Wednesday, 11 August 2010

38 Studios Loan Draws Criticism



The potential $75m USD loan that the State of Rhode Island is promising 38 Studios is drawing criticism from prominent politicians from the area. Former Sen. Lincoln Chafee, who is running for Govenor as an independent candidate, has asked the Rhode Island Economic Development Corporation to suspend its commitment due to the high risk involved, as well as what he called "the absence of process". This is to go with state Treasurer Frank T. Caprio, a Democrat who is also running for Govenor, who on Friday sent a similar letter to the EDC, requesting equity in the company. The loan takes up 60% of a programme that is meant to fund "knowledge-based" industry in the state, and was key in getting the company's owner, former Boston Red Sox pitcher Curt Schilling, to move his company from Massachusetts.

On a UK based website, there are some that don't quite understand what Curt Schilling means to New England, an area that includes the states of Rhode Island and Massachusetts. In 2004, Schilling pitched two critical games for the Red Sox - the most popular sports team in the region, by far - with a torn tendon in his right (push-off) ankle, the first of which went down in history as the "Bloody Sock" game that propelled Boston to their first Championship since 1918. Let me try to draw a parallel for the British as to how revered Schilling is for this: imagine England, instead of soiling themselves against Germany, made the World Cup final, and Wayne Rooney scored two goals to help them win the game, while playing on a torn MCL. The reverence that Rooney would experience is parallel to how much New England loves Schilling.

Under the light of those circumstances, it's a little easier to see why Rhode Island would extend that much money to a company that has put out no games and is entering a field - MMOs - that has a massive failure rate and a clear alpha dog (World of Warcraft) that is virtually untouchable. It doesn't make it a good decision, however. Though the statistic is not sourced, the Providence Business Journal notes that 90% of game companies fail; I question that stat, but there's some truth to the fact that it's an extremely high-risk venture, and that politicians are right to question it. The fact that they extended a loan that no one would ever extend to a company without such a famous owner, ostensibly with the amount of control that a little girl would have if she met Justin Bieber, is highly questionable indeed.

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