"There is clearly an issue of business execution," Sliwinski said. "This game should have been out by now. It’s been six years."
And the release date had been set for a year from now. Meaning tens of millions more dollars would have to be invested to complete the game. The state of Rhode Island says it would allow Schilling to find such an investor or buyer if there is one. But Sliwinski says the market for these types of games is not good.
"As a fire sale goes, it could be worth a few million dollars," Sliwinski said. "No one’s gonna pay the full loan amount, put it that way."
Especially now that all of employees have been laid off, and are moving on. You need top talent to finish such a major release. That’s why Kevin Dent is even less optimistic.
"I want to be super clear here: This game is never going to see the light of day," Dent said.
Dent thinks a white knight coming to buy the company and its property is fantasy.
"Curt Schilling is a baseball hero and he’s a video game villain," Dent said.
But Dent has equally harsh words for Chafee. He says the governor should have spent less time talking about how he didn’t like the state’s economic development deal and spent more time trying to find a buyer before the company collapsed.
This program aired on May 30, 2012.