Midway's Chicago HQ closing, final buyout price $49 million

By Tor Thorsen, GameSpotPosted Jul 16, 2009 2:38 pm PT

Sixty employees at publisher's offices laid off, but 100-plus Mortal Kombat dev team rehired by Warner Bros.; $69 million to $76 million in assets and development costs written off.

Last Friday, the majority of Midway Games' assets were bought by Warner Bros., parent company of rising publisher Warner Bros. Interactive Entertainment. As a result, employees at Midway's San Diego studio were informed that the facility would be shut down by August 31 unless a buyer could be found. Then, earlier this week, the publisher's Newcastle, UK, studio, developer of the stillborn Necessary Force, shut its doors--eliminating 25 percent of the publisher's payroll.

Today, as rumored, Midway announced that all 60 workers at its Chicago headquarters would be let go by September 13. The layoffs will not affect any members of Midway's Chicago development studio, which is in a different building. According to a Midway rep, that operation was bought outright--facilities included--by Warner Bros., which has retained all 100-odd staffers at the Mortal Kombat-focused shop. That figure includes Ed Boon, who, according to a recent Twitter post, is hard at work on a back-to-ultraviolent-basics Mortal Kombat 9.

A form filed with the Securities and Exchange Commission outlined the scope of the Chicago HQ layoffs, which account for about 20 percent of the remaining global workforce of Midway, which still exists as a company. The form also revealed that, as a result of last week's sale, said company will be writing off $69 million to $76 million in debt: $25 million to $30 million of development costs and $3 million to $5 million of fixed assets--aka items like buildings, which can't be easily liquidated. Midway is also writing down $41 million of impaired goodwill, or the value of assets Midway held that were reduced or eliminated as a result of the Warner Bros. buyout.

The good news for Midway--and its creditors--is that the final amount paid to that company was higher than the $33 million figure announced in May. The SEC revealed that the aggregate gross purchase price was actually $49 million, with the increase due to "considerations such as inventory and accounts receivable," according to the rep.

For its $49 million, Warner Bros. now owns virtually all of Midway's IP, including Mortal Kombat, Wheelman, Gauntlet, Joust, Spy Hunter, and Area 51, among others. Midway's Seattle development studio, which is still working on This Is Vegas, was also acquired. Whether the Sin City bender simulator is ever published "is now Warner Bros.' decision," said the spokesperson.

57 Comments

  • Kainkillers

    Posted Dec 25, 2009 10:32 pm PT

    noooooooooooo

  • Kainkillers

    Posted Dec 25, 2009 10:32 pm PT

    Damn, That might was hard to Ed Boon and John Tobias

  • I_GOT_YO_ASS

    Posted Nov 27, 2009 6:44 am PT

    well i just hope they dont Fu k this game up this time putting those lame as.s fatalities in there and lame characters...heres a tip put aleast 50 or so characters that u can use on the game and go all out with the fatalites dont be a wimp.....if i had the money to buy out the company i would and show yall how its done....

  • _AxisofEvil_

    Posted Nov 5, 2009 6:29 am PT

    mk9 wow i never thought the day would come. FLAWLESS VICTORY for us ALL!!!!

  • cocomacoco

    Posted Jul 29, 2009 2:23 am PT

    MK 9 and another stranglehold

  • fowler84

    Posted Jul 20, 2009 10:52 am PT

    i want mk 9 asap

  • Dirk13

    Posted Jul 20, 2009 4:16 am PT

    Isn't the Chicago HQ their main HQ? Besides, I already though they went under in that sense.

    Oh well, one more place that I can't seek gainful employment .

  • ROBNER_basic

    Posted Jul 17, 2009 3:28 pm PT

    bring back the rush series!! nd not that crappy LA one either

  • ultralesus

    Posted Jul 17, 2009 2:45 pm PT

    And what about TNA??

    Please give me the news that someone, WB or ANYONE that the TNA Impact title has been picked up...

  • Halcalix

    Posted Jul 17, 2009 2:24 pm PT

    Gauntlet please Warner Bros

  • CamiKitten

    Posted Jul 17, 2009 1:52 pm PT

    Hmmm, not sure how I feel about this. Mebbie WB should bring back Gauntlet !

  • smurfa1

    Posted Jul 17, 2009 1:37 pm PT

    Not sure where I stand. There could be both positive and negative aspects coming out of this. When many of the smaller publishers are bought by the bigger ones there is a risk (due to large corps equals, mostly, much money) that the market will be flooded by mediocre sequels of recently developed games that became successes. As long as a series will sell they do not have to worry much of the quality. Smaller publishers and developers must, in most cases, be sure what they are developing is a product of high quality since they have much more to loose if the game do not sell. Larger companies can afford low sell rates better than small ones.

    On the other hand, a larger publisher is able to invest more money in a game than a small publisher would be able to. In this way, they may be able to assure the developer can afford to create a quality game.

    EA is a good example. I was worried that they would flood the market with low quality Battlefield games when they acquired DICE. Fortunately I was wrong, Mirror's Edge and Bad Company proves that even a mass publisher like EA are willing to publish quality games rather than a high quantity of mediocre games. So as long as WB do not interfere with Midway's developing parts and only support them financially, I think this could end well for Midway as a developer.

  • Arab-man666

    Posted Jul 17, 2009 12:21 pm PT

    Oh wait. The devopment studio is still going to be open? That's a relief.

  • Arab-man666

    Posted Jul 17, 2009 12:20 pm PT

    Wow, a loss for us in Chicago. I'm headed down to the midway HQ to pay my respects before the close. That company had some of the industry's best talent... too bad the resources kept getting more and more scarce. I remember going down there when Mortal Kombat Deadly alliance was being developed, and seeing all the posters and adds... good times.

  • DastardlyD

    Posted Jul 17, 2009 10:02 am PT

    Gao_Wuji: "I'm glad their Chicago studio is staying open. There aren't enough game studios in the midwest."

    I didn't even know they were that close. I could have swore that almost all the game studios were in California or New York. Too bad, I would have tried to pay them a visit had I knew they were 5 hrs. away.

  • SoloSnakeGR

    Posted Jul 17, 2009 9:33 am PT

    First post in gamespot....Anyway I think it's a pity because there have been many games from this company I enjoyed.Well except for...Wheelman! I hope something good comes out of it though.

  • kytomasi

    Posted Jul 17, 2009 9:05 am PT

    Its sad, after i got my degree in Animation and 3D modeling, one of the 1st places i applied for was midway HQ. my father use to work for at this same location, making pong consoles.

  • Tornado_Volcano

    Posted Jul 17, 2009 8:19 am PT

    I'm afraid that Midway won't be the only one...

  • Mordechai28

    Posted Jul 17, 2009 7:53 am PT

    I feel sorry for the studios that were not included in the deal.

  • StephenBassford

    Posted Jul 17, 2009 7:52 am PT

    CRRRRRUUUUUUIIIIISSSS'NNNNNNNNNNNNNNNNNN

    USA

    YEAH!

    (insert ghetto yet sexy music)

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