38 Studios' Loan Guarantee Under Fire
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Their concerns center on the size of the loan, the risk to Rhode Island's taxpayers and the wisdom of guaranteeing a multimillion-dollar loan in a business where failure is more common than success. Adding to their concern is the fact that 38 Studios has yet to bring a product to the market.
The company plans to release two products, although it has not yet said when they will be available. The first is a single-player game, code-named Mercury, playable on game consoles and personal computers. 38 Studios has signed a deal with industry giant EA to distribute the game.
The larger product is an MMOG, or massive multiplayer online game, in which thousands of players can play online at the same time. Both games will be set in the same fantasy world.
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Keith Stokes, executive director of the EDC, said the terms and conditions will not be public until they are first reviewed and approved by the EDC board, which he said is standard practice. The board meets Thursday at 10 a.m.
Interestingly, the state would take ownership of the IP if 38 Studios wasn't able to pay back the loan:
Stokes said the EDC has hired consultants familiar with the video-game industry, closely examined 38 Studio's books, and has access to research from Wells Fargo and Electronic Arts.
Stokes said the state has included financial penalties, payable to the EDC, if 38 Studios does not provide at least 400 jobs in Rhode Island by the end of 2012. The company said it employs 180 people at its Maynard, Mass., headquarters and another 80 in Maryland.
Stokes also said the state would be in the first position to claim any assets, including intellectual property and any revenues 38 Studios receives.
Thanks, Blue's News.
