38 Studios | Unfinished Game the Last Prized Asset

Article excerpt

PROVIDENCE - As one lawyer for Rhode Island makes the state's case this week against the people involved in the 38 Studios loan debacle, another is ready to sell the company's video games - once intended as progenitors of a new industry here.

"Who knows what the value ultimately will be?" said Providence lawyer Richard J. Land. "But there is interest in the assets.

"We're at the point where we need to get out there," Land said.

As Rhode Islanders learned too late, the video-game industry is hit-driven and volatile. "Kingdoms of Amalur: Reckoning," 38 Studios' first video game, failed to meet its sales projections. That left 38 Studios scrambling for cash. The company filed for bankruptcy in June 2012, leaving the state's taxpayers potentially liable for roughly $100 million in principal and interest on bonds sold to back a loan to 38 Studios.

A Rhode Island Superior Court judge in August named Land as receiver for the defunct company. As receiver, Land's role is to sell off 38 Studios' assets to help pay back some of the $130 million in debt left behind by the company founded by former Red Sox pitcher Curt Schilling.

(The state sued Schilling and 13 others in November in a separate attempt to recoup its money. A hearing in that case is set for Wednesday.)

Land supervised two auctions - one in Timonium, Md., the other in Providence - last year to sell office furniture, computer equipment and other hard goods once belonging to 38 Studios. Those sales, together, raised less than $1 million.

The company's most valuable assets were its intellectual property - the drawings, designs and work related to its video games and the computer software supporting the games. For instance, the company valued its Helios software platform - its customer relationship and marketing platform management system - at $3.75 million. The system went hand-in-hand with the video games but can be sold separately.

The intellectual property rights to "Kingdoms of Amalur: Reckoning" belong to the creditors of 38 Studios - primarily the state. The distribution rights to "Reckoning" belong to Electronic Arts, the California video-game company that advanced 38 Studios money to develop the game.

Land manages that as a separate asset of 38 Studios, which can be sold on its own.

There are other games in the collection, developed or overseen by 38 Studios' subsidiary Big Huge Games. The most important game, though, is the one 38 Studios never finished.

Code-named "Copernicus," it was intended to be a massive multi- player online game. The world was created by fantasy novelist R.A. Salvatore, and comic-book artist Todd McFarlane oversaw art direction. They supervised writers and artists working at 38 Studios. …

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