Analysis: Brain drain is 38 Studios’ most pressing problem nowMay 22nd, 2012 at 5:12 pm by Ted Nesi under Nesi's Notes, On the Main Site
Most of the discussion around 38 Studios up to now has focused on the company’s cash crunch. But the biggest threat to its survival may be a related but different problem: the brain drain.
38 Studios’ roughly 300 Rhode Island employees are surely well aware of their company’s problems by now; even those who’ve somehow missed the headlines couldn’t have missed the fact that they failed to get paid last week. Other developers are starting to circle Providence like vultures, with an eye on snatching away the firm’s top talent.
The fact that other companies are already wooing 38 Studios’ workers is further evidence that they are highly skilled individuals who’ll be in demand across the region, particularly in nearby Boston. And for obvious reasons, it is 38 Studios’ best workers who will be in the most demand.
If too many of those top people bail, 38 Studios could be crippled in its efforts to right the ship and move forward on “Project Copernicus,” even if Curt Schilling somehow finds a deep-pocketed investor to get him through the current storm. That’s not a recipe for success – and without a successful game, there’s no way 38 Studios can pay off the $75 million loan backed by Rhode Islanders.
Governor Chafee’s public comments probably haven’t helped. The governor has revealed 38 Studios’ $4 million monthly costs and its new June 2013 release date, reiterated its problems attracting private funding, and generally failed to inspire much public confidence in its prospects. That’s put taxpayers’ money at even greater risk, albeit indirectly.
However, most of the blame rests squarely on Schilling and his management team.
They should have known once Chafee won office – which happened the same day they sold the $75 million in bonds – that they weren’t going to get more help from Rhode Island. That should have focused them like a laser beam on getting the game done and sticking to the 2010 deal’s stipulations. Their lack of disclosure has made taxpayers – and Chafee – even more wary of supporting the firm.
Before 38 Studios collapses, though, it’s worth discussing whether Chafee – and Rhode Island – are making a mistake by letting the company go under. That might feel good, but it won’t do anything to protect taxpayers from taking a sizable loss or to keep hundreds of high-skilled workers from leaving Providence en masse.
If there’s a reasonable way to throw 38 Studios a lifeline, it might be worth it. But time is running out.
(photo: 38 Studios)