Midway cancels two game licenses, nearly doubles projected Q3 loss

[UPDATE] Publisher ends deal for one internally, one externally developed game based on non-owned IPs; list of suspects includes NBA Ballers, Cartoon Network; Unreal Tournament unaffected.

On Tuesday and with much fanfare, Midway Games revealed the November 16 release date for Mortal Kombat vs. DC. Yesterday, the company made a much lower-key announcement that it will cease publishing games based on two licensed intellectual properties currently in its portfolio. In a brief press release, the company said that it had "come to mutually beneficial terms with licensing partners resulting in the cancellation of future versions of related game properties and associated development expenditures."

As a result of the agreement, Midway's third-quarter fiscal losses will nearly double. Instead of the $0.37 per share loss that it forecast during its August 4 earnings call, the company now expects to lose $0.70 per share due to charges from the cancellation. That means the company's shortfall will be nearly double that of the April-June quarter, when it lost $0.38 per share, or a $34.8 million net loss.

"We made some deals back during the last console cycle, and obviously the economics have changed drastically since then," a Midway rep told GameSpot. "We take a charge now, and then we're freed up with these resources to be spent elsewhere."

More intriguing than Midway's latest financial losses is the identity of the canceled licenses. Currently, the majority of Midway games are original IPs such as Mortal Kombat, Gauntlet, Area 51, and Blitz. The Midway rep also emphasized that Stranglehold and Wheelman are "wholly owned properties," and that the latter game is still on track for an early 2009 release. Midway also said that it is still planning on publishing wrestling games bearing the TNA Impact imprint, and its deal with DC Comics remains in place.

So which IPs does that leave? The rep said that he couldn't comment on which licenses the Chicago-based company is cutting loose. However, the rep did say that Midway was opting out of publishing two licensed series: one developed internally at one of Midway's studios, the other developed externally by a third party.

Currently, only a few licenses that were around during the last console cycle are developed inside Midway--and even fewer would result in a multimillion-dollar loss. The highest profile is NBA Ballers, which launched in 2004 on the Xbox, GameCube, and PlayStation 2. The latest entry in the series, April's NBA Ballers: Chosen One, was personally fouled by critics and shunned by audiences. Domestically, the game sold less than 60,000 units on the PlayStation 3 and Xbox 360 combined as of August 31, according to the NPD Group.

When it comes to Midway-published licensed IPs developed by third parties, the list of suspects grows. The company has distributed games based on several Cartoon Network shows, including: The Grim Adventures of Billy & Mandy (developed by High Voltage Software), Ed, Edd n Eddy (developed by A2M), and Aqua Teen Hunger Force (developed by Creat Studios).

In the US, Midway also publishes the Lord of the Rings Online massively multiplayer online role-playing game, developed by Turbine Software. (European publishing duties are handled by Codemasters.) It has signed on to distribute LOTRO's forthcoming Mines of Moria expansion pack, due out November 18. However, given that Lord of the Rings Online isn't a console game and Midway didn't agree to publish it until 2006--as the console generation was transitioning--it is unclear if it falls under the rep's rubric.

Last but certainly not least are the Unreal Tournament games from Gears of War maker Epic Games. Besides Mortal Kombat, the UT games have become one of Midway's highest-profile franchises since it stole the IP from Atari in July 2004. After releasing Unreal Championship 2: The Liandri Conflict for the original Xbox in 2005, the publisher also backed Unreal Tournament 3, which shipped for the PC and PS3 last year, and the 360 this past July.

Although Unreal Tournament 3 has sold a respectable 476,000 units domestically on all platforms combined, Midway has had a rocky relationship with Epic. After a delay that pushed the PS3 UT3's release into December--past the prime holiday-shopping time of November--CEO David Zucker blamed problems with Epic's Unreal Engine 3 for delays of other Midway games, including Stranglehold and BlackSite: Area 51.

When asked point-blank if Epic was taking back the Unreal Tournament series, a Midway rep said that he could "neither confirm nor deny" anything until the company's next earnings call in "early November." However, he did take on a diplomatic air by saying, "Epic's been a great partner for us. ...And they continue to be a great partner for us with the Unreal Engine."

[UPDATE] Epic vice president Mark Rein has now confirmed to GameSpot that "Midway is still very much the publisher of Unreal Tournament 3." The two companies have straightforward publishing agreement not contingent on licensing, and are even working on a "major expansion" to UT3.

Indeed, the rep talked up the relationship between Midway and its licensing partners--even the ones with whom it no longer has an agreement. "For these particular licenses the deal that we had in place is what we've canceled," he explained. "We still have a very strong relationship with these licensing partners. One thing we're particularly proud of is keeping strong relationships with these partners."

147 Comments

  • DeadManRollin

    Posted Oct 28, 2008 10:05 pm PT

    Midway is suffering from lack of creativity...it's prevalent in most of their new games. It's sad, cause they used to be a great publisher

  • Negemite

    Posted Oct 22, 2008 8:45 pm PT

    So that means no more Cruis'n games on the Wii? Hey I actually like Cruis'n on the Wii, but I wish Midway Games could port The Fast and the Furious Superbikes and The Fast and the Furious Drift over to the Wii in disguse as a Cruis'n game. Midway Games is like this generation verison of Acclaim Entertainment. Well Acclaim tryed not to go bankrupt, but this is ridculous!

  • masterchief375

    Posted Oct 22, 2008 6:40 pm PT

    Mk vs. DC no Fatilities?? Is Midway trying to go bankrupt??!?!? and Why do they keep cranking out those crummy NBA Ballers games?? Let EA handle the over the top b-ball stuff (cuz at least they can do it right) but c'mon when Will I get to see the sequel to Psi Ops: The Mindgate Conspiracy?? I've been waiting on a sequel to that game since forever...

  • sussmeyer01

    Posted Oct 21, 2008 2:11 pm PT

    I hope you can ride a horse!

  • georgeorjose

    Posted Oct 21, 2008 8:39 am PT

    yeah NBA street!!!!

  • cell_100

    Posted Oct 21, 2008 1:40 am PT

    UT3 suck a$$ and MK is jus ruined no fatalitys jus crap man

  • Giantsfan22

    Posted Oct 20, 2008 10:53 pm PT

    In a down economy, luxuries go by the wayside.

  • SupahDude

    Posted Oct 20, 2008 2:13 pm PT

    I don't mind that the Ballers series might end. NBA Street is where it's at!!!

  • BioShockOwnz

    Posted Oct 20, 2008 1:36 pm PT

    Yes, more TNA iMPACT games! Don't cancel those, Midway!

  • lamprey263

    Posted Oct 20, 2008 1:02 pm PT

    maybe they should bring back the Hitz/Blitz games before their Pro/League mutation, those were awesome

  • LindBergh2007

    Posted Oct 20, 2008 12:41 pm PT

    No Paul_TheGreat, this is what happens when the video game software market collapses.

  • Paul_TheGreat

    Posted Oct 20, 2008 12:25 pm PT

    This is what happens when you make sh**** games.

  • mangepenge

    Posted Oct 20, 2008 11:59 am PT

    The First thing midway can do is get the MC rating up to mature

  • why9090909090

    Posted Oct 20, 2008 11:38 am PT

    So if he new mortal kombat is rated "T" that means there's only brutalities? or would it be like the animalities that made mortal kombat 3 entertaining lol

  • Big_Evil666

    Posted Oct 20, 2008 11:34 am PT

    as long as Mortal Kombat is not on the chopping block, i am happy! but yeah, like some of u have said, just tell us already and get the suspense over with!

  • krunkattack

    Posted Oct 20, 2008 10:50 am PT

    yup, haven't really noticed the midway logo on my games for awhile.

  • Get_Shorty

    Posted Oct 20, 2008 10:25 am PT

    Not Unreal Tournament noo!! It is a great online multiplayer hyperactive game.

  • woods0419

    Posted Oct 20, 2008 10:09 am PT

    Mortal Kombat... oh how we miss thee. What is Ed Boon doing the MK franchise?!? Look at Armageddon.. no character specific fatalities? No true character stories? Now a TEEN rating on MORTAL KOMBAT? My favorite fighting franchise has gone down the toilet thanks to that idiot Ed Boon. What happened to John Tobias? I think he was the genius behind it all, and I don't see his name in the credits anymore. The first thing Midway can do is fire Ed Boon.

  • necronaux

    Posted Oct 20, 2008 9:58 am PT

    "The rep said that he could comment on which licenses (they're) cutting loose." Why not just tell us? We're gonna find out anyway. It's not like telling us would make much difference at this point.

  • jer_1

    Posted Oct 20, 2008 9:51 am PT

    Midway pretty much sucks stones.

  • retrofraction12

    Posted Oct 20, 2008 9:42 am PT

    serves them right for only porting really bad games onto the wii.

  • Hedfix

    Posted Oct 20, 2008 8:40 am PT

    Looks like the Unreal games will be being published by EA seeing as hoe Epic's been cosying up to them recently.

    EA have the better distribution and marketing setup.

  • jadefury27

    Posted Oct 20, 2008 6:43 am PT

    midway was an arcade company attempting to stay relevant by doing console titles. their heart (and budget) was never really into it which is why most of their studio's are practically freelance. nothing too surprising about this.

  • benswinbanks

    Posted Oct 20, 2008 6:20 am PT

    @ShadowJake

    Midway dont make the UT series, Epic games is the developer. Changing the publisher (Going to MS as you suggested) wouldnt have any effect on its quality.

    @everyone else

    I agree MK used to be so mad, midway just dont have 'IT' anymore. perhaps they need a new original IP to get back up there

  • ADEPTONE

    Posted Oct 20, 2008 5:07 am PT

    Midway Sucks. They tend to rush games to meet their projected releases. The MK series died after UMK3. I still buy MK games thinking maybe one day I'd get that feeling I got when I played MK1 for the first time, but they always let me down by cheesy voice acting, horrible story line, repetitive fatalities, cheap looking generic new characters, unproportioned character models and they need to pay real martial artist's to do the motion capture instead of having one guy do everything on his own. Whatever happened to the dark, evil feeling the music had? MK is ruined
    and will suck even more as long as boon is in charge. I don't know how he thinks that the series is going in the right direction. I can't really think of any other games they had that I can truly say I liked other than Rampage and NBA jam.

  • chineolee

    Posted Oct 20, 2008 4:55 am PT

    Midway are carrying a lot of dead weight, but dropping unreal would be an error.

  • shockster4life

    Posted Oct 20, 2008 3:49 am PT

    just realized i haven't bought a midway game since the N64 days

  • Norgavue

    Posted Oct 19, 2008 10:14 pm PT

    I miss the old school midway. You know the one that brought us Mortal Kombat... from the arcades to our homes. I miss that era and wish they would start putting out better games.

  • eyet00th

    Posted Oct 19, 2008 7:47 pm PT

    They should learn their lesson. Lousy games should not produce sequels, just because you spent a lot of dough to create the first game.

  • padrenes86

    Posted Oct 19, 2008 7:25 pm PT

    Midway has not been the same for a couple of years now. But, I'm glad they're not making anymore NBA games because The Ballers series is horrible.

  • ShadowJake

    Posted Oct 19, 2008 5:53 pm PT

    Since I am an unreal tournament fan, I hope they don't drop that series. However, UT3 wasn't really THAT great so maybe it would be beneficial for the unreal tournament license to go to a different company such as Microsoft (someone mentioned that idea below). The only problem there is the PS3 people get left out. Luckily I have a 360...

  • atrofiado

    Posted Oct 19, 2008 5:30 pm PT

    i think they have good games...but things aren't going the way they expected. UT and MK were my favourite...hope those don't disappear

  • JOKEROFHEAVEN

    Posted Oct 19, 2008 3:22 pm PT

    yes no more NBA Ballers games!!!!!!!!!

  • grassgreener12

    Posted Oct 19, 2008 3:15 pm PT

    Other than Mortal Kombat, not a whole lot of what Midway makes is any good...TNA was alright, but not my kind of game. Unreal Tournament 3 was cool, but it wasn't up to the standards of its predecessors....whatever happens, happens for the best I guess

  • kayn83

    Posted Oct 19, 2008 2:16 pm PT

    I wouldn't be shocked in the slightest if Midway dropped Unreal. Especially now that Epic and Microsoft are such buds, Epic could just get their games published under Microsoft (of course a PS3 version of their games probably wouldn't come out but considering the Unreal 3 engine has had problems on the console, it wouldn't be a major loss.)Besides, I think the popularity of Unreal has wanned from the glory days, while UT3 was fun it wasn't as good as its predecessors.

  • ---Saint---

    Posted Oct 19, 2008 1:21 pm PT

    All good things come to an end I guess.

  • rddflag

    Posted Oct 19, 2008 1:01 pm PT

    Midway, whats going on. I don't know about you guys but I'm gonna miss. N-B-A bah bah bah bah Ballers , and from the sounds of it we're going to lose another game company

  • IXIWhistIXI posted Oct 19, 2008 12:38 pm PT (does not meet display criteria. sign in to show)

    IXIWhistIXI

    Posted Oct 19, 2008 12:38 pm PT (hide)

    I honestly don't see what people see in the unreal games.

    I loved unreal GOTY, but everything after that I cannot find the fun in.
    Part of it is the weapons...I hate having to aim ahead for every weapon I use except the pistol and sniper. The other part is the gameplay its self, I don't know why but it's just not fun.
    I hated the demo of UTIII and I'm still baffled when people say it's a great game. I honestly cannot see why people would enjoy it.

  • Lisandro_v22 posted Oct 19, 2008 12:30 pm PT (does not meet display criteria. sign in to show)

    Lisandro_v22

    Posted Oct 19, 2008 12:30 pm PT (hide)

    midway... midway... oh yeah those are the guys that made that fighting game for the PS, ain't they?


    EA WINS!!... FATALITY!!

  • maaly81

    Posted Oct 19, 2008 12:25 pm PT

    thank GOD they cancelled nba ballers. sad for them they lost so much money but they need to start listening to gamers wants rather than old ideas for games which have ran their courses already

  • masterhalo43

    Posted Oct 19, 2008 9:52 am PT

    i want another UT for the PS3 with SPLIT SCREEN!

  • JamesSoprano

    Posted Oct 19, 2008 8:18 am PT

    i like unreal but for me it's play complete and put away to collect dust. after Unreal Tournament it just .. was always the same it just didn't feel fresh to me .. sure a new game play and that is nice but it just doesn't reel me in to play it over and over and over i didn't really bother with online mode anyways .. now i have never played Unreal Tournament 3 but i played UT2004 and 1 and 2 and it's basicly the same game .. i'm just a little tired with it sure graphics are nice but that's not what brings me too the table. UT is pretty much dead after the 1st one i mean it's the thing over and over wash rince and repeat .. i really wanna digg into UT but it's just an O.K game for me and as i said you play one you play it all not a whole lot of change. makes me not interested

  • otanikun

    Posted Oct 19, 2008 8:09 am PT

    That kinda sucks, but hey, sometimes you have to cut something off in order to make higher profits, I'm pretty sure those licenses won't stay in purgatory forever, especially Unreal Tournament.

    Just thank god that the new MK game isn't cancelled, I can't wait to get it pre-ordered.

  • jknight5422

    Posted Oct 19, 2008 8:03 am PT

    You know another amazing theory that this game disproves is that going multi-platform doesn't necessarily mean higher sales. If they had focused on one platform only & spent more time on game quality, they might have had twice the number of sales.

  • jknight5422

    Posted Oct 19, 2008 7:55 am PT

    I wonder if EA is looking at them right now...

  • NintendoWarrior

    Posted Oct 19, 2008 6:17 am PT

    thank god NBA ballers is gone, now we can have more NBA street games

  • Humorguy_basic

    Posted Oct 19, 2008 5:25 am PT

    Anyone heard of the saying 'one more nail for the coffin'?! AS sad as I am to say it, the smell of death surrounds parts of the video/PC game market at the moment.

    Oh, and 476,000 combined sales of UT3 are now 'respectable'? Well, the original Unreal sold over a MILLION units on PC alone! How times have changed...!!!

  • athomas987

    Posted Oct 19, 2008 12:04 am PT

    "Unreal Tournament 3 has sold a respectable 476,000 units domestically on all platforms combined"
    what do they expect when they just remade the game with their new engine.

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