On Saturday Lincoln D. Chafee wrote an opinion article at projo.com and I take issue with what he had to say. Unlike his article here I will be linking to actual news sources to back up what I am saying so I don’t appear to be talking out my ass.

Rhode Islanders love the Boston Red Sox — most of us do, anyway — but that does not mean we would expect taxpayers to foot the bill for the astronomical salaries that star players command. As we fight our way out of the current recession, we need to ask hard questions about the plan to ask our taxpayers to pay $75 million to Curt Schilling and his 38 Studios to develop an untested video game in hopes that it will jumpstart the economy.

First of all the taxpayers are not paying any money to 38 Studios. The state is only co-signing the loan and would only have to pay if the company defaults on the loan. It’s my understanding that the state is only offering moral obligation bonds which are high risk for the investor as there is no legal requirement for the state to pay anything if the company defaults on the loan. [Source] Interesting how no one talks about that particular fact.

Second the company is creating more than just one game and I am unaware of any game development studio who has ever produced a tested video game. At the end of the day its the gamers who buy the game who decided if its good enough and impossible for any company to test prior to release other then a beta and all companies do this. Gamers will also tell you many experienced companies have produced crappy games so really the fact that 38 Studios has not released one means nothing. What matters is do the people creating the games have experience doing so and for 38 Studios and the company they purchased Big Huge Games the resounding answers is yes. They are not a bunch of kids just out of school with no practical experience producing video games they are seasoned professionals with many hit games under their belts.

Make no mistake — this is a heavy burden to ask Rhode Islanders to bear. The $75 million offered by the Rhode Island Economic Development Corporation represents 60 percent of our state’s newly authorized technology-loan-guarantee fund. As one who has a philosophical aversion to any risky deal for our taxpayers, I have three concerns.

First, I am troubled that Massachusetts did not pursue 38 Studios with anything close to the amount of incentives that RIEDC has offered. A spokesperson for the Massachusetts Department of Housing and Economic Development flatly stated: “We as an administration have never offered such a large incentive to lure a company to Massachusetts from any of our neighboring states, and we never would.” If 38 Studios holds the promise that justifies risking the majority of our available loan guarantee, why did Massachusetts take a pass on it?

Massachusetts did not have any kind of program in place to offer 38 Studios so even if they wanted to they couldn’t. About 20 states offer financial incentives aimed at video game development companies, but Massachusetts isn’t one of them. So just because Massachusetts didn’t offer any major incentive for 38 Studios to stay does not mean the company was not worth investing in as your implying. It simply means that the state feels it already has enough of a gaming development cluster in place that it does not have to offer that kind of incentive to draw or keep companies in the state. Rhode Island does not have an established gaming development cluster and thus has to offer other kinds of incentives to attract companies as do other states. [Source]

Second, the consulting firm hired by RIEDC to evaluate the 38 Studios deal (Strategy Analytics) cited three markets — Boston, Montreal and Austin — as instructional in Rhode Island’s considerations. However, in none of those three markets did government support even to begin to approach what Rhode Island has offered. Boston offered no support until well after the market was established, Montreal offered a partial tax credit on labor costs, and Austin offered a minuscule 5 percent game-development tax break.

Correct. As I noted in response to your first point these 3 markets or Clusters as Strategy Analytics called them have established gaming companies and thus don’t really need to offer major incentives to companies because of everything else these clusters provide. They also developed in a different time frame and economic climate than today.

Boston
- Grew out of incubation with MIT Media Labs, availability of capital
- Spawned new game developers as a result of academic base/talent
- Little government stimulus or involvement until more recently
- Now, Harmonix (Guitar Hero), Turbine (Lord of the Rings), others reside in Boston

Montreal
- Ubisoft was anchor tenant in mid-90s
- Recruited to area as result of language and tax credit of 37.5% on labor costs
- Blockbuster hits from Ubisoft attracted EA’s attention
- Currently Ubisoft has 2000 headcount under one roof in Montreal
- Government and industry are aggressive in promoting the video game cluster

Austin
- Early legendary game developer, Richard Garriott, grew up in Austin and found Origin Systems, later acquired by EA
- Nearly all game developers in Austin have roots in Origin/EA
- 5% game development tax break
- Strong academic tie-ins for technical and creative support
- Home to Digital Media Council – fosters academic/government/industry collaboration

[Source]

So considering what these 3 gaming clusters have to offer what does Rhode Island have to offer? It has RISD which is great but what major game studio is the anchor? You ask why 60% well that’s to secure the anchor tenant for Rhode Island and the other 40% is to help attract other smaller companies and startups to the state and all of a sudden you have your very own cluster in Rhode Island. So at the end of the day for co-signing 125 million in loans the RIEDC has created its very own cluster in a state that had nothing prior. If successful they will have done so without ever spending a dime of taxpayer money.

Third, and even more troubling, are recent reports that 38 Studios’ lead product, the video game “Kingdoms of Amalur,” received a guarded forecast of success from game bloggers and gaming professionals at the recent Comic-Con trade show in San Diego. Why has Rhode Island gambled so much for an unproven company that seeks to compete in a volatile, high-risk industry?

First you did not even get the name of the game right, it’s not Kingdoms of Amalur it’s Kindgoms of Amalur: Reckoning. Kingdoms of Amalur is the original IP that 38 Studios has created and covers 10,000 years of lore and history in which many games including the yet unnamed MMORPG code named “Copernicus” will be set in. I would also like for you to list / link these so called troubling reports. Considering they have only announced the name of the game and released a CGI trailer and a few screen shots we know nothing about the game and no one can really say anything about the success of the game. But here is a list of positive press by major gaming sites about the game. [Source]

Or better yet just read all the articles posted on my site.

“38 Studios is doing everything right to minimize the risk of failure,” Michael Pachter, an analyst at Wedbush Securities in Los Angeles, said in an e-mail. “The key to a successful MMO is a great story, compelling art, and a well-crafted game.

“Much like the movie industry, investment in quality personnel doesn’t always pay off, but it considerably improves the prospects for success,” Pachter added. “My guess is that [38 Studios] will succeed, but it’s really hard to forecast without seeing the game,” Pachter said.

The only person I saw saying anything negative is Mike Hickey who I take to task here.

I am not going to respond to the rest of you’re article as I think it’s very clear at this point your not really about trying to do anything other then trying to delay the RIEDC deal until you become govenor and can stop it completely. You have already stated if you become governor you won’t allow these kind of deals. It would be great to see you invest your time and energy in what you would do to help attract companies and jobs to the state of Rhode Island instead of what your willing to do to stop it.

I was not going to comment on the reports coming out in regards to the Rhode Island EDC decision that will see 38 Studios move to Rhode Island from its current location as its mostly people trying to score political points. However Demiurge Studios decided to get involved by posting an open letter to Curt Schilling that ended up getting reported on by Joystiq and then expanded on by Gamasutra.

If this was a sincere letter from Bill Reed to Curt Schilling why make it public? I agree with Bill’s argument for an established company that already has money coming in from existing product lines. However 38 Studios is still in the start up / development stage and thus the overall need right now is capital to ensure they can afford those talented people to create a product and get revenue rolling in. As a CEO Bill should know this and thus why I see this as a lame attempt to try and lure talent away from 38 Studios, especially when he ends it with…

If anyone on the talented 38 Studios team wants to stay in Massachusetts, where we play major-league ball, they’re more than welcome to join the team at Demiurge Studios, the state’s soon-to-be largest independent game studio.

Shame on you Bill!