Curt Schilling's 38 Studios, a video game maker, laid off its entire staff in Rhode Island and Maryland on Thursday.

The video game company, which received a $75 million loan to move its business to Rhode Island in 2010, called the firing of more than 300 employees absolutely necessary.

The company is experiencing an economic downturn, an email statement from 38 Studios said. To avoid further losses and possibility of retrenchment, the company has decided that a companywide lay off is absolutely necessary.

The shuttering of 38 Studios comes just months after it released its first video game, Kingdoms of Amalur: Reckoning. The game was relatively well-received and sold an estimated 1.2 million units, but that was less than half of the break-even point, according to the Boston Globe.  The lack of financial success led to the company becoming unable to make its May 15 payroll.

The company also failed to pay the state of Rhode Island a $1.1 million payment due to insufficient funds.

38 Studios' move to lay off its entire staff caught Rhode Island Gov. Lincoln Chafee completely off-guard. Chafee and the state of Rhode Island had been in communication with the studios about its plans, but no one from 38 Studios told Chafee or his staff about its plans to close down.

Chafee told reporters at a news conference on Thursday that despite the layoffs, he wasn't going to abandon trying to save the company. The state would likely look at some different options to revamp the company or risk being on the hook for the majority of the initial $75 million loan.

I have not given up,'' he said. But I am also a realist. What we've learned from [industry] experts is grim news. Very, very grim.''

The company, named after Schilling's baseball number, has also spent a lot of money in developing a multi-player, role-playing game called, Copernicus. It's now doubtful that Copernicus will ever hit the market, despite the heavy investment in it.