The Week The Music Died

It’s hard to overstate how difficult this week was for what remains of the MMO industry.

First off,  Bioware took an axe to the Old Republic team. No official numbers on how many were let go, but most people I’ve talked to put the total bloodletting at somewhere in the neighborhood 0f 200 people… 40% of the studio.  This after EA went through contortion after contortion trying to first boost then mask subscriber numbers (at one point giving most players a free month of time) finally coming out and saying that the most expensive game ever produced (my initial estimate of $150m  was at least $50m low) wasn’t really that important and why are you people so interested in it anyway? So, a retrenchment of the team, which never really underwent the usual post-launch pruning, was inevitable.

You’d think the loss of 40% of the team working on the highest profile MMO release of the year would be hard to top, but hand it to Curt Schilling, he stepped up to the plate without fanfare, knocked it out of the park, into the bleachers, and  straight into the record books with a company explosion so painfully drawn out and mismanaged that it may have poisoned the well for anyone ever considering investing in an MMO company. Lest you think I’m exaggerating, let me direct you to a press conference by the esteemed Governor of Rhode Island trying to explain the mystery of role playing game sell-through, team burn rate, and why those games are so sexy and violent, anyway. Or just check any media source in Rhode Island or Massachusetts, with people with no connection to gaming other than, you know, paying taxes, furious that they, through the state, apparently now are on the hook for $90 million dollars to pay, among other things, a cool $1.4 million to R. A. Salvatore to come up with synonyms for the word “drow”. (At least, until the company collapsed, at which point Salvatore, as a stakeholder along with Rhode Island taxpayers, lost any hope of being paid.) Coincidentally, that is also close to what 38 Studios paid the state of Rhode Island this month in lieu of paying the people who worked there.

While all this was happening, 38Studios employees were kept completely in the dark. Their first warning was when payroll checks stopped showing up in their bank accounts. The final warning was a dismissal letter showing all the compassion of Ayn Rand towards welfare recipients.

And that’s just what’s on the public record so far. The rumors that have been surrounding this total collapse/clusterbomb have made the above look like a case study in business management. Insurance plans unpaid for months (and literally uncovered by pregnant women informed by their doctor that their insurance expired) ensuring that the newly laid off employees are disqualified for COBRA and liable for pre-existing conditions with new plans, relocation/home sales packages so badly mismanaged that ‘beneficiaries’ turned out to be liable for two mortgages and back taxes due to lack of payment, the list goes on.

Through all this, the 38Studios employees have shown an unbelievable loyalty to Curt Schilling himself. From everything I’ve heard, publicly and privately, Curt Schilling is a great guy, generous to a fault, and a gamer way back before it was ever considered cool much less a path to wealth, and has sunk over $30m of his own cash into the company.

However, Schilling is also a very wealthy man (over $114m over the length of his career), and a political conservative who has consistently demanded that government not be involved in the private sphere, except where he is involved. There is a word for that and it isn’t “great” or “generous”, it is “ragingly hypocritical“. But even beyond that, Schilling failed the 400 people who depended on him.

I’m told that most of the people affected by the Old Republic layoffs had plenty of warning what was about to happen, specifically because during a company meeting Greg Zeschuk, one of Bioware’s founders and the studio head, was honest and forthright about the challenges facing the company and what his people could probably expect. When faced with the prospect of failure, he stepped up and said hard things that no doubt hurt him deeply and personally, because his people were owed that much.

Schilling did not. Instead he continued to squander what little operating capital the company had left to it trying to continue drawing public taxpayer money into what by that point could almost be considered a Ponzi scheme, while keeping the vast majority of his employees completely unaware of how final the situation was.

Loyalty matters, but character also matters. And in this case, Schilling’s failure of character has damaged an industry, to the point where it may be years before we see another investment in MMOs. I am loathe to link to anything said by the possibly sentient Michael Pachter, but even a stopped watch is right twice a day. The MMO industry in general is in deep trouble this year, and Schilling this month pile-drived it even further into the concrete.

I have nothing but sympathy for the now-unemployed former colleagues of Schilling at 38, and I know from my own time working in the trenches that many of them will violently object to much of what I have said here. But I think the direction that our industry is going – the incredible amount of money wasted by EA on what was essentially a roll of the dice that came up 2 and 3, and the even more incredible display of massive hubris and utter incompetence on the part of Schilling and his management team, is killing the very concept of massively multiplayer gaming.

Addendum: Steve “Moorgard” Danuser, creative director and the self-described “Czar of Amalur” has a different perspective: it’s all the Governor’s fault.

We just needed a little more help, and we thought the state would have our backs on that,” said Steve Danuser, one of the creative minds at Curt Schillings 38 Studios.  “We thought the governor was an ally. It didn’t turn out that way.”

“We’ve really loved it here…we bought homes, we’ve helped the businesses in the area,” said Danuser.

“The governor has turned his back on a lot of taxpaying Rhode Island citizens who work here and it’s unfortunate because we had a lot of great people who wanted to contribute to Rhode Island and now they can’t.”

The “Czar of Amalur” says he has a few questions for the governor.

“Why did you do it? Why didn’t you help us?” asked Danuser. “He (the governor) said a lot of things, he’s broken confidentiality. He’s done a lot of things to materially hurt us and I don’t understand it.”

My comment on the above: Um.

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