What Happened to 38 Studios

Quarter to Three has put forth a pretty good write-up on the rise and fall of 38 Studios, and while the end result of the company's failure is no laughing matter, I can't help but appreciate the sarcastic humor that the author injects as he covers the last several years of MMO releases and the rising popularity of the free-to-play business model.  An excerpt:
Here's what the MMO landscape looked like in October 2006. World Of Warcraft was celebrating its second anniversary and doing huge numbers. Lord Of The Rings Online had just launched that spring and was capturing a nice niche of the market. Dungeons and Dragons Online had launched in February and was already sucking air. Dark Age Of Camelot was about at the end of its cycle. Everquest II was running a distant second to World of Warcraft in subscriptions, much to Sony's chagrin. Sony also had Star Wars Galaxies in the market space, but the bloom was really off that rose. Eve Online was doing well in its market segment. Guild Wars was preparing their first expansion.

In the development pipeline, Mythic was pulling all staff off their ill-conceived PVE Romans in Space game to work on their Warhammer Online, which started in 2005. Age Of Conan apparently had started a bit earlier than that. According to Mythic CEO Mark Jacobs, Warhammer Online would cost $60-70 million (including promotion) to bring to market in a three-and-a-half year development window that ended in fall of 2008. Age of Conan would cost about $50-60 million (including marketing) to come to market on a four to five year development cycle.


Move the timeline ahead to Spring 2009 and we're at two-and-a-half years in the development cycle of 38 Studios' MMO. The marketplace is already in some flux in the 30 months since the development house was formed. World of Warcraft continues to be a juggernaut. Warhammer Online, however, is clearly struggling six months after release, and Age Of Conan has failed to carve out the niche Funcom were hoping to find. Lord of the Rings Online is also faring poorly, while Dungeon and Dragons Online and Star Wars Galaxies are both on life support. Sony's Vanguard soft-launched in January of 2007 and never caught hold. The worldwide economy is in a dreadful state, and subscription-based MMO's seem to be taking the brunt of the hit in the games segment of the marketplace. In the spring of 2009, 38 Studios acquires Big Huge Games from THQ in a selloff that prevents the Maryland developer of Rise Of Nations from being shut down. Big Huge has been working on a single-player RPG of their own since 2006. When they're acquired, that RPG is re-dubbed (Project Mercury), and 38 Studios works with Big Huge to re-jigger the game's fantasy universe to match the setting and lore of their in-development MMO, which is now (Project Copernicus). It's likely at that acquisition that 38 Studios had some expectation that (Mercury) would be ready to launch by Q1 2011.

Fast forward a year. In March of 2010, 38 Studios may have signed their own death warrant by agreeing to a publishing deal with Electronic Arts for Project Mercury, although it may not have been obvious at the time. 38 Studios exchanges all future royalties for sales of the game for a $35 million advance from Electronic Arts. In other words, no matter how well Mercury sold, it would not be a revenue stream for the developer. But it's a unique and bold marketing concept: release a single-player open-ended RPG to establish the intellectual property and lay the groundwork for the lore and setting of an in-development MMO. In retrospect, it was also a doomed one. Reading the press releases and interviews at the time indicates that both 38 and Electronic Arts expected Mercury by no later than Q2 2011. In reality, it wouldn't arrive for 23 months.

In the meantime, the marketplace has really changed. Dungeons and Dragons Online, on the brink of collapse, goes (free to play) in late 2009, and even Turbine seems stunned by the success of the revenue model. By the start of 2010, they're already working on reconfiguring Lord of the Rings Online to a free-to-play game, and that re-launches in June. Warhammer Online, which Electronic Arts had banked quite a bit on, is clearly in ruins. Age Of Conan is stalled in a very small niche market. Star Wars Galaxies and Vanguard are dead games walking. Everquest II continues to enjoy a dedicated subscriber base, and new player Star Trek Online has just launched to favorable initial reviews.