Report - 38 Studios spent $133 million on the way to bankruptcy

Financial documents allegedly show Kingdoms of Amalur developer 38 Studios spending huge money without a guaranteed source of revenue on its way to apparently inevitable collapse.

WRPI claims to have access to over 1,100 pages of documents detailing the studio's spending of $133 million over its lifetime.

Since its August 2006 founding and December 2011, 38 Studios noted expenses of $118 million. In the first quarter of 2012, it sepnt a further $15.4 million and brought in $27.7 million in revenue, thanks to Kingdoms of Amalur: Reckoning.

Founder Curt Schilling footed all bills, since the company wasn't bringing in any revenue, before being subsidised by a $75 million loan from the state of Rhode Island.

Analysts Michael Pachter and Mike Hicky both told the Rhode Island publication that the costs were in line with what they'd expect after six years working on MMO Project Copernicus. Pachter said if investors hadn't been scared off by the perceived under-performance of Star Wars: The Old Republic, 38 Studios could have secured more financing and survived.

But Rhode Island governor Lincoln Chafee, who has been sketched as something of a villain during the developer's collapse, said a few extra million wouldn't have helped.

"I just didn't see any evidence that another penny, another million, another $10 million, could get them to firm financial footing," he said.

"I never had that confidence and I was always reluctant to get in any deeper."

Chafee's comments are made easier to swallow by a report from earlier in the week in which Schilling admitted Copernicus wasn't up to scratch. In the same interview, Schilling admitted to bit spending; a Harvard Business School report estimated the company spent well beyond its start-up means; $705,000 on "travel and entertainment" for two years, for example.

"38 Studios was hemorrhaging cash - our cash," former Rhode Island Economic Development Corporation boss Saul Kaplan said.

"The thing that is most amazing to me is their burn rate was about $5 million a month all through 2011, heading into 2012, and it didn't slow down even when they knew they were running out of cash."

Thanks, Gamasutra.