Midway Games in Dire Straits

by Neal Ronaghan - November 24, 2008, 3:45 pm PST
Total comments: 55 Source: Business Wire

The Chicago-based game company lost over 70 million dollars last quarter and now faces the risk of being delisted from the New York Stock Exchange.

Long time video game publisher Midway Games is currently in a terrible financial situation. Since being bought out CBS and Viacom chairman, Summer Redstone, four years ago, Midway has fallen deeper and deeper into debt. With big releases being delayed, like 2007's Stranglehold (developed with John Woo), and others either rushed out the door (Blacksite: Area 51) or cancelled (Career Criminal), Midway's games have begun to cost more and more money. All of this has been accentuated by the fact that Midway has not been able to keep their stock above the New York Stock Exchange's minimum average closing price of $1 per share for over 30 straight trading days.

When Variety's The Cut Scene blog tackled the subject, they found out that, according to ex-employees, Midway's decision to license Epic's Unreal Engine was a huge part of delays and declining game quality. One ex-employee even said that "instead of just taking the base Unreal 3 engine that Gears of War was made on and building games off of that, we let our tech and product development guys try to really modify the engine to add all these [different] things.…It put all the games way behind schedule."

Most likely due to their focus on the Unreal Engine, Midway has barely been able to capitalize on the success of the Wii. Their only Wii-exclusive titles have been the moderately successful Game Party franchise. On the DS, their only releases this year have been Mechanic Master and TouchMaster 2. Currently, they have no future games planned for any Nintendo system.

Talkback

GoldenPhoenixNovember 25, 2008

Quote:

Midway's decision to license Epic's Unreal Engine was a huge part of delays and declining game quality.

I could have swore that was occuring before then!

NinGurl69 *hugglesNovember 25, 2008

TSK, SUB-ZERO, TSK

DAaaMan64November 25, 2008

Dire Straits is an excellent band

ThePermNovember 25, 2008

what instrument does midway play in the band?


but seriously, i'valways had a thing for Midway, they don't always get my cash, but i always like mortal kombat. Its just they've milked the franchise without making any new substantial franchises. I'd hate to see them go the way of acclaim, which is ironic, last economic cycle it was midway doing well in sales and acclaim tanking. I had suggested that they should buy acclaim just for the franchise rights.

another thing they don't understand is franchise integrity, changing the costume of scorpion every iteration is BAD. Keep some things Cannon.

GoldenPhoenixNovember 25, 2008

Really though what has Midway done that has stood out since the SNES days? Sure they've created some fun games like the Blitz series but beyond that most of their atempts were either bad, average or slightly above average.

Unreal Tournament III was pretty good as far as first-person shooters go.  It's in the upper tier of this console generation.

However, Midway's problem simply comes down to bad management.  OK, so you're bleeding cash...why would you license the Unreal Engine, which basically forces you to make an expensive, high-risk/high-reward game?  Do what Majesco did and start making stuff like Cooking Mama.  Scale back and concentrate on making money and getting financially solid again, instead of gambling everything on a small number of costly titles.  Leave that to the big boys that can absorb the losses.

GoldenPhoenixNovember 25, 2008

Quote from: Lindy

Unreal Tournament III was pretty good as far as first-person shooters go.  It's in the upper tier of this console generation.

However, Midway's problem simply comes down to bad management.  OK, so you're bleeding cash...why would you license the Unreal Engine, which basically forces you to make an expensive, high-risk/high-reward game?  Do what Majesco did and start making stuff like Cooking Mama.  Scale back and concentrate on making money and getting financially solid again, instead of gambling everything on a small number of costly titles.  Leave that to the big boys that can absorb the losses.

Didn't realize they developed UTIII. If so then I will correct myself, all but ONE game has been top tier since the SNES days! ;)

D_AverageNovember 25, 2008

Mk vs DC sales will make this whole thing go away.

ToruresuNovember 25, 2008

Unless it tanks, and I think it will :/

I hate it when game companies just die, it's bad for all of us.

EnnerNovember 25, 2008

Midway has a publishing deal with Epic for Unreal Tournament III. I think they hinted or announced and expansion for that.

It's sad to see Midway in such bad shape, but it doesn't come as much as a surprise given how their games have been doing. Hopefully, MK vs. DC will help them through enough to bounce back.

TheNorthSeaNovember 25, 2008

They should put out a sequel to Hydro Thunder on the wii. I'd buy that in a heartbeat.

KDR_11kNovember 25, 2008

The core market continues to implode from rising dev costs...

Ian SaneNovember 25, 2008

Midway's legacy as a developer is based on their quality arcade games.  Think of a classic Midway game and it's an arcade game.  Period.  They've been largely irrelevent since they stopped making arcade games.

So what they need to do is "trick" themselves into making arcade games.  Design games as if they are made for the arcade but then effectively "port" them to the consoles.  You design the quarter munching arcade gameplay first and then add the standard console stuff like vs. modes (depending on the genre) and limited lives and difficulty levels and stuff like that.  Midway shouldn't make big epic console games because they suck at them.  They have to make pick-up-n-play got-you-by-the-balls action games because THAT is what they are good at and that is what their legacy is.

And if they ever made a Mortal Kombat with digitalized sprites again I'll bet the novelty factor alone would get people interested.  Pull a Mega Man 9.  MK has never been the same since they went with polygons.  MK is supposed to be silly exploitation, not a sub-par American Tekken knock-off.

Bill AurionNovember 25, 2008

Quote from: Ian

So what they need to do is "trick" themselves into making arcade games.  Design games as if they are made for the arcade but then effectively "port" them to the consoles.

That's what they USED to do...San Francisco Rush was one of those series that was bloody excellent in both the arcades and on the console...The problem is, after LA Rush, I just don't think Midway has the talent to do it anymore...

KDR_11kNovember 25, 2008

IOW, Midway should get the hell out of the hardcore market :P

ThePermNovember 25, 2008

Quote from: D_Average

Mk vs DC sales will make this whole thing go away.

every reviewer says rental

Quote from: ThePerm

Quote from: D_Average

Mk vs DC sales will make this whole thing go away.

every reviewer says rental

I still bought it and I don't regret it.

D_AverageNovember 26, 2008

I still can't fathom how they were the kings of Pinball, then the kings of Fighters and they somehow managed to piss it all away.  They will no doubt be discussed in business schools some day on what NOT to do.

GoldenPhoenixNovember 26, 2008

I miss the Pinball industry.

LuigiHannNovember 27, 2008

Quote from: Ian

And if they ever made a Mortal Kombat with digitalized sprites again I'll bet the novelty factor alone would get people interested.

I'd play it. Double the resolution of the sprites (without making them HD or anything) and maybe get some recognizable B-list actors involved, and you could have a really entertaining presentation.

Chozo GhostNovember 28, 2008

Quote from: nron10

Midway's games have begun to cost more and more money.

Gee, if only there were a system out there which was extremely easy and cheap to develop for and was insanely popular, with a user install base of over 30 million. Then Midway could start releasing games for that system and make tons of money. But sadly, no such console seems to exist, so it looks like Midway is doomed to plod on with expensive HD-games on systems that aren't that popular.

/sarcasm

Chozo GhostNovember 28, 2008

Quote from: D_Average

I still can't fathom how they were the kings of Pinball, then the kings of Fighters and they somehow managed to piss it all away.  They will no doubt be discussed in business schools some day on what NOT to do.

The problem is they bet on the wrong horse. A lot of 3rd parties seemed to think graphics and HD was the way to go, so they all invested in costly 360 and PS3 development whilst giving Nintendo the shaft. Now they are paying the price for their backstabbing, and it is a payback I think they richly deserve.

The OP said the few minor softcore offerings they released for the Wii were "moderate successes". Now, moderate success on cheap grandma party games that cost a tiny amount to develop is a lot better than wasting massive amounts of money of hardcore PS3 or 360 games that don't turn a profit, or maybe never even see the light of day at all. But better yet, why don't they try actually bringing some hardcore games to the Wii? You'd think if cheap mario party clones could be profitable on the Wii, then a bigger investment into hardcore games might actually end up majorly profitable, and turn their fortunes around 360 degrees...

But are they smart enough to see that success lies with Nintendo? If they're not, and if they stupidly continue to ignore the market leader, then they completely 100% deserve the bankruptcy that they will get as a result.

Ian SaneNovember 28, 2008

Those of you pushing the "developing hardcore games is folly" idealogy do realize the Midway SUCKS as a game developer, right?  It doesn't matter what console you support, if your games suck and you're in financial trouble that means everything is right with the world.  Now if Midway was releasing GOTY candidates every few months and still was losing money on the PS3/X360 then you've got something.

Developing for 360/PS3 isn't bad business, it's just riskier business.  You really have to know what you're doing and be confident that you're going to turn out a product that can stand alongside the big boys, and market it well to boot.  There's less room for error, that's all.

The "folly" is that Midway sank tons of money into mediocre projects on high-investment platforms.  That's simply bad management because they put all their eggs into one basket and didn't manage risk effectively.  They'd didn't cover their asses with Cooking Mama: Mortal Kombat Edition for Wii, or Princess: My Life as a Queen for DS.  Seriously, Blitz II, Wheelman, This Is Vegas?  Who's going to buy those games?

D_AverageNovember 28, 2008

Just played the Arcade port of MK 2 on the PS3 yesterday, oh the memories, oh what could have been!

KDR_11kNovember 28, 2008

Less room for error, higher investment, lower gain, seems like a terrible idea but maybe that's just me.

Cover their asses with easy profits? Usually easy profits aren't for covering your ass, they're for making a profit. In a business there aren't profit projects and "fun projects", everything's supposed to make a profit. Realistically Midway should have known that their games wouldn't be praised as GOTYs and wouldn't warrant these budgets but eh, if they had a good business sense they wouldn't make headlines for being de-listed.

Besides, what were the Game Party games if not easy profits?

Chozo GhostNovember 28, 2008

Quote from: Ian

Those of you pushing the "developing hardcore games is folly" idealogy do realize the Midway SUCKS as a game developer, right?  It doesn't matter what console you support, if your games suck and you're in financial trouble that means everything is right with the world.  Now if Midway was releasing GOTY candidates every few months and still was losing money on the PS3/X360 then you've got something.

Right, but even though Midway sucks and makes crap games, they would still be better off if they released those crap games on the Wii, because the Wii is cheaper to develop for and has an installed base at least twice as high as the competitors. Whether the games are hardcore or softcore, the Wii makes perfect sense for a company in bad financial shape.

NinGurl69 *hugglesNovember 28, 2008

The Wii helped out Majesco.

Ian SaneNovember 28, 2008

Quote:

Right, but even though Midway sucks and makes crap games, they would still be better off if they released those crap games on the Wii,

Yes I think we can all agree that the best place to sell crap games is on the Wii.  ;D

ToruresuNovember 29, 2008

Ouch! :(

Wow, Ian wins the thread.

Like I said, the high-risk development isn't a bad business move if you have the money to absorb loss (like Sony, MS, Capcom, Konami, Squeenix, EA, etc.) and do your homework, but if you're just out there winging it...good luck.  In that case you're better off developing for the iPhone.

KDR_11kNovember 29, 2008

High risk is only worth it if the reward is similarily large and there's no lower risk approach with a similar reward. A sane approach is to pick the option where chance of success * expected gain (profit/cost) is maximal, from what I see a "casual" game is more likely to make money than a big game and both have a chance of striking it really big (multi-million seller).

GoldenPhoenixNovember 29, 2008

Well the biggest test will be Monster Hunter 3, if and when it comes out in the US. That is a bigger budget game and Capcom sounds like they really want to market it.

DeguelloJeff Shirley, Staff AlumnusNovember 29, 2008

I laugh at people suggested Midway should have made "casual" games to "cover their asses."  If Nintendo makes about six "casual" games and gets harangued for "going casual" and "abandoning the hardcore," despite making a gajillion of those games, what would people think of Midway making a group of "casual games" to cover their losses on one uber mega hardcore fighting game?  UBISoft's reputation is already in the gutter because they decided to make 500 garbage games they call "casual" for the Wii and DS in order to finance a few Super Mega Hardcore games on 360 and Ps3, a strategy that really doesn't seem to be working out too well.  This also plays on the stereotype that just about anything labeled "casual" will sell on the Wii, which the facts just don't support.  The reason they make money on these garbage games is because they have shoestring budgets and sell about 500 copies each, sometimes more.

There is only so much you can blame on management, the rest is simply that they failed to recognize where the majority market is and bought into internet forum hype.  In 2005, everybody was throwing their hands up in the air as to how the Unreal 3 Engine was going to be the future of games and everybody who was anybody was licensing it.  Apparently this idea hasn't panned out well for many companies (Epic made out pretty well, selling this snake-oil), causing Silicon Knights much frustration and criticism and here Midway may even die because of it.  We can't fault management for doing exactly what was demanded of them by their visible consumers at the time.

EDIT:

Quote:

Yes I think we can all agree that the best place to sell crap games is on the Wii.

The best place you can sell awful games is always the market leader.  You could say this about the PS2, the PS1, the DS.  Of course, you'd have to have your head examined too, mainly because this is a common troll trope on Gamefaqs, who are understandably aged 13-15 or scarily aged 23-35.

KDR_11kNovember 29, 2008

As long as crappy shovelware keeps making a profit there's no real reason to stop making it (of course scaling the production up probably wouldn't work well but hey,"free" money!), might want to fork your brand to make sure you don't get notorious as a crap pusher though.

Then again I wonder if crappy shovelware really sells better on the Wii than other consoles...

UrkelNovember 29, 2008

I don't think shovelware sells particularly well on Wii.

Ubisoft made most of its profit off of DS games last quarter, and the least off of Wii. I think the reason shovelware is a less effective approach on Wii is because the Wii is a system parents will actually want to play with their kids.

With the DS, most parents will just pick up any random game for their kids just to shut them up while they're grocery shopping or in the car. On the Wii, most parents will actually be playing this game with their kids, so it matters to them if the game is good or not. Word of mouth is what sells games on Wii, hence games like Mario Kart selling and selling and selling.

Shovelware is still profitable, but just barely. It certainly wont cover the losses if your big budget game bombs.

NinGurl69 *hugglesNovember 29, 2008

Grandmama won't play no crap games, fo sho.

Luigi DudeNovember 30, 2008

Quote from: KDR_11k

Then again I wonder if crappy shovelware really sells better on the Wii than other consoles...

It doesn't, the whole shovelware sells on the Wii and only the Wii is a myth started by the usual idiots in the gaming media who are the same ones that say Nintendo is trying to destroy hardcore gaming.

The ratio of good to bad games selling is about the same on all 3 systems, it's just the videogame media doesn't report on them, because the bad games on the 360/PS3 that sell are usually games like shooters, while on the Wii the bad games are things like mini game collections.  So when a crappy Halo clone or GTA clone sells well on the 360, nobody cares.  But when a crappy Wii Sports clone sells well, everyone goes crazy and starts writing articles about how the Wii is destroying gaming.

ThePermNovember 30, 2008

can't Midway just make a great game and market it as shovelware

MaxiDecember 01, 2008

More bad
news for Midway

Well it looks like Sumner Redstone doesn't like where Midway is heading with his money so he is selling his stake for 100,000.

PlugabugzDecember 01, 2008

Quote from: Urkel

Shovelware is still profitable, but just barely. It certainly wont cover the losses if your big budget game bombs.

So maybe they should focus their attention on whats easiest. Make money on what costs the least, and will produce the most returns. Even if its Midway Sports, and can stand against Wii Sports then i'd be all for it.

Chozo GhostDecember 02, 2008

Is Midway the company that made those weird jousting games from the arcade days? Because if they are, they should really redo that whole franchise on the Wii (of course) so you can do jousting with your wii-mote and use your nunchuck to move the ostrich thing around. With spruced up 21st century graphics and motion control, it would probably do well enough.

Otherwise, yeah, Mortal Kombat is always a safe beat. Why don't they take one of the characters, like Scorpion for example, and spin him off into a new franchise as a platformer game where he throws his harpoons around to get from one platform to the next. Kinda like Mario, but with a harpoon instead of jumping. He could also have Reptile by his side, and Reptile would be like Luigi so it could be a two player game, and Midway could title it "Super Mortal Bros." or something... Man, they should put me in charge of their company because I think I could really turn things around for them. :P

GoldenPhoenixDecember 02, 2008

Quote from: Chozo

Is Midway the company that made those weird jousting games from the arcade days? Because if they are, they should really redo that whole franchise on the Wii (of course) so you can do jousting with your wii-mote and use your nunchuck to move the ostrich thing around. With spruced up 21st century graphics and motion control, it would probably do well enough.

Otherwise, yeah, Mortal Kombat is always a safe beat. Why don't they take one of the characters, like Scorpion for example, and spin him off into a new franchise as a platformer game where he throws his harpoons around to get from one platform to the next. Kinda like Mario, but with a harpoon instead of jumping. He could also have Reptile by his side, and Reptile would be like Luigi so it could be a two player game, and Midway could title it "Super Mortal Bros." or something... Man, they should put me in charge of their company because I think I could really turn things around for them. :P

Wasn't that Rare who did Joust? (I may be wrong)

MaxiDecember 02, 2008

Joust was made by Midway GP.

NinGurl69 *hugglesDecember 02, 2008

Gauntlet Legends Neo for Wii plz

vuduDecember 02, 2008

Quote from: Chozo

Otherwise, yeah, Mortal Kombat is always a safe beat. Why don't they take one of the characters, like Scorpion for example, and spin him off into a new franchise as a platformer game where he throws his harpoons around to get from one platform to the next.

Did you just suggest Midway make another Mortal Kombat Mythologies?  What is wrong with you?

oohhboyHong Hang Ho, Staff AlumnusDecember 03, 2008

Quote from: NinGurl69

Gauntlet Legends Neo for Wii plz

I so second this. I play Gauntlet for the N64 years ago with 3 players and it was an absolute blast. If they have that with on-line play, they might actually have a winner.

ThePermDecember 03, 2008

100,000 for the rights to mortal kombat...sold! I'd automatically be like


"today with the new change in management we will be switching to a one console exclusive strategy. Today we will be making our games exclusively on Wii. I expect the quality to increase 10 fold as we won't have all our resources squandered by developing multiconsole, our first game to be developed since the changeover will be a new Gauntlet game designed for virtual console with online multiplayer in mind. Think castle crashers meets gauntlet. We will also release a new mortal kombat game with classic 2d mechanics and will take the current 3d mortal kombat series and rebrand it, i think gamers will enjoy a new set of characters and a new storyline"

I haven't bought a new mk game since mk4, which to me was the pinnacle of the classic gameplay, it was just like its sprite cousins. Except it was fast and furious.

That being said I actually dug the newer mk games, but not enough to justify their purchase. I did buy Soul Calibur 1 2 and 4 though which means that fans are perfectly willing to trade in for new characters. If i were to take the 3d mechanics of the 3d mortal kombat as i'd redesign the game so that it appeals to more people. Kung Fu masters would be graceful, spies would have good stories. i'd also try some licensing ploy like put Sam Fisher in the game. If the game tanks it doesn't hurt UbiSoft.

I like the one console strategy, for the most part Acclaim spent most of its resources making games for n64 during that era. It did however have a few ports, but it spent more time on turok than it did on other franchises. The series was popular for that audience and they did well. When they went multi console for Turok they didn't make an AAA product and sales suffered and they suffered and went out of business. It doesn't seem to be advantageous at all to be multi console unless you sale nothing but sports games, or have the capacity to make AAA titles on more than one console, especially if your competing with ubisoft. Although, they are starting to tank too, or so I've heard.

Theres a huge group of people who love classic mk, and i think marketing to nostalgia is a great idea. Take an existing classic and add to it Megaman 9 style.
Mortal Kombat is a great example because they used live actors, and the game was tacky. If tacky was turned into a fine art that would be a new classic mortal kombat game.

if a game was like this
http://www.youtube.com/watch?v=wbeXI45wNyQ&feature=related
i'd buy it

NinGurl69 *hugglesDecember 03, 2008

Quote from: oohhboy

Quote from: NinGurl69

Gauntlet Legends Neo for Wii plz

I so second this. I play Gauntlet for the N64 years ago with 3 players and it was an absolute blast. If they have that with on-line play, they might actually have a winner.

It's like WoW but good on any given minute.  Actually, WoW is like Gauntlet, just with less funs per second.

ThePermMay 22, 2009

http://www.gamasutra.com/php-bin/news_index.php?story=23722

looks like Warner is eying Midway, maybe Warner can make an even better enter the dragon clone!

TJ SpykeMay 22, 2009

When I saw that a few weeks ago I was intrigued. Warner Bros. Interactive have said they are serious about expanding in video games, so this would be a good pick up for them. It would also make it cheaper and easier to do a sequel to Mortal Kombat vs. DC Universe (since Time Warner, parent company of Warner Bros., also owns DC Comics. This means they wouldn't have to pay to license the characters).

I'd think Warner would have the money to buy somebody good instead, especially with the economy the way it is.

KDR_11kMay 22, 2009

Quote from: TJ

It would also make it cheaper and easier to do a sequel to Mortal Kombat vs. DC Universe

I don't think it was the license fees that made DCvMK such a massive money loser.

TJ SpykeMay 22, 2009

I didn't say the first game made money, I just said it would be cheaper to make by not having to pay the licensing fees for the DC Comics characters.

ThePermMay 23, 2009

actually, if mk vs dc hadn't made as much money as it did midway would have been out of business sooner.

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