Midway Q2 losses more than double to $34.8M

Listing publisher sees spurt of red ink in April-June quarter thanks to increased development costs, more losses predicted.

Today, the once-mighty Midway Games reported another lackluster quarter. The Chicago-based publisher suffered a $34.8 million loss, or $0.38 cents per share, on net revenues of $23.4 million. The shortfall was more than twice the $14.3 million, or $0.16 per share, Midway lost on revenues of $31.8 million during the same quarter last year.

In an after-earnings report conference call, interim CFO Ryan O'Desky blamed the shortfall on increased development costs. He told analysts that Midway used $32.9 million in cash on operations during the quarter, while "cash invested in next-generation technologies and product development projects totaled approximately $26.2 million." For the entire quarter, O'Desky said "capitalized product development costs [were] approximately $73.2 million, an increase of $11.6 million from the previous quarter." While hardly welcome, the losses were less than analysts' expectations.

Another major reason for Midway's poor April-June quarter was its slim release schedule, which saw only NBA Ballers: Chosen One hit US and Canadian PlayStation 3s and Xbox 360s. The publisher also released Unreal Tournament III for the 360 in Europe, but its July North American ship date just missed the end of the quarter.

Besides the 360 UTIII, Midway plans to release its first TNA iMPACT! wrestling game for the Wii, 360, PS3, and PlayStation 2 this quarter in September. However, the company's guidance still predicts a loss per share of $0.37 on net revenues of $52 million. Also, more than four months after longtime chief David Zucker's exit, the company is still looking for a permanent CEO, president, and CFO.

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64 comments
bananabutt
bananabutt

well shyt, They wouldnt be losing so much if they just released there games, Tna has been in the works like 2 years. all that time and money wpend making a game thats gonna only sell to hardcore wrestling fans, i mean non wrestling gamers will really dig the 6 sided ring and stuff but the game doesnt offer much, peopole that arnt wrestling fans are not gonna get "into" the deep gameplay mechanics that is the game offers. I think they will lose there ASSSSSSSES on it.

Negemite
Negemite

Well if they don't do something fast they will go bankrupt. Well I always liked their Cruis'n francise and other games too liked San Francisco Rush 2049. I will only metion about these two francises. Well who will make the next Cruis'n game? Maybe if they went bankrupt maybe Nintendo could make a Cruis'n game since they co-owned the francise and at the time that Midway Games went bankrupt. Nintendo maybe will offically own the series and maybe make another Cruis'n game on the Wii. I can't believe that Nintendo let Midway Games to port a unrelated game over to the Wii and called it Cruis'n. Well for the San Francisco Rush francise? Well I don't know but Atari co-owned the series and they will be bankrupt soon. So they might give that francise away to some other company like Activision or something. Well I don't know about their Mortal Kombat series. They might give them away to other companies like Sega or something. We will still have Midway's Arcade Treasures but made by differnet companies like Crave Entertainment. But who knows they might make a comeback.

tg17
tg17

they will make a comback

des_kong
des_kong

Hmm... sounds like goodbye Midway.

ParisSun
ParisSun

If they keep making crap games, they will sink. It's that simple.

GaussGoat
GaussGoat

There were people who thought that Capcom had lost their mind when they announced X-Men vs Street-Fighter, and I’m sure there were “purists” who thought it was the beginning of the end. Instead, look what happened… it took off in a big way, and spawned several games in a totally new series. The gameplay footage for MK vs DC looks freaking awesome, and I can’t wait to play it. Yes, it is not a gore-fest, but that hardly means the gameplay will be poor. I know that there are a lot of great people over there who are working their butts off to make that game awesome. Midway is going through a down time, but that hardly means they are out. I wish them success with their new projects.

El_Esbirro
El_Esbirro

Mortal Kombat was good on SNES...afterwards all it's been is a waste of button smashing crap! Now they wanna do a Marvel vs capcom deal of game? MK vs DC?? WTF??? that's not original, it's boring and unprovacative to buy. TNA right now, represents the only good thing happening...and it's only because everyone is sick and tired of Smackdown vs Raw. Man, am sorry to say this but midway is currently on the way out. Rehashing games like Gauntlet and NBA Jams and all of that old school stuff, is not happening nowadays, simply because all you have to do is websurf for a videogame NES/SNES site and play till your brain drops...most importantly, all this for free! Yes, NES/SNES games when Midway made them, back in the day, were awesome. But right now, If you want to bring those back, they MUST have an interesting story with an interesting twist. So doing the same old, lame old MK, using the Marvel vs capcom mechanic....dude am sorry but that sucks! On top of that, No CEO or CFO to direct the ship??? still to this date?? something smells really rotten. The only way to emerge, is what everyone here says, MAKE QUALITY GAMES! ciao!

erix43
erix43

Wow, the once great company that brought us Mortal Kombat is seeing loss. I feel for Midway just as much as I did for Atari. I am sure they will stick around if they beef things up a bit. Maybe they should consider making another "Suffering." Everyone forgets how great that game was on PS2 and Xbox. Ed Boon, go F*CK YOURSELF for selling out to some washed up DC comics idea. What kind of crap is that? You are seriously hurting the company nowadays. The whole MK thing got TOO CHEESY. I was a HUGE FAN, but now disappointed. Get your heads out of your A*SES and find fresh blood! Stop relying on "HAS BEENS." I LOVE MIDWAY! GET IT TOGETHER DUMMIES!! DITCH ED BOON and REVAMP THE MK SERIES-MAKE IT MORE DARK WITH BETTER STORY LINES! GO BACK TO THE BEGINNING! MK ONE! REDO IT!

titanviper2000
titanviper2000

Okay, what was the last great game Midway made? See my point?

jsmoke03
jsmoke03

i say merge with ubisoft and 2k. now that would make for a great publishing company with lots of great studios. 2k midsoft...great name

Sacred-Snow
Sacred-Snow

Midway has some bright looking titles, but I just don't know. We'll have to see how This is Vegas and MK turn out.

Sparktony
Sparktony

If TNA impact suck and MK vs. DC suck its over sry its the truth

bennae66
bennae66

in days of the super nes midway was one of the kings. they are now beggars on the street with 24 re-hashings of mortal kombat. its sad for me to think that they have no relevance in my life anymore. also though, the 'casual, extreme' game market has shrunk. nba jam on snes was good but now that wont keep a gamer entertained for more than an hour. take a page from bethesda or biowares book.

Hokkie
Hokkie

Midway has gone a long ways down the drain since "Next-gen" started. They used to be a household name for fun games. But now...they just offer wrestling games? They offered new ideas with games like Blitz, SF:Rush, Rampage, Mortal Kombat, and Gauntlet. But those ideas were taken and made better by other companys, that their ideas are now just "Good". No more Gimmicks like MK vs DC. Think of some new original content guys, or just merge with EA and stop the bleeding

badman11226
badman11226

yup cvp you are right. Midway just sucks on the next gen. They are going to keep losing until they file for bankrupt. so they better merge with another company to save some money. mk armageddon is one of the worst mk game i ever played. MK vs DC i dont know man hope its does well.

CVM_123
CVM_123

thats because they s*ck simple as that

digitalpro
digitalpro

LindBergh2007 . I was not trying to say you had anything against Midway. But I understand what you are saying. Right now I think the industry will survive the reccession. Now Midway is just a small part of the industry. Now If EA post a 35million loss then we need to worry. Now with movie downloads and other dl services out there, yu can see why DVDs sales are declining. Now some will be affected and if they put out good games and not rush them with glitches and other issues(don't they have testers for their games) If you look at the data. Game sells (games and consoles ) show that they are making money

toddze
toddze

Well I cant say I feel sorry for them, just because of the low game quality that they have been putting out recently

grigjd3
grigjd3

Wasn't Midway the Mortal Combat group? Doesn't seem like they've put out much of value lately.

crazyleftykid
crazyleftykid

well there's no other way to put this. that sucks. i think they'll make it through this, but idk, hard to tell..........

otanikun
otanikun

Oh noes! Midway, what's goin on guys! You'll pull through!

akiwak
akiwak

They invest in the best technology and yet we get Glitchfests from Area 51? So many games have been released that are not the most beautiful to look at BUT are really fun to play. the game doesn't have to be jutst good on the eyes it MUST have a great gaming experience!!! If they keep releasing such games then the company will of course continue to trip on itself.

Savior24
Savior24

LindBergh2007: Your argument is tenuous at best. Not "All" 3rd party developers are going to report a loss. Your acting like what has happened to this one developer is going to exponentially occur with every other 3rd party developer. Your closing statement was clearly implying this as well, but I think you need to seriously open your eyes and realize that this just isn't going to happen. The third and fourth quarters are going to have phenomenal sales for a lot of third party developers. Epic (Gears of War 2), Lucas Arts (Star Wars Force Unleashed), Capcom (Bionic Commando), LionHead Studios (Fable 2), Bethesda (Fallout 3), Insomniac (Resistance 2), etc..., and there will be many other developers that are going to have unbelievable third/fourth quarter sales as well. If you would look at the statistics, our economy is having absolutely no effect on the gaming industry. You need to understand that just because there are reports of "ONE" developer reporting a loss, doesn't mean that this is a universal trend for every other developer to be afraid of!

Maxor127
Maxor127

Yeah, the only game I'd MAYBE be interested in would be UT3, but that's more of a PC game and it's not my style of game anyways. I like more realistic shooters.

ecoite3000
ecoite3000

not surprising with the crap they make.

LindBergh2007
LindBergh2007

digitalpro I personally have nothing against Midway. I like them, I alway have. I just see this as the start of a trend. I don't want to be the harbringer of bad news, but I'm a realist. Does anyone think that the industry is going to survive without a crash in this reccession when electronics, Blu-Ray DVDs(the DVDs themselves not the players) and gaming software are the main mediums be affected by it?

digitalpro
digitalpro

LindBergh2007. PArt of your statement could happen but take at look at what Midway has release. NBA Ballers has never been a big seller in the first place. They choose to put UT3 out on the PS3 first and not the 360. That like selling your stuff in Kmarts before Walmart. With the 360 selling better then the PS3 at the time the UT 3 was release, that why their sells were bad. One thing is for sure. Make a great game and gamers will buy it. You put out a sub-par games and it will get around quick and no onw will buy it. It true high development cost are hurting game companies but it seem that the people making the games are either great( makers of MGS 4, GTA 4 or GOW 2) or not so great(makers of Alone in the dark and other games) Most of the time good games equal big profits.

mikemetroid5565
mikemetroid5565

Don't worry! They will kick some ass when Mk Vs DC comes out!

LindBergh2007
LindBergh2007

See! What did I tell you? These high development costs are hurting 3rd party publishers in the U.S. pretty soon, we'll see others struggle with these rising production cost. I'd like someone to try to argue against my theory. The economy is hurting, and retail sales reports are in and they are pretty appaling for the early summer 2008 if this trend continues, then you can certianly expect the U.S. game market to feel the effects. As we begin to see more publishers report losses, we will see the early stages of a 3rd party market crash and video game collapse, based on the start of the poor retail summer report, I don't see the 3Q outlook any better.

hunter8man
hunter8man

TNA, Blitz: The League 2, and MK vs. DC should help. I wish they would find a way to remake NBA Jam for next-gen systems that wouldn't suck.

kweeni
kweeni

wel the solution is quet simple: 1. make a good game with nice graphics awesome gameplay some violence and other stuff, a game u kno everyone will want and buy, bring it to as many platforms as possible, dont do any ports make it good on each platform, give it some hype and it will sell like hot cakes or 2. like ctg867 sed, team up with some other company and you might do better anyways doesn't mather what u do really, as long a you'll be doing good, btw no wonder that they're doing losses, haven't seen a good game from them in quet a wile now and ut3 isn't that good

dynomitemasta
dynomitemasta

Midway needs to change direction, their ideas are old and stale. If you took a chance like most great companies instead of trying to play it safe and failing, they would have a 50-50 chance of hitting on something good. NEW, GREAT franchises aren't born by playing it safe. We need constant and fresh stimulation as hardcore gamers for you to keep are interest and our loyalty in your back pocket. . . Give us something good, and we will buy it, every time.

raahsnavj
raahsnavj

Still looking for a CEO, president, and CFO... To me that sounds like a good time for the employees to grab what they can and make a run for it!

n3o_711
n3o_711

This may just be a minor fallback for Midway. It's just a matter of product release. Most likely, MK vs DC would more than fill the loss and perhaps be the big break for Midway. Perhaps not. lol Anyways, MK vs DC would definitely sell because of the hype and the distinct cross-over :)

TimmyNude
TimmyNude

They need to bring NHL Hitz back. I loved NHL Hitz 2003, I never played Pro. They need to bring back Blitz but make the gameplay better.

londonrider
londonrider

Well, if they will continue releasing sport games only, sooner than later they will be forced to close offices at all

Amir29
Amir29

I know that it seems that way, but this is not bad news at all folks. Many developers are preparing for Next Gen Systems. It's a large investment. But, most of that investment is only in it's initial phase. They are preparing themselves to compete with other developers, and I am happy to see they've made the investment to continue being at the top of their game (pardon the pun). Other developers have already expressed that they are looking to reduce the prduction costs as a remedy to stay afloat. That's just a waste of gaming system horse power and bad business with only a shor term plan. If companies like Midway (and another I can't remember) continue to rise and show they are willing to compete regardless of cost, gaming may not be lost to simple arcade style games and opportunist umbrella companies like EA.

trystkl1826
trystkl1826

Wow, the company is looking to fill three of the top positions. No one inside of the industry has stepped up? Doesn't seem that anyone wants the huge responsibility of lifting Midway out of the negative and no one wants to be blamed for it for it's failings.

combatsoldier
combatsoldier

I like Midway very much and they deliver many quality games that I do enjoy. I hope that they recoup thier losses. I will buy some of there new games to help if I can.

kos1085
kos1085

Wow...thats a lot of money lost. Hopefully TNA Impact and Mortal Kombat vs DC helps reduce those losses.

TheVGDude
TheVGDude

I hope TNA doesn't suck , based on the comments here! XD

Nemesis-03
Nemesis-03

OH nooooo EA's next target has arrived.

Sins-of-Mosin
Sins-of-Mosin

Sounds like Midway needs some new ideas. I laughed when I read that the only game they released was a horrible NBA game. Well duh, lets put some blame on that too besides development costs. The TNA game better induce some quick sales or I see layoffs in the future.

okassar
okassar

Midway should advertise more,simple as that.

NandoSupes
NandoSupes

bad news for Midway, the things is they put themselves on this position, if they made great games instead of crappy ones,they would not be losing so much money. theres too many competition out there. great games sell, crappy games don't. hopefully MK vs DC and This is Vegas will bring some revenue

da_chub
da_chub

EA will just buy them in a few months, and further attept to take over the video games world.

ONLYDOD
ONLYDOD

Sucks for Midway, they have some pretty cool looking games coming out, hopefully they will help them out.

Solid_Azeus
Solid_Azeus

i can be CEO. chose me i will guarantee a solid break even in 1 quarter with all my exploding ideas of what next gen should be gaming.