Things are quickly going from bad to worse as fledgling game developer, 38 Studios, the studio behind the mildly successful Kingdoms of Amalur: Reckoning, continues its painful-to-watch meltdown.
We recently discussed the massive loan the developer has taken out through the state of Rhode Island and the missed payments that sparked this whole controversy. Now it appears that both the CEO, Jennifer MacLean, and Senior Vice President, John Blakely, have left the company.
Meanwhile, employees are still working without pay and their health coverage will end Thursday. Sources told Joystiq that there's no way of saying whether the studio itself will shut down this week, but the " Outlook is not good."
The developer is currently working on an MMORPG code-named "Project Copernicus" which may be at the center of the company's financial woes. An MMO isn't just a massively-multiplayer game, it's also a massive - and expensive - project, especially for a young developer with only one published IP.
If the studio does sink, the taxpayers of Rhode Island would be on the hook for as much as $112 million. The state taking over the developer's assets, including Amalur, would be small consolation.
Meanwhile, 38 Studios may not be eligible for millions of dollars of state tax credits in Rhode Island because the company is incorporated in Delaware, and registered in Rhode Island as an out-of-state LLC.
"The shakiness of this company is a tragedy for Rhode Island," Rhode Island governor Lincoln Chafee said.
It's hard to imagine anything turning out for the better at this point. Nobody is going to touch a failing developer with a massive debt burden and only one IP to its name. From what little we know, it seems like a case of bad management, badly managed funds, and projects much too big for 38 Studios' small shoes.
If the company does capsize, we'll likely find out exactly what happened. So far Curt Schilling, the company founder, has only taken to Facebook to defend the company and thank fans for their support.
Follow me on Twitter or Facebook. Read my Forbes blog here.
