38 Studios just laid off all of their employees today. They even shutdown their Rhode Island office and even Big Huge Games based in Maryland. No word of lay offs have been made so this move shocked a great deal of people, including Lincoln Chafee, the governor of Rhode Island.

WPRI is reporting that this is the letter sent to all of its Providence and Baltimore employees this afternoon:

"The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.

These layoffs are non-voluntary and non-disciplinary.

This is your official notice of lay off, effective today, Thursday, May 24th, 2012."

Chafee says the studios’ closure was due to their first game, Kingdoms of Amalur: Reckoning, which sold only 1.2 million copies in its first 90-days but needed to sell 3 million copies just to break even. That’s quite a large deficit. The game was well-received, but all in all, Chafee says the game “failed.” The game was integral to the success of the company, but unfortunately it didn’t go in their favor.

The biggest question now if what’s going to happen to the $75 million loan dispute? 38 Studios was lured to Rhode Island in 2010 by a $75-million loan guarantee from the state. Officials argued that the studio would bring hundreds of jobs and millions in tax revenue to the state. Though that may be true, it turns out the move was an unfavorable gamble. It was quite obvious 38 Studios was having financial problems when they made a payment for $1.25 million but bounced the check prior to the payment. They also couldn’t afford to pay their employees and even requested an additional loan from the state.

Of course, because of this, the governor’s office is still trying to figure out a way for 38 Studios to keep going. If the studio goes completely under, that’ll leave the state to pay the bank, which in today’s economy would be relatively detrimental. I don’t have much to say to this. It’s kind of sad to see a gaming company just completely go away.

As reports say, 38 Studios had 379 employees as of March 2012. All gone now and unemployed. Two offices, one in Rhode Island and Big Huge Games from Maryland are gone as well. I just wish everyone involved the best of luck in their future endeavors and hopefully Rhode Island, and what’s left of 38-Studios will figure out a good solution.