Curt Schilling & 38 Studios: The Tragic New Story of a Developer’s ‘Implosion’

Jul 24, 2012 by  

Curt Schilling 38 Studios Collapse Layoffs

Hope and hell.

In a new exhaustive exposé on the collapse of 38 Studios, Shonda Schilling poignantly describes the last two weeks of her husband’s company with those two words. Many of Curt Schilling’s employees became his harshest critics when it was clear financial insolvency had doomed the Kingdoms of Amalur: Reckoning developer this May, and Shonda responded to their vehement attacks in a private company Facebook chat: “We hung on every telephone call. My husband couldn’t function. My kids saw their father cry more in that month then [sic] any child should see.”

But as the full piece from Boston Magazine continues – recounting details from Schilling’s business partners, associates, 38 employees and, often, Curt Schilling himself – it’s quite easy to see why many despise the former Boston Red Sox pitcher for his actions as the chairman of 38 Studios and subsidiary Big Huge Games.

Schilling 38 Studios Layoffs Project Copernicus

The 38 Studios exodus after full-scale layoffs this May

The crux of what lead to 38 Studios’ demise? Illusion. Schilling envisioned that their planned MMO, Project Copernicus, would reap in sums of cash on par with Blizzard’s World of Warcraft and turn 38 into the next great industry giant. He wanted to become “Bill Gates rich” and generate a philanthropic impact on a global scale. And only one sector of the industry was so promising:

“If it wasn’t an MMO, I wouldn’t have done it. If you look at the game space now, if you want to build something that’s a billion-dollar company, the only game to do that with is an MMO.”

Certain investors would join him, Schilling sunk his personal fortune (he’s estimated $40-50 million) into building the framework for Copernicus, all the while hoping to bankroll massive profits from Kindgoms of Amalur and Kingdoms of Amalur 2. (Keep in mind: this would only be possible after paying off a $75 million loan to set up shop in the state of Rhode Island.) Lavish employee benefits exceeding $2.5 million – premium healthcare and 401(k)s, free gym memberships, two homes to temporarily lease to new out-of-state hires, new laptop computers for every employee during one Christmas – were indulged in along the way, again out of Schilling’s own pocket.

“He really needed Company 101,” said Brett Close, 38 Studios’ first CEO, who later claimed that “investors’ heads would explode” upon being offered into his 50-50 profit sharing plans in lieu stock options.

The egregious spending habits were obfuscating to 38 employees, who seemed unaware of the danger lurking in the company’s future. A former employee recalls, “It never had the culture of a start-up. The message was being sent…that there was plenty of money.”

Todd Dagres, a founder Boston’s Spark Capital, grew worried about the developer’s path after seeing just how much of an all-in gamble Project Copernicus was. Even if 38 Studios had survived past Amalur 1 and 2 – they didn’t make it to 2 – the whole company would still implode if the MMO was a failure. And the lack of experience and preparation was evident at every level:

“[They didn't have] the ‘A’ team that I thought you’d want to see developing such a difficult game. Curt was not the CEO, but you could see he was quite involved and had a lot of control. I was a little nervous.”

However, the entire time 38 Studios steamrolled towards its collapse this May, Schilling remained unflappably optimistic. Kingdoms of Amalur: Reckoning sold 1.3 million copies before 2012, and the indulgent benefits, huge travel budgets and excessive Copernicus spending continued, seemingly oblivious to the impending Rhode Island loan dues. “We never had that sense of urgency or panic,” Schilling says. “I think there was a sense of invulnerability — I don’t want to say invulnerability, but I think we were comfortable.”

38 Studios Schilling Leadership Copernicus

Interestingly, Schilling recounts now that Copernicus “wasn’t fun,” and that after six years of development the combat was still stale and world interactions still bland. One former employee, though, claims this wasn’t the mood he emanated during those last perilous months or in meetings with potential investors:

“Curt sincerely believed that Copernicus was the best thing since sliced bread. [He] could not imagine a scenario where other people would not see the same potential he did. His attitude is always, This is gonna happen, the deal is going to close.”

To try to comprehend the way Schilling rationalized his confidence, the article probes into his psyche as a Hall of Fame pitcher, a hero of Boston’s 2004 miracle postseason and a World Series MVP in 2001. Curt Schilling’s success in his first occupation was a product of skill, faith, and devotion to something he loved. He assumed making video games would turn out the same way:

“I had to beat the Yankees three times in nine days. I never doubted I was going to do it. 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.”

The portrait depicted of Curt Schilling as he ponders what’s next – he currently fills his hours as a coach of his daughter’s high school softball team; it’s unclear as to the state of his finances – is tragic. But the consequences don’t end with him; everyone from 38 has a tale of grief and despair: a pregnant mother who learned from her doctor that her healthcare was cut off; the wife of Bill Mrochek, 38 Studios vice president, who lost coverage before a vital bone marrow transplant. Employees felt like they had the rug pulled out from underneath them when they were let go this May, all because Schilling never warned them – “I didn’t know what to say.”

Verbose and measuring up to a good hour of reading, the revealing story is full of fascinating, but heartbreaking details we can’t hope to capture fully. The legacy of 38 Studios – what we know so far, at least – is staggeringly dark, but it’s a textbook study on the challenges of succeeding in video game, MMO, and corporate development … and of the hubris, inexperience, and fallacies that can send it all crashing down.

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Follow me on Twitter @Brian_Sipple.

Source: Boston Magazine

6 Comments

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  1. This horrible. I really feel for everyone at 38 who lost everything. I wasn’t a huge fan of Kingdoms of Amalur, but I still wanted to see it do well.

  2. This seems to paint Curt Schilling as the villain. He overspent on unnecesary things and didn’t even warn 38 Studios’ employees about the financial crisis. It seems like he just wasn’t a very good person to run a game company.

    • my thoughts exact, it’s one thing to have a dream/goal but another to actually set out and do it and know what must be done to get there. he took a very big risk diving into an industry he knows so little about, and this is the consequence. him thinking that he could top WoW is pure evidence of his ignorance towards the industry and business in general.

      amalur was really good, combat, visuals and world where all top notch, it just didn’t hit the mark b/c skyrim came out a few months before it and everyone was comparing the 2 together (something morons always do these days instead of actually trying things out).

      • I don’t think it was so much the success (or lack thereof) of Reckoning as it was the $75 million loan from the state of Rhode Island and the money prematurely poured it Project Copernicus. That loan was too big, Schilling was too generous with his money, and 38 Studios should’ve waited to see how Reckoning did before they started dumping money into Copernicus.

        • there is that to, but i assume if the game had been more successful those d***s would have pushed back the loans due date etc.

          • Possibly.

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