Video Game Industry Thread: May is done, go to the next one

cloudeagle

Welcome to the Industry Thread: your place to post about the business side of the hobby. Here's some helpful hints from Rorus Raz on how to keep this thread on track and free of rage explosions.

1. This is about the industry: if your post has something to with the business of making video games, then you are probably on the right track. Sales numbers, hiring or firing of employees, opening or closing of development teams, and so forth are good topics. Minute details on the quality of games, what Reggie had for breakfast, Sony's TV sales, and so forth tend to be outside the scope of this thread.

2. This is not a chat thread. It's not a place to shoot the breeze and casually talk about video games as a whole. While you don't have to be super serious to post here, there is going to be substantially less tolerance of content-less posts that are comprised of an image macro or YouTube video.

3. Discussion on why a game/company failed or succeeded will come up. It's fine to kick around gameplay or other factors as reasons to why. Getting into a multiple page discussion on why nerfing wizards caused this MMO to lose 100,000 subscribers is when you have crossed a line into inane chatter. If you are unsure where that line is, then I recommend not making that particular post.

4. This is not a place to proselytize nor antagonize. "Console war" crap will not be tolerated, nor will needlessly crapping/cheering on a particular game/company/etc. Pondering about why Capcom hates Megaman is not really relevant to the industry.

5. You are not the arbiter of what is discussed here. Farmville is a game. Kinect games are just that: games. If you don't like that a large number of recent posts are discussing something you are sick of hearing about, then bring up other industry topics or take some time off from this thread. Do not complain that people aren't talking about what you want to talk about. If you feel that the discussion is detrimental to the thread (whining about Mass Effect 3 for the billionth time), then feel free to use your report button.

6. While an economics degree is not required to post in here, one not versed in the subject would do well to read and think carefully before posting. Sales do not necessarily reflect on the game's quality! A game can sell a lot but still be a failure if was expensive to produce! Before immediately posting something, think critically a bit and remember that business is a different beast that tends to be very much detached from the hobby itself.

7. VGChartz is mostly horseshit and should not be taken seriously. Why? Read about it here.

8. No lists. Besides being pretty much off-topic, they are a breeding ground for shitty posts and stupid squabbles.

Bottom line: business is for adults, and thus you should post in here like an adult. If you want to casually chat about video games, then we have a whole forum for you to do that in. This thread is not the place for that. Nor is it the place for petty bickering amongst yourselves (we, in fact, have no place on these forums for you to do that).

Having said all that, enjoy the thread.

And now, May's sales.



Dragon's Dogma was below 100,000.

360: 160K
PS3: 124K
3DS: 113.5K
Wii: 71K
PSV: >50K, <56.8K

cloudeagle

38 Studios and Big Huge Games. Jesus. Where to begin?

38 Studios, formerly Green Monster Games, is the entertainment and IP development company founded by Major League Baseball pitcher Curt Schilling and named for (drumroll, please) his jersey number.

Feeling that the only thing that can be better than one huge ego in his company is three huge egos, Schilling hired R A Salvatore and Todd MacFarlane to help create a massive new IP, the Kingdoms of Amalur. The first game, the single-player Kingdoms of Amalur: Reckoning, came out earlier this year and got a pretty good reception from gamers and critics, even though it wasn't quite Skyrim. 38 Studios planned to release an Amalur MMO, "Project Copernicus," a little later.

The problem is that 38 Studios decided to develop the two games simultaneously, with a combined budget north of $100 million. Any way you slice it, that's ginormous. To help meet that budget, the studio got a large loan from the state of Rhode Island. Unfortunately, to keep making payments on that loan, Reckoning would have had to have sold three million copies... it barely cracked a million.

Because of the financial crunch, employees weren't paid since May 1, their health insurance was cancelled, and finally, this happened:

38 Studios and Big Huge Games have both let go of their entire staffs, a source with knowledge of the situation tells Joystiq. Following reports that 38 Studios stopped paying staff on May 1, and just an hour before a scheduled press conference in Rhode Island addressing the recent 38 Studios financial debacle, both the Providence, RI-based 38 Studios and the Baltimore, MD-based Big Huge Games are no more.

"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," former Big Huge Games lead world designer Colin Campbell said on his Twitter account. Big Huge's latest release was the moderately successful Kingdoms of Amalur: Reckoning. The studio was picked up by 38 Studios back in 2009, and it crafted the first entry in 38's ambitious new universe: Amalur.

The recent financial tumult arose following a defaulted payment from 38 Studios to the Rhode Island state government on May 1, indicating much larger financial issues that could ultimately lead to Rhode Island taxpayers owing up to $112.6 million between 2013 and 2020. It's unclear whether today's layoffs mean 38 Studios is unable to pay back the approximately $50 million its owes Rhode Island of a planed $75 million loan. If that's the case, Rhode Island will take over ownership of the Amalur IP, valued at around $20 million.

We expect to hear more at a scheduled press conference this evening held by Rhode Island Governor Lincoln Chafee.

Update: WPRI got ahold of the internal memo to employees at 38 Studios, which reads: "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. This is your official notice of lay off, effective today, Thursday, May 24th, 2012." Big Huge Games and 38 Studios collectively employed 379 full-timers as of March 15, according to the report.

http://www.joystiq.com/2012/05/24/38-studios-and-big-huge-games-lay-off-entire-staffs/

How big of a massive clusterfuck is this? Not only could Rhode Island taxpayers be on the hook for $112.6 million, but two state officials (state economic development corp. executive director, Keith Stokes, and vice chairwoman Helena Foulkes) have been forced to resign. Not to mention the 300+ people who lost their jobs.

http://bostonglobe.com/business/2012/05/24/second-official-resigns-amid-studios-flap/U0hk3st9s5Zb61WyOHcjPO/story.html

Fairchild

Ya know, I've been thinking a bit about picking up a vacation/retirement home on or near the seacoast in New England. I'll bet there are suddenly a bunch of oceanview homes in Rhode Island available for cheap...

Fairchild

Don't forget to lock the old thread.

Also, Quads.

cloudeagle

Updated the second post with a brief history of the 38 Studios mess, lemme know if I'm forgetting anything. FYI, is there a post that shows how Schilling is doing gangbusters?

By the way, we're now up to two state officials who have been forced to resign over this. This is huge, huge news for Rhode Island.

Also, the truth behind 38 Studios' dumb name is revealed: it was Schilling's jersey number during his baseball career.

Nocren

Wait... Why were those officials forced to resign? Are they the ones that pushed/backed the idea?

cloudeagle

Nocren wrote: »

Wait... Why were those officials forced to resign? Are they the ones that pushed/backed the idea?

We don't know for sure, but they were the ones running the show when the state made an extremely shitty loan to an unstable company that cost the taxpayers a ton of money, plus it arguably cost 300+ employees their jobs plus it's the top story in Rhode Island news. It's a highly visible fuckup, so they're taking the fall.

Blendtec

cloudeagle wrote: »

Nocren wrote: »

Wait... Why were those officials forced to resign? Are they the ones that pushed/backed the idea?

We don't know for sure, but they were the ones running the show when the state made an extremely shitty loan to an unstable company that cost the taxpayers a ton of money, plus it arguably cost 300+ employees their jobs plus it's the top story in Rhode Island news. It's a highly visible fuckup, so they're taking the fall.

Jobs and tax payer money are always a big deal, but especially right now given the economy and how small Rhode Island is. Any company pulling out of a small area like that is going to cause some ripples.

SyphonBlue

cloudeagle wrote: »

Nocren wrote: »

Wait... Why were those officials forced to resign? Are they the ones that pushed/backed the idea?

We don't know for sure, but they were the ones running the show when the state made an extremely shitty loan to an unstable company that cost the taxpayers a ton of money, plus it arguably cost 300+ employees their jobs plus it's the top story in Rhode Island news. It's a highly visible fuckup, so they're taking the fall.

Plus the Governor who approved the deal already lost his job in large part due to this deal

Fairchild

Read down to the bottom of the BOSTON GLOBE story. 38 Studios was incorporated in Delaware, not Rhode Island, and thus was not even eligible for the Rhode Island loan program. Oops.

mrt144

Fairchild wrote: »

Read down to the bottom of the BOSTON GLOBE story. 38 Studios was incorporated in Delaware, not Rhode Island, and thus was not even eligible for the Rhode Island loan program. Oops.

LMAO, this really is a comedy of financial errors.

Undead Scottsman

So does that potentially add fraud to the shit 38 studios is in trouble for?

cloudeagle

mrt144 wrote: »

Fairchild wrote: »

Read down to the bottom of the BOSTON GLOBE story. 38 Studios was incorporated in Delaware, not Rhode Island, and thus was not even eligible for the Rhode Island loan program. Oops.

LMAO, this really is a comedy of financial errors.

My god. What's next, a clause specifying that 38 Studios would be given a county of their choice? Ritual puppy sacrifice?

Fairchild

Probably not fraud, as 38 Studios' corporation status was available to anyone who checked. This makes it look even worse for the Rhode Island state government people who approved the loan without first learning where the studio was incorporated.

Couscous

They are still searching for money.
http://www.bostonherald.com/business/technology/general/view.bg?articleid=1061134310

Curt Schilling’s 38 Studios, which laid off all its employees yesterday, is still desperately looking for investors willing to come in and resurrect the Rhode Island video game firm, which former employees say is fairly close to completion.

Corporate lawyer Jonathan Savage, appointed special counsel to Rhode Island Gov. Lincoln Chafee, said he has been in contact with 38 Studios officials today and company representatives assured him they are ready to be very flexible to bring in new investment to restart the firm and the state has not given up on its hope to resurrect the company.

“They are diligently pursuing additional capital,” said Savage, who is Chafee’s point man on 38 Studios. “I would anticipate any additional capital would be private.”

38 Studios laid off its entire staff of nearly 400 workers in Rhode Island and Maryland — at its affiliate Big Huge Games — yesterday, a week after struggling to make a $1.1 million payment as part of the company’s $75 million loan financing deal with the Ocean State.

A 2010 Harvard Business School analysis of 38 Studios was critical of Schilling’s unwillingness to part with equity in the company during its early history, but Savage said he has seen none of that attitude.

“I’ve heard from Mr. Schilling’s representative that his goal is the success of the company,” Savage told the Herald. “They have said they don’t want in any way to impede that success. Everything is on the table, including dissolution of equity and management control.”

Savage, widely respected in Rhode Island and beyond for his business acumen as well as his experience in bankruptcy and receiverships, said he is convinced company officials are doing all they can to find potential investors who could restart efforts to publish the new game known as “Copernicus,” a game designed for large numbers of online players.

Savage said he has not talked to Schilling directly since Wednesday and could not say how actively involved he might be in the search for new partners.

“They have been in active discussions in the last few days in their efforts to bring additional capital into the business,” the private attorney said.

Savage said he has not been told if 38 Studios is considering bankruptcy and would not say if he expects that action.

“It’s hard for me to answer an abstract, speculative question like that,” he said. “There are any number of actions a business could take. There are certainly other potential options. It’s difficult to say how viable other options might be.”

That analysis, done within a company, is difficult to predict, he said, because it is so “fact specific.”

Savage said the governor has been personally involved in efforts to help 38 Studios survive. “He’s as engaged as anyone, but he’s asked me to engage with the company and see how the state might assist and facilitate the company’s ultimate success,” Savage said.

Dragkonias

Man...I was expecting this whole situation to cause a massive shitstorm.

But I wasn't expecting it to happen so quickly.

Allforce

I thought we already moved past the outrage at Studio Closure Of The Month™ #3209

No one was a big evil monster, the company failed, government is inept, blablabla.

naengwen

They should post a Kickstarter.

Most ambitious project ever! We're building an MMO! Goal is only a modest 130 million dollars. C'mon guys, sponsor us!

Foomy

Hmm, that's pretty much what I thought they would do by firing everyone, it buys 38 a month or two to desperately try and find some financing. They couldn't both pay for the employees and the loan at the same time.

Though it never should of gotten to a place where that decision was necessary. Trying to develop a mmo and a single player rpg at the same time, hoping the rpg makes enough to pay for continued development on the mmo was just insane. I would guess that KoA made a little bit of profit, but not enough to pay for the huge budget of a mmo.

If they had just stuck with the whole single player KoA games, maybe released a few largish dlc packs, a sequal in 1.5-2 years to build up the IP than go into mmo development if the market still looked ok for them, that would of made more sense.

L Ron Howard

I don't think /popcorn has really been this appropriate.

tyrannus

Fairchild wrote: »

Probably not fraud, as 38 Studios' corporation status was available to anyone who checked. This makes it look even worse for the Rhode Island state government people who approved the loan without first learning where the studio was incorporated.

Do we know the conditions of the loan program?

edit: Here's a copy of the loan agreement.

http://www.riedc.com/files/38 Studios Authorization Resolution Fact Sheet 072610.pdf The incorporation of 38 Studios in Delaware was not a condition of the loan, only that they relocate.

Turkey

Allforce wrote: »

I thought we already moved past the outrage at Studio Closure Of The Month™ #3209

No one was a big evil monster, the company failed, government is inept, blablabla.

It is a well known fact that every month we have a studio close, then take down half a state with it.

Fairchild

tyrannus wrote: »

Fairchild wrote: »

Probably not fraud, as 38 Studios' corporation status was available to anyone who checked. This makes it look even worse for the Rhode Island state government people who approved the loan without first learning where the studio was incorporated.

Do we know the conditions of the loan program?

edit: Here's a copy of the loan agreement.

http://www.riedc.com/files/38 Studios Authorization Resolution Fact Sheet 072610.pdf The incorporation of 38 Studios in Delaware was not a condition of the loan, only that they relocate.

That's for the specific loan to 38 Studios, not the Rhode Island loan program. Let me see if the loan program's rules are online, the BOSTON GLOBE reporter may have been wrong...

The RIEDC Business Incentives program can be found here, including the program specifically aimed at motion picture and videogame companies: http://www.riedc.com/files/RIBusiness Incentives- 2011_0.pdf. I don't see any mention that the companies are required to be incorporated in Rhode Island.

Allforce

If you really think they "took down a state" then you have wayyyyy too much imagination.

Blendtec

naengwen wrote: »

They should post a Kickstarter.

Most ambitious project ever! We're building an MMO! Goal is only a modest 130 million dollars. C'mon guys, sponsor us!

I think it'd be funny if the state of Rhode Island should post a Kickstarter to finish the MMO and run it as the state. Could go to the the state capital building to visit the "Office of MMO Management" or something.

Turkey

It's an exaggeration. Anyway, you can't act like this one isn't a little bigger than the usual studio closures.

L Ron Howard

Blendtec wrote: »

naengwen wrote: »

They should post a Kickstarter.

Most ambitious project ever! We're building an MMO! Goal is only a modest 130 million dollars. C'mon guys, sponsor us!

I think it'd be funny if the state of Rhode Island should post a Kickstarter to finish the MMO and run it as the state. Could go to the the state capital building to visit the "Office of MMO Management" or something.

That would be a clusterfuck if I've ever seen one.

The_Scarab

What is even in Rhode Island anyway? Nothing. That's what. It doesn't exist. It's just that America is so big compared to Europe that their maps are so boring and full of wide open, featureless expanses. So they just make up places to keep the cartographers busy.

How else can you explain Delaware?

L Ron Howard

I don't recall reading about this in the other thread, but:

http://www.theverge.com/gaming/2012/5/25/3043282/38-studios-downfall-leads-to-second-mortgages-for-some-employees

Some of the hundreds of 38 Studios employees laid off yesterday were hit with a second round of bad news this week when they were told by banks that homes they thought the company had sold for them hadn't been and that they may be stuck with a second mortgage, Polygon has learned.

Also:

One former employee said they discovered this week that their Massachusetts home, which they had been told was sold last year, actually hadn't been. The bank contacted them this week to ask why they mortgage wasn't being paid.

skeldare

And in something completely different, since it's apparently a slow news week...

Professor Layton and The Miracle Mask has been trademarked in North America

While Nintendo of Europe confirmed the Professor Layton game for the 3DS, Nintendo of America hasn’t said anything about the title yet. They’re probably saving the announcement for E3 since Level-5 just filed a trademark for Professor Layton and the Miracle Mask in the U.S.

tyrannus

L Ron Howard wrote: »

I don't recall reading about this in the other thread, but:

http://www.theverge.com/gaming/2012/5/25/3043282/38-studios-downfall-leads-to-second-mortgages-for-some-employees

Some of the hundreds of 38 Studios employees laid off yesterday were hit with a second round of bad news this week when they were told by banks that homes they thought the company had sold for them hadn't been and that they may be stuck with a second mortgage, Polygon has learned.

Also:

One former employee said they discovered this week that their Massachusetts home, which they had been told was sold last year, actually hadn't been. The bank contacted them this week to ask why they mortgage wasn't being paid.

This double mortgage thing will be such a fucking headache for everyone. gad damn

Turkey

skeldare wrote: »

And in something completely different, since it's apparently a slow news week...

Professor Layton and The Miracle Mask has been trademarked in North America

While Nintendo of Europe confirmed the Professor Layton game for the 3DS, Nintendo of America hasn’t said anything about the title yet. They’re probably saving the announcement for E3 since Level-5 just filed a trademark for Professor Layton and the Miracle Mask in the U.S.

Almost surely an October release. Layton 4 was also announced last E3 if I remember correctly.

skeldare

Turkey wrote: »

skeldare wrote: »

And in something completely different, since it's apparently a slow news week...

Professor Layton and The Miracle Mask has been trademarked in North America

While Nintendo of Europe confirmed the Professor Layton game for the 3DS, Nintendo of America hasn’t said anything about the title yet. They’re probably saving the announcement for E3 since Level-5 just filed a trademark for Professor Layton and the Miracle Mask in the U.S.

Almost surely an October release. Layton 4 was also announced last E3 if I remember correctly.

They showed it off at E3 2010, but there hasn't really been much info since then.

cloudeagle

The_Scarab wrote: »

What is even in Rhode Island anyway? Nothing. That's what. It doesn't exist. It's just that America is so big compared to Europe that their maps are so boring and full of wide open, featureless expanses. So they just make up places to keep the cartographers busy.

How else can you explain Delaware?

You're thinking of Wyoming.

http://www.youtube.com/watch?v=56uSDQECrRQ

At any rate, Zynga's going to E3 for some reason.

Something was missing at last year's E3.

While there were the usual big announcements and spectacle, the absence of Zynga – which was already one of the largest publishers in the industry – was a shadow hard to ignore. This year, though, the social games maker has reversed course – and will join the industry's annual circus.

"It was an easy decision," says Rob Dyer, vice president of partner publishing at Zynga. "We have a number of potential partners who will be there. … We did this very purposefully. We knew when we signed up for the space we would have launched Zynga Partners and would have Zynga.com up and running."

Despite some early speculation to the contrary, don't expect Zynga to go hog-wild at E3. The company opted to bypass the show's expensive booths and won't be sending a contingent of employees. Instead, Dyer and about five other staffers will be huddled in a meeting room at the show to meet with prospective content partners. The company's even turning down media appointments, so it can focus on finding new games.

While E3 is still very much a retail-oriented show (and, given the large media presence, a consumer facing event), the industry at large is changing. And Zynga is betting that evolution will extend to the show.

"E3 is in a bit of transition," says Dyer. "It's no longer just about consoles. It's about games and having an opportunity to talk to the people making those games, whether on the web or mobile. It is where we need to be, so we will have a presence."

Social games in general will have a larger presence at this year's show. EA and Disney will both prominently showcase those divisions of their companies, despite having major console games on display. And as both vie for Zynga's king-of-the-hill status, it could help with their recruiting – another reason Zynga decided to make the trip to Los Angeles this year.

It was, in fact, the growing presence of mobile/social games at industry trade shows that convinced Dyer to leave his position as senior vice president of publisher relations for Sony Computer Entertainment America nine months ago.

"The thing that struck me last year and influenced my decision to leave Sony was the Tokyo Game Show," he says. "In the past, it was a very big deal about what was coming out on consoles. Last year, there were maybe three or four games outside of Sony's booth that were console games. Everything else was social or mobile -- and that was the canary in the coalmine for me. … I believe that over time, you're going to see the same thing occur at E3. You're going to see more free to play games on the show floor."

http://www.gamasutra.com/view/news/170977/Whats_Zynga_doing_at_E3_anyway.php

L Ron Howard

Oh, and
http://www.examiner.com/article/reckoning-s-sales-had-nothing-to-do-with-the-collapse-of-38-studios
The article is short enough that you can read it for yourself.

Ultimanecat

Just chiming in:

Many, many corporations are Delaware corporations because that state has created a corporate law that is extremely favorable to corporations. This in turn has led to much of Delaware's corporate law being applied in courts, which in turn means that it is better understood and more predictable to corporate lawyers, which in turn can help keep legal costs down, which in turn motivates corporations to incorporate there, which in turn...you can see where I'm going with this.

Over half of all publicly traded companies are Delaware corporations. It's not altogether strange for other states to let companies keep their incorporation status there while still giving them incentives to do business locally.

Shady3011

E3 has always had random booths with stuff from people no one knows about. Before the whole redesign, Kentia Hall was the whacky ass place to see some truly neat stuff.

cloudeagle

Ultimanecat wrote: »

Just chiming in:

Many, many corporations are Delaware corporations because that state has created a corporate law that is extremely favorable to corporations. This in turn has led to much of Delaware's corporate law being applied in courts, which in turn means that it is better understood and more predictable to corporate lawyers, which in turn can help keep legal costs down, which in turn motivates corporations to incorporate there, which in turn...you can see where I'm going with this.

Over half of all publicly traded companies are Delaware corporations. It's not altogether strange for other states to let companies keep their incorporation status there while still giving them incentives to do business locally.

Very true. And I'd post the "we're in Delaware" bit from Wayne's World if I hadn't already used up my allotment of YouTube links for the day.

At any rate, it turns out the whole thing with GameStop forcing you to take the digital version of Game Informer was based on jerky managers.

Pressed about the discrepancy between their stated policy and the experience of some of our readers who said they were switched from print to digital without warning, a GameStop rep told me today that their "original response is the policy. Subscribers may, at any time, contact Game Informer to switch their current subscription from one format to the other by visiting http://gameinformer.com/contactus.aspx or calling 866-844-GAME." Several commenters as well as readers who have contacted me privately say their experience as GameStop customers and employees has involved a mixed execution of that policy, with some store managers encouraging employees to make sure customers have a choice and others pushing a switch to digital on the sly.

http://kotaku.com/5913419/gamestop-says-they-wont-mess-with-your-game-informer-subscription-after-all

tyrannus

Typically it is either better to incorporate in the home state or in Delaware, which is very favorable to corporations. As for State Corporation Codes, Delaware actually uses their own and not (R)MBCA, like Rhode Island does. But all I've seen so far was that the loan was contingent on moving jobs and nexus into Rhode Island.

Turkey

Looks like Nintendo's getting in the preorder DLC business with Pokemon Conquest.

wirehead26

Cloudeagle I was just about to post that Garfield video.

Damn you.