LOS ANGELES--Midway Games has been in the limelight lately. In addition to announcing its numbers for 2005, which were (once again) in the red, the publisher has made a deal with Double Fusion for in-game ads, with Turbine to copublish the upcoming Lord of the Rings massively multiplayer online role-playing game, and with Tigon Studios, MTV, and Paramount Pictures--in a three-way deal--for an upcoming game and movie project.
With the next generation looming, third-party publishers have opportunities to explore new strategies that will help them become industry giants. However, is it wise to overlook the current generation and 2006?
At Midway's recent press event in Los Angeles, GameSpot News got some one-on-one face time with Midway's CEO, David Zucker, to find out how the house that publishes Mortal Kombat and Blitz: The League is handling the transition to the next console cycle and what's in store for 2006. With the sounds of the Sunset Strip in the background and the lights of Hollywood shining on him, GameSpot News got Zucker to spill the beans.
GameSpot: 2005, was as expected was tough on many publishers, including Midway. How was Midway specifically impacted for the recent quarter and the full year?
David Zucker: We had a flat year in terms of sales. But from a retailer standpoint, we're in good shape. Retailers were happy with our sales, and our inventory situation, and we're very focused on gaining market share in the next console transition. So 2005 and 2006 are all about making sure were putting the right building blocks in place for the next generation.
GS: What's your outlook for 2006 now?
DZ: It should be a solid year for us. We've got NBA Ballers: Phenom, which is the sequel to the million-plus-selling NBA Ballers. We've got Mortal Kombat [Armageddon], the Mortal Kombat to end all Mortal Kombats. We also have a new PC title, with Rise & Fall, and Spy Hunter [Nowhere to Run], a big project with The Rock, which is a big action driving game for this summer.
GS: Midway seems particularly excited about the next generation, not necessarily for 2006, but for 2007. What do you have up your sleeve?
DZ: We've got all or internal studios actively working on titles for next-generation. We've always been willing to take risks with new intellectual properties; we'll be doing that again with the next generation of consoles. I think the kind of things we're doing now, such as Stranglehold and The Wheelman, are good examples of what you'll see from us. We're taking multigenre action games, with driving, shooting, and fighting elements, and tying that gameplay together with compelling storylines.
GS: Late last year, you closed your Australian studios, formerly known as Ratbag, but you've also been adding studios, such as Pitbull in Newcastle, UK. Tell me about your new studios.
DZ: I got [to Midway] about two and a half years ago, and we were concerned we didn't have enough internal product development. Internal product development is critical for success in the next generation. We had to find ways to share technology, share systems, and we've more than doubled our internal product development capacity.
We've acquired five studios in the past few years, four of them we are very happy with. We think they're on the verge of becoming AAA studios--Seattle, Austin, Los Angeles, and Newcastle. One of them, the Australian studio, is a good studio, but it would require a little more work to get up to the kind of quality we need to have for next-generation, so we made the tough decision to close the studio late last year. But as a result of our other acquisitions, we have four new studios that are a critical part of our team now.
GS: Through these moves, you've streamlined Midway, with a focus more in internal production. Several of your studios will be working together on games, instead of each house churning out different titles. How does this affect the way you develop games?
DZ: External product development is always harder. You can make good games through external development, but with internal production you have much more control over the quality of the game. But for next-generation systems, these are $15-$20 million dollar games, it's really important to make sure you're not reinventing technology. We really don't want different studios doing the same kind of thing differently; it doesn't make sense.
Obviously every game is going to have its own unique features and technology, but there are certain basic elements you don't want to reinvent. You can get away with that when you are making $5-$10 million dollar games on the PlayStation 2, but you're going to go out of business if you do that with $15-$20 million dollar games. We've been very focused on getting our studios to share common techs.
GS: Midway recently moved into France, and you also have an outpost in Germany. How, from a strategic standpoint, is marketing different in those regions?
DZ: Midway was probably underserving Europe for some time. We had our own operation in the UK, but adding France and Germany over the last years has been critical.
Europe is an important part of our business. If you look at 2004, it was 18 percent of our revenue, last year; if you exclude Blitz, it was about 25 percent. Our goal is to get it up to about 35 percent. It's a big focus for us.
And if you look at the UK, France, and Germany together and it's about 60-70 percent of the revenue in Europe. So now we have the biggest part of that market that we control ourselves.
Our commitment to Europe is not just on the marketing side of things--it's also in the products themselves. Take our PC titles, like Rise & Fall; we expect them to do better in Europe than in the US. The Wheelman is actually set in Barcelona, so our commitment to Europe is not just in sales and marketing.
GS: You've announced that Mortal Kombat: Armageddon will be the last current-gen game for that franchise. What's the fate of current-generation systems with Midway?
DZ: For 2006 it's our primary focus. We've got NBA Ballers, Rampage, Spy Hunter, Mortal Kombat...those are all current-generation consoles. As we move into 2007, we'll be largely focused on next-gen.
GS: Don't you think that your Cartoon Network games will do much better on current-generation consoles?
DZ: Oh yeah, they will. We're not exclusively going to next-gen. We'll be doing current-generation games for years to come.
GS: How long do you think the shelf life is for current-generation consoles? How long until most gamers move on?
DZ: There is still a lot of software to sell on the PlayStation 2, even the Xbox this year. The PS2 is going to last a long time, especially in Europe, where the life will be even longer than here in the US. I think we'll be selling PS2 games in 2009, 2010.
GS: Going back to The Wheelman, with so many partners involved in the development of the multilayered project, does that change the process of developing the game itself?
DZ: One of the biggest problems we've seen with movie-licensed games is they often have this reputation of being not particularly good quality, although that's changing. One of the reasons for that is time, because it takes longer to make a game than a movie. By the time you license the rights to make a game based on a movie, you all of a sudden have 15 months to make a game, and that's never a good thing.
The Wheelman was our concept. We developed it at Midway. We started work on this game a year ago. We're well into making the game. Then we went out to Vin Diesel, then we went out to MTV, then we went out to Paramount. So the movie will start [production] well after the game's development, and I think if we do it the right way, the game will be a high-quality game, because we'll take the right amount of time to make that game.
MTV Films and Paramount will be making the movie on a separate track, that's not our expertise. Obviously, the stories and characters will overlap. We're very excited about it, we're really trying to do the whole movie-entertainment-music paradigm the right way from the ground floor up.
GS: With Vin Diesel and The Wheelman, TNA Wrestling, and John Woo and Chow Yun Fat in Stranglehold, Midway appears to be headed into the next generation with well-known names or familiar licenses. Is this the case? Is there a risk involved with developing new IP for a console's first games?
DZ: It's one of the great conundrums of the game business. If you look at the PS2, it's so important to get it right in the first half of the console cycle. Midway got it wrong in some regards, because it had a lot of new IP that wasn't particularly attractive.
GS: Can you give me some examples?
DZ: Freaky Flyers. I think we're at a juncture in the business. How many times are you going to give me the 16th iteration of...I'm not going to name the other products. There's a great opportunity to bring fresh new IP.
Grand Theft Auto started somewhere, right? Metal Gear Solid started somewhere. We think there's a great opportunity to launch new franchises in the next-generation. We're going to be very aggressive there. The stuff we'll be announcing later is new IP. They're new franchises, but they're not the sort of reckless new IP you might have gotten in the last console cycle.
GS: How does The Wheelman fit into that strategy?
DZ: I think The Wheelman is a good example. You know what The Wheelman, it's a new IP, but it's self-descriptive. Every gamer knows what that means. You have a vision of the guy driving that getaway car, you bring Vin Diesel to it, and you bring a movie to it. It's the same thing with Stranglehold. People know what a Hong Kong action film is.
We're doing things to minimize the "new IP effect" [consumers' skepticism on a project because of unfamiliarity] because I think it's a shame for the industry that the media gets excited about some of this new IP and the consumers aren't buying it. Most new IP fails. It's really a risky process. But we need new IP to regenerate and rejuvenate and keep this business fresh and to keep products fresh. The 20th iteration of a driving game isn't going to keep this industry growing. We think we owe it to the industry to come up with some new stuff and keep things fresh.
GS: Speaking of licenses and new IP, you proved a lot of people wrong with Blitz: The League, showing that a non-NFL-licensed football game can be a hit. But you've also got NBA Ballers, another big hit, which I think relies heavily on the license. What's you stance on sports licenses, do you think it's a case-by-case basis?
DZ: Yeah, case-by-case basis, definitely. Midway debated this years ago. They've always wanted to make Blitz. They've always wanted to make a game that wasn't shackled by the restrictions of the NFL. So for us, it was a natural choice. This is a game we've always wanted to make. I think you saw some of that passion in the game.
With baseball, who knows. We've got a license with SlugFest, but who knows... It's something we'll be looking at in the future.
GS: I've got a title for you if you want it. SlugFest: Corked.
DZ: [laughs] Maybe we'll use that.
GS: What about Unreal Tournament 2007, is that coming to any other platforms?
GS: No word?
DZ: To be determined.
GS: This one is just for me. Why didn't you include Xenophobe or Super Sprint in your Xbox Live Arcade titles? I love those games.
DZ: We may. We're working our way there. We have four [Xbox Live Arcade games] now, and five coming.
GS : How is Xbox Live Arcade doing for Midway? Is that really exciting for you to do?
DZ: We've been generally surprised by the response rate...the paid downloads are more than we expected. It's not going to change our economic success overnight, but it's a nice little business on the side, and we're glad that people are happy with the product. I think Xbox Live Arcade has been a surprise for a lot of people.
GS : Given the chance, would you explore similar opportunities with the PS3 or Revolution if those capabilities are implemented?
GS: Are you guys planning full support for the DS?
DZ: [pauses] We will have our first DS game this year. It hasn't been announced yet.
GS: What about the PS3?
DZ: Of course.
GS: And the Nintendo Revolution?
DZ: We will have our first Revolution title this year as well.
GS: Thank you very much, David.