Matt Bai of The New York Times has authored a lively, comprehensive deconstruction of the downfall of 38 Studios, makers of Kingdoms of Amalur: Reckoning and a planned MMO. The story weaves in Rhode Island's political and cultural forces in explaining the debacle. It's a superb Sunday read.
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Honestly, aside from the fact that no one seemed to have any understanding of the business they were getting in, what surprised me the most was that Schilling honestly and earnestly believed he was going to create the world's greatest MMO, and he didn't see how he could fail . If they had built the universe up with smaller releases like Reckoning (which sold a respectable 1.5 mil), and then led up to creating the MMO six or seven years later, they would have had a reasonable chance of success. Going for the MMO first, however, was pretty much insta-death.
Seriously, everyone who tries to replicate WoW's success forgets that Warcraft was already a wildly popular franchise prior to the MMO.