Today, Interplay reported its quarterly earnings--a net loss of $900,000 for the quarter ending March 31, 2004. During the same quarter a year ago, the company reported a profit of $5.6 million. The news was especially bad, considering Interplay had largely staked its fortunes on two major titles, Baldur's Gate: Dark Alliance II and Fallout: Brotherhood of Steel, released during the quarter.
The effect of the two games' disappointing sales was made painfully clear by the 10-Q report Interplay filed with the US Securities and Exchange Commission. Buried inside this report was the revelation that Interplay will run out of cash in five weeks unless it receives an injection of capital. "The company anticipates its current cash reserves, plus its expected generation of cash from existing operations, will not be sufficient to fund its anticipated expenditures through the second quarter of fiscal 2004," read the report. "If we do not receive sufficient financing we may (i) liquidate assets, (ii) sell the company (iii) seek protection from our creditors including the filing of voluntary bankruptcy or being the subject of involuntary bankruptcy, and/or (iv) continue operations, but incur material harm to our business, operations or financial conditions."
Today's financials follow reports earlier this week that Caen faced a number of disgruntled employees seeking back pay. According to the Orange County Register, some of the more than 20 Interplay employees who claim they have not been paid since April confronted CEO Herve Caen at a meeting mediated by the California Division of Labor Standards Enforcement. A ruling will be made shortly on those complaints.
Despite its grim situation, Interplay issued a press release announcing an audacious plan to parlay its prized Fallout brand into a massively multiplayer role-playing game. A surprisingly upbeat Caen said in a statement that, "based on a detailed review of where our industry stands and the level of interest in the gaming community in taking some of our premier properties online, we are now pursuing several options to fund our entry into massively multiplayer online gaming with titles including Fallout."
Caen expressed optimism that catapulting the Fallout universe into the online arena could reverse the fortunes of the once-successful developer and publisher. "Initial feedback from our investment bank and ongoing dialogue with others in the gaming sector, appear to confirm that the combination of our valuable and popular intellectual properties with the rapidly growing online gaming community is the best way to maximize Interplay shareholder value," Caen said.
Today's developments follow a recent spate of bad luck for Interplay. In the past few months, the publisher has been temporarily shut down by state labor officials, threatened with eviction, sued by BioWare and Warner Bros., and has had its Web site go offline indefinitely. Nonetheless, Caen is chipper about his company's future. "Several short-term obstacles remain for Interplay, [but] management is focused on simultaneously financing and executing our new long-term strategy and finding ways to solve these short-term issues."