This is it; this is rock bottom for 38 Studios. It’s been discussed numerous times over the past week, but it has finally come to pass, 38 Studios has laid off its entire staff and the staff of Big Huge Games.

After failing to make payments on their loan with the state of Rhode Island, and then failing to pay their employees, 38 Studios appeared to be on the verge of shutting down, but Curt Schilling and the Governor of Rhode Island remained optimistic that they could work things out. Unfortunately, that no longer seems to be the case, and with 38 Studios’ downfall also came the presumed closure of Big Huge.

While Kingdoms of Amalur: Reckoning failed to strike a chord with gamers, 38 Studios’ plans for an MMO follow-up, code named Project Copernicus, had us pretty intrigued. A trailer and some character art were recently revealed for the game, but at this point those feel like last gasps rather than tantalizing pieces of marketing.

It should be noted that this does not meet that either Big Huge or 38 Studios are closing down just yet, Rhode Island still ostensibly controls the fate of 38, but it means that all of their current staff have been laid off. WRPI has acquired the e-mail that was reportedly sent out to all staff at 38, which we have included below.

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.

At the end of the day it felt like the state of Rhode Island did not find any financial success in 38 Studios’ future — a future that would have seen the release of Project Copernicus — and therefore they were unwilling to extend certain tax breaks. Despite a new project looming in the horizon, the state of Rhode Island did not see any profitability in 38’s future.

What’s interesting though is that Rhode Island was not made aware that these layoffs were about to take place, they simply were unwilling to provide financial support to the developer. It appears that 38 Studios saw the writing on the wall and made a brash decision, and perhaps plans to file for bankruptcy.

It’s an unfortunate turn of events for 38 Studios, and our heart goes out to all those employees who were caught unaware and sent on their way. Hopefully each and every one of them can find employment with another game company.

Should 38 Studios file for bankruptcy and try to start again? How do you feel about Big Huge being collateral damage in this situation?

Source: WRPI