In a decision Wednesday allowing the R.I. Economic Development Corporation to sell off 38 Studios’ assets, a federal judge barred the agency from selling “collateral containing any Epic Games Inc. software without Epic’s consent or order of the state court with jurisdiction over the receivership after prior notice to Epic.”
"And Schiller dug deep in their pockets and handed them back enough change to get them home that night on the bus. And they bent over."
There's a lot of hostility towards Schilling (not Schiller, btw), but had the company been better managed and the project even modestly succeeded, the deal would have been great for both 38 Studios and RI.
38 Studios got some money up front in exchange for subjecting its employees to RI's income tax rates in the future. RI was not some innocent bystander. They took a risk, a small risk in the big scheme of things, for the chance at a far bigger reward. That's why states have Economic Development departments. They spend some taxpayer dollars in hopes of attracting businesses for the long term. Had the loan guarantee not gone to 38 Studios, it would have gone to some other company, probably with a much more limited upside.
Had 38 Studios succeeded, RI would have gotten the money for it's loan back, and it would have had a few hundred well-paid tech workers paying income tax, the company paying corporate tax, workers compensation taxes, etc. Then there would be all the extra jobs that would be created by the presence of a successful technology company. Then there was also another upside of RI possibly becoming, as youd said, a new technology hub. If 38 had succeeded, experienced employees would no doubt break off and create new games, attract new investment, etc.
RI's governor didn't just get charmed one day and issue the loan guarantee. RI did the financial modeling and saw the tremendous upside, and considering the loan was really only for $17 million (half the loan was kept in an escrow account to make the interest payments on the loan for the first 2 years as the game was developed).
Had 38 Studios' efforts worked out, RI would have reaped incredible benefits. As it stands now, the state is probably in the hole for about $10-15 million. If they sell the IP for $5-10 million (and considering they've already reaped several million in income taxes from employees as well as other taxes), they'll almost break even. Considering the rewards that RI _could_ have had, it probably was worth the gamble.
Given the crappy condition Providence and RI are in, the governor at the time had limited options for attracting companies to the area. They needed to take some kind of risk, and again, considering the upside for a such a small loan guarantee. Investing in a tech company that had already attracted over $100 million in private investment (i.e., it had been "vetted" by the private sector) was probably better than taking that money and throwing it at some politically connected scheme that is the common MO for these state Economic Development departments.
In a decision Wednesday allowing the R.I. Economic Development Corporation to sell off 38 Studios’ assets, a federal judge barred the agency from selling “collateral containing any Epic Games Inc. software without Epic’s consent or order of the state court with jurisdiction over the receivership after prior notice to Epic.”
Since 38 Studios were using the Unreal engine, I think this just means that whoever buys the assets can't just keep using the engine and publish the game without agreeing to the deal 38 Studios has worked out with Epic. These companies usually get a chunk of the game's revenue in return for not charging much initially for use of the engine while developing the game.
Also with the news that Big Huge Games was basically recreated by Epic, there's a strong likelihood they'll shell out $5-10 million for the KoA IP. In the interim, RI owns the IP, so the $10 DLC for the next release will probably make RI a few million right there.
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From WPRI:
In a decision Wednesday allowing the R.I. Economic Development Corporation to sell off 38 Studios’ assets, a federal judge barred the agency from selling “collateral containing any Epic Games Inc. software without Epic’s consent or order of the state court with jurisdiction over the receivership after prior notice to Epic.”
"And Schiller dug deep in their pockets and handed them back enough change to get them home that night on the bus. And they bent over."
There's a lot of hostility towards Schilling (not Schiller, btw), but had the company been better managed and the project even modestly succeeded, the deal would have been great for both 38 Studios and RI.
38 Studios got some money up front in exchange for subjecting its employees to RI's income tax rates in the future. RI was not some innocent bystander. They took a risk, a small risk in the big scheme of things, for the chance at a far bigger reward. That's why states have Economic Development departments. They spend some taxpayer dollars in hopes of attracting businesses for the long term. Had the loan guarantee not gone to 38 Studios, it would have gone to some other company, probably with a much more limited upside.
Had 38 Studios succeeded, RI would have gotten the money for it's loan back, and it would have had a few hundred well-paid tech workers paying income tax, the company paying corporate tax, workers compensation taxes, etc. Then there would be all the extra jobs that would be created by the presence of a successful technology company. Then there was also another upside of RI possibly becoming, as youd said, a new technology hub. If 38 had succeeded, experienced employees would no doubt break off and create new games, attract new investment, etc.
RI's governor didn't just get charmed one day and issue the loan guarantee. RI did the financial modeling and saw the tremendous upside, and considering the loan was really only for $17 million (half the loan was kept in an escrow account to make the interest payments on the loan for the first 2 years as the game was developed).
Had 38 Studios' efforts worked out, RI would have reaped incredible benefits. As it stands now, the state is probably in the hole for about $10-15 million. If they sell the IP for $5-10 million (and considering they've already reaped several million in income taxes from employees as well as other taxes), they'll almost break even. Considering the rewards that RI _could_ have had, it probably was worth the gamble.
Given the crappy condition Providence and RI are in, the governor at the time had limited options for attracting companies to the area. They needed to take some kind of risk, and again, considering the upside for a such a small loan guarantee. Investing in a tech company that had already attracted over $100 million in private investment (i.e., it had been "vetted" by the private sector) was probably better than taking that money and throwing it at some politically connected scheme that is the common MO for these state Economic Development departments.
Since 38 Studios were using the Unreal engine, I think this just means that whoever buys the assets can't just keep using the engine and publish the game without agreeing to the deal 38 Studios has worked out with Epic. These companies usually get a chunk of the game's revenue in return for not charging much initially for use of the engine while developing the game.