Unlike for many companies, Midway Games' fiscal year is exactly the same as the calendar year. So while other companies are talking about their annual results, the Chicago-based publisher today reported earnings for its first financial quarter, which ended March 31.
The good news was that Midway's losses were only $19.8 million during the three-month period, versus a $22.6 million loss during the same quarter in 2006. Speaking with analysts in a conference call, Midway CFO and executive vice president Thomas Powell credited the reduced loss to robust holdover sales of holiday releases such as Mortal Kombat: Armageddon and the muliplatform film tie-in Happy Feet.
The reason Midway's biggest Q1 2007 sellers were the same as its biggest Q4 2006 sellers is that the publisher had no new releases during the quarter. The dearth of fresh titles caused Midway's quarterly revenue to slump from $15.4 million to $11.1 million, year over year.
With nothing much to mention in the first quarter, Powell and CEO David Zucker were eager to tout the recently launched The Lord of the Rings Online: The Shadows of Angmar. Midway copublished the massively multiplayer online role-playing game with its developer Turbine Inc., and Zucker claimed the game has had "significant sales" since its April 24 release. He did not go into specifics.
During the call, the two executives promoted Midway's upcoming slate of games. These include the reworked Wii edition of Mortal Kombat: Armageddon, due out May 29, and the World War II shooter Hour of Victory, due out for the Xbox 360 "in June." During the April-June quarter, the company expects to take in net revenues of approximately $29 million.
Zucker also narrowed the release window for Strangehold, the eagerly awaited game pseudo-sequel to the classic John Woo action film Hard Boiled. According to the executive, the PC, Xbox 360, and PlayStation 3 title "is expected in August." That puts it just ahead of a crowded fall season, which will include heavy hitters like Microsoft's Halo 3 and Take-Two's Grand Theft Auto IV.
"We feel very good about the games we have coming out," Zucker told analysts. "Stranglehold is our first major, ambitious next-generation title. It's the one to look at in terms of critical reception for what we're planning."
Further ahead, Midway will release BlackSite: Area 51 on the PC, 360, and PS3 in the fall. Zucker promised that a demo for the shooter is also in stores in order to "give gamers a look at this exceptional high-quality game led by [Midway Austin creative director] Harvey Smith."
Zucker said that the Vin Diesel-starring PS3/360 action game The Wheelman will also arrive "later in the year" but did not say anything about the game's film sibling. Finally, the PlayStation 2-exclusive Aqua Teen Hunger Force Zombie Ninja Pro-Am was confirmed to ship in the fall.
Curiously, little mention was made of what will likely be the biggest game on Midway's roster, Unreal Tournament III. Powell said only that the success of Gears of War has stirred up a lot of interest in the Epic Games shooter, which is set to ship for the PS3, 360, and PC "when it's done," according to a Midway rep.
The call was not without surprises. When an analyst asked if Midway had changed its development plans in light of the success of the Wii, Zucker said his company had always supported the platform. He then revealed that Midway is working on two Wii-exclusive titles that it will announce later in the year.
Other topics touched on were Midway's 2008 release schedule, which Zucker promised would feature a similar number of titles as 2007, but of a "more ambitious" nature. Powell also addressed the subject of income from downloadable content on Xbox Live Arcade and the PlayStation Store.
"Gauntlet, Smash TV, and Root Beer Tapper continue to be the top sellers on the Microsoft online store," Powell said. "We are launching on the PlayStation online store adding Championship Sprint, Mortal Kombat II and Rampage World Tour. ... We believe that this, in addition to downloadable items and expansion packs, as well as our growing base of in-game advertising, will become a meaningful revenue stream."
Midway's outlook for all of 2007 currently forecasts the company's net revenues to grow around 36 percent to $225 million with a net loss of approximately $0.44 per share.