Midway Q4 revs sputter

[UPDATE] Santa not so nice as October-December quarter nets out at an almost $37 million loss; next-gen TNA games in works, PC Unreal 2007 confirmed for winter release.


Unreal Tournament III
Mortal Kombat: Armageddon

Midway Games released financial results for the three months and full year ending December 31, 2005, today.

For the quarter, Midway reported revenues of $69.8 million, down 9.6 percent from the same quarter a year ago (when it reported net revenues of $77.2 million). The bottom line was also down, as the company posted a loss of $36.2 million for the quarter.

For the full fiscal year ending December 31, 2005, the company had revenues of $150.1 million, down from $161.6 million the prior year. It posted a full-year loss of $112.8 million, compared to a loss of $24.7 million for fiscal year 2004.

In a statement, Midway president and CEO David Zucker said, "Midway's fourth quarter results reflect the challenging industry environment that has affected nearly all software publishers at this point in the console transition."

Commenting on the bright side, he added, "Nevertheless, Blitz: The League achieved breakout success for us, and our first Cartoon Network release, Ed, Edd n Eddy, performed well in the quarter."

Sequentially, this Q4 figure compares with the previous quarter's tally of a $29.1 million loss on revenues of $29.5 million. Midway blamed that poor showing on flat reorders of The Suffering: Ties That Bind and L.A. Rush. Also looming over the publisher's finances was the December news that it had shuttered its Adelaide, Australia, studio, laying off more than 100 employees.

In a conference call with industry analysts, Zucker confirmed that Unreal Tournament 2007 for the PC will be released in the winter. There was no mention of the PlayStation 3 version. Zucker also revealed that the upcoming Mortal Kombat game, Armageddon, will be the last Mortal Kombat game for current-generation systems. Though that franchise is winding down its life on its current platforms, older franchises will be getting new life on a new console. Following the success of Joust and others, Midway plans to release more games for Xbox Live Arcade.

There was also some good news for those who like to see big, sweaty men in high definition. In 2007, Midway is expected to release its first game based on Total Nonstop Action Wrestling (TNA Wrestling). Though it was previously announced only for current-gen consoles, Zucker revealed that next-gen iterations are also in the works.

Though Midway's financial numbers were slightly down, one number will be going up in the coming year. The company plans to hire as many as 100 new employees for its internal studios, as it ramps up for next-generation development. Midway expects to have about 725 staffers by year's end.

The publisher's internal studios won't only be getting bigger, but they will be working more closely together on upcoming games. Midway's suite of development studios, which includes houses in San Diego, Seattle, Los Angeles, Chicago, Newcastle (UK), and Austin, Texas, will all be working together with what Zucker calls a "common technology platform." For example, with the recently announced Wheelman, Midway's Newcastle studio will be the main developer. However, other studios will pitch in and contribute their own assets; for instance, the Seattle studio will work on the game's artificial intelligence, and the Chicago studio will work on the game's engine.

Much of Midway's attention seems focused on 2007, when it expects next-gen titles to be in full swing. Adding to its sunny outlook is the company's new method of determining a game's potential, which involves screening games for marketability and green-lighting only those that stand out from the rest. The first fruits of this process are expected to ship this year, with a "full slate" of "ambitious" next-generation titles expected in 2007.

For the current quarter ending March 31, Midway expects a loss of $22 million on revenue of $13 million.

In light trading today, Midway shares traded up, fractionally, to $10.93.

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