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Unreal Tournament III can't turn Midway around

By Brendan Sinclair, GameSpotPosted Mar 6, 2008 3:04 pm PT

Publisher's fourth-quarter and full-year financial results show growing losses on shrinking sales.

2007 may have been a record year for the gaming industry, but a rising tide doesn't necessarily lift all ships. Despite the long-awaited launches of Unreal Tournament III on the PC and PlayStation 3 and the John Woo-Chow Yun Fat vehicle Stranglehold, Midway Games saw declining sales and mounting losses for 2007.

The publisher reported its fourth-quarter and full-year 2007 financial results today, and its sales fell short of already-lowered expectations. Even with the PlayStation 3 version of Unreal Tournament III unexpectedly sneaking onto shelves by year's end, Midway reported fourth-quarter sales of $78 million, short of the projected $80 million and down from $97 million for the last quarter of 2006 (which saw the company release hits like Mortal Kombat: Armageddon and Happy Feet). For the full year, Midway reported revenues of $157 million, shy of both the $160 million forecast and the $166 million it brought in throughout 2006. As recently as August, the publisher had expected $225 million in full-year revenues.

In addition to sinking sales, Midway has to deal with growing losses. The company's net losses in 2007 surpassed $97 million, compared to $78 million the year before. The fourth quarter was especially rough, as Midway lost nearly $30 million over the holiday shopping season, compared to $2 million for the same period of 2006.

"2007 was a challenging year for Midway as we made the transition to the next-generation of consoles," said Midway president and CEO David Zucker in a postearnings conference call.

Despite the publisher's difficulties, there were some highlights for Zucker. Midway had three games reach the million-unit-shipped milestone in 2007. Those titles were Stranglehold, Unreal Tournament III, and the 2006 release Rampage: Total Destruction, which Zucker praised as "a perennial catalog seller."

The company's upcoming slate of titles including TNA iMPACT! and This Is Vegas also had Zucker optimistic, as he said, "For the first time in recent years, we believe we have a number of titles with the potential to break out and overachieve."

Zucker also said the company would continue to court the casual market with titles like Touchmaster for the DS and Game Party for the Wii, but Midway's still going to turn to titles like the 2008 installments of Mortal Kombat, Blitz, and the debut of The Wheelman to rack up sales.

"We're really focused on fewer, bigger, better... on creating those breakout games that can really move the dial on the revenue side," Zucker said.

For the current quarter, the first of Midway's 2008 fiscal year, the publisher expects revenues of $28 million for a net loss of $.30 per share. That's a big sales boost over the $11 million in revenues it posted for the same period last year, but a deeper loss than that quarter's $.22 per share shortfall.

The publisher today also announced that it has terminated a $30 million line of credit with Wells Fargo Foothill in favor of a $90 million credit line with National Amusements, Inc., an outfit headed up by Midway chair of the board Shari Redstone and controlling stockholder Sumner Redstone.

165 Comments

  • plm3d_basic

    Posted Jun 12, 2008 1:45 pm PT

    Blame it on piracy like every other game developer.

  • robathy

    Posted Apr 18, 2008 3:10 am PT

    Midway are increasingly cutting their support of PC gaming to concentrate on Next Gen consoles. Is it just coincidence they're now making losses and not pulling in the revenue? I don't think so. That is my mostly uneducated opinion.

  • Negemite

    Posted Apr 13, 2008 12:17 pm PT

    Midway might go bankrupt if they don't do something.

  • vonmurder

    Posted Mar 30, 2008 1:59 am PT

    Apparently you gunsels fighting muti-billion dollar corporations' battles cannot appreciate your games on your respective systems as individuals. someone hates your favorite game or your system of choice? **** you're screwed. How can you have a good time with MGS or GOW knowing someone HAS A PREFERENCE IN GAMES THAT DEVIATES FROM YOURS?

  • Ares_hot

    Posted Mar 23, 2008 9:39 am PT

    playstation 3 is in most ways better than xbox 360, hardware speaking, but the 360 has better online services and... well... that halo 3 and gears of war. But still, playstation 3 has games like resistance, uncharted and motorstorm and games like resistance 2, motorstorm 2, killzone 2, gran turismo 5 and haze at the horizon. ,I,,

  • jedimasterjl

    Posted Mar 13, 2008 1:20 pm PT

    thecakeisalie47 - WOW. great speech. ur right too, ps3 does have mgs4...... oh wait, thats ALL it has! and i can see it being better than GoW for sure! not. you helmet. stop trying to convince yourself that ps3 is in someway superior too.

    Fact? it is not. and kudos to you ripping on GoW, you're right there too, what a lousy game, it only sold 3 million copies in its first 2months. second only to halo in sales at the time, which is ANOTHER xbox game.

    So maybe you would like to post something useful and non-fiction if the Ps3 ever manages to release a decent game? keep your false lame opinions to yourself buddy - perhaps post back when mgs4 becomes a bigger game than ANY successful xbox game? (pick from a large ever-growing list). I think NOT

  • juggleJUGGLER

    Posted Mar 11, 2008 2:51 pm PT

    stranglehold was too short but was fun. no one cares about UTR 3 so i wouldn't consider it shocking for them to lose money. lets hope they can make TNA IMPACT fun though.

  • BlueyesCyclone

    Posted Mar 10, 2008 4:19 pm PT

    And one other thing if they hyped up the game and advertized sorry about my spelling the game properly the sales would of been so much better there was no adverts on TV for the game baners on busses in the UK what the hell was they thinking and i keep hereing that they were spending more time on GOW2. Well that just shows its got nothing to do with what console it comes out on cause they like to cut conners and rush things don't get me wrong its still a great game. but more games that get rushed and don't get hyped up don't sell well. No matter what console you put it on proberly wont sell well on the 360 to. But its still a great game seacond best to RFOM in my books.

  • BlueyesCyclone

    Posted Mar 10, 2008 3:57 pm PT

    I love it how i keep reading if it was brought out on the 360 the sales would be better because the PS3 sucks. Well for one of course the sales would be alot better because it would of been out on the PC PS3 and the 360. And i don't know why people wont buy the game i have and it rocks i've got on in the background. what i don't get is if you have a Blu-Ray disk they could of made the Online play have up to 60 players just like RFOM.
    People that have a PS3 and Like FPS should get this game your missing out big time.

  • kjk07

    Posted Mar 10, 2008 2:31 pm PT

    I'm looking forward to TNA Impact. Its gaining some ground but not sure how many other people even watch TNA though so I doubt they're going to get a blockbuster in sales from it.

  • Rezzy_Rod

    Posted Mar 10, 2008 9:29 am PT

    thecakeisalie,
    what games are you speaking of? I've played Drakes fortune. Which PS3 game would you recommend, that incorporates a "good story"? I own a PS3, and so far I regret spending a dime on it. Tell me what games are available "right now" that deserve my attention!

  • thecakeisalie47

    Posted Mar 10, 2008 5:40 am PT

    P.S. The game didn't sell well on PS3 because PS3 owners actually enjoy more than quality graphics....something like, oh I don't know.....A STORY.

  • thecakeisalie47

    Posted Mar 10, 2008 5:37 am PT

    PS3 has nothing? OK, that's cool. How about MGS4? Have you forgotten that? Let's see, we could play Gears of War, yeah; we could go through areas, shoot bad guys, chainsaw them, listen to terrible lines, watch terrible cutscenes, shoot some more, play stupid boss fights, and not have any story context to do it in: except aliens have invaded, fight back (snore). Oh, and as for multiplayer...Team DM over and over again with MINOR twists on the rules (and some crappy add-on CTF). Then you get the **** extremely stupid, low class jerks that flood XBL. Don't believe me? Just check out the awesome literacy of "pourya_ahmadian" below me. The people sucking off their parents, ruining fun value in games. Great, sounds like a plan! Or, we could play MGS4 and experience true craftsmanship and greatness in all represented forms. Damn you people that ruin fun in games, the people who think they are industry insiders because you read websites and magazines, and you're absolutely right no matter what (so you think). The same people that think only graphics matter in games. It's sad, man. It really is. YOU ARE KILLING GAMING AND THE FUN IT IS SUPPOSED TO BRING. If people in here can't admit that, they are one of those people Think about it...

  • pourya_ahmadian

    Posted Mar 10, 2008 1:51 am PT

    all you say;there is clearly that great XBOX360 have so larg nomber top games in any fields;but poor ps3 have nothing;

  • HolteEnder4Life

    Posted Mar 9, 2008 9:03 pm PT

    @ Homerj:
    who cares if Epic "insult" us (not even sure if that is true), if they continue releasing games like Gears of War on the 360, i'll fund it till i die i mean, at the end of the day, its all about the games.

  • Stu1515

    Posted Mar 9, 2008 1:34 pm PT

    Their sales are down because UT3 hasnt been released for 360 last quarter.

  • lamprey263

    Posted Mar 9, 2008 12:07 pm PT

    well, I thought Stranglehold was cool, even though the multiplayer sucked, th game single player game was pretty awesome

  • mrgroot

    Posted Mar 9, 2008 11:27 am PT

    Agermemnon: I didn't ask who published UT3 or GoW, my post was in response to pourya_ahmadian.

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