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Midway Games

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Midway Games
Company typePublic (NYSE: MWY)
IndustryVideo game
Founded1988[1]
HeadquartersChicago, Illinois, USA
Key people
Matt Booty, CEO, former Senior Vice President
ProductsMortal Kombat, Spy Hunter, NBA Jam, Rampage
RevenueIncreaseUS$150.1 million (2005)
Decrease-US$108.5 million (2005)
Decrease-US$112.5 million (2005)
Number of employees
820 (2006)
SubsidiariesAtari Games (1996–2003), Cookie Jar Group
Websitehttp://www.midway.com

Midway Games (NYSE: MWY) (formerly Midway Manufacturing) is an American video game publisher. Midway's legacy includes landmark titles such as Mortal Kombat, Ms. Pac-Man, Spy Hunter, Tron and NBA Jam. It was listed as the #19 video game publisher in September 2005 and the #20 in September 2006 by the magazine Game Developer.[2]

Sumner Redstone, the head of Viacom/CBS Corporation, was a large investor in the company; he owned directly and through his companies 87% of Midway at the end of 2007.[3] In December 2008 he sold all his stock to "Mark Thomas", a private investor about whom little is currently known, for $100,000 plus ~$70m of debt.[4] And on Febuary 12th 2009 Midway filed for Bankruptcy

History

Arcade games

Midway Mfg. Co. began in 1958 as an independent manufacturer of amusement equipment. It was purchased by Bally in 1969. After some years making mechanical arcade games such as puck bowling and simulated western shoot-out, Midway became in 1973 an early American maker of arcade video games. Throughout the 1970s, Midway was very close to Japanese video game developer Taito, with both companies regularly licensing their games to each other for distribution in their respective country. Midway entered the consumer market in 1977 by releasing the Bally Home Library Computer; the only home system to ever be developed by Midway.

Midway's real breakthrough success came in 1978, with the licensing and distribution of the seminal arcade game Space Invaders in America. This was followed by the hit U.S. version of Namco's Pac-Man (1980). Ms. Pac-Man followed in 1981. In 1981, Bally merged its pinball division with Midway to form the Bally/Midway Manufacturing division. Three games released that year: Solar Fox, Lazarian and Satan's Hollow were the first to feature the Bally/Midway brand. From the late 1970s through the late 1980s, Midway was the leading producer of arcade video games in the US.

The Bally/Midway division of Bally was purchased in 1988 by the arcade and pinball game company Williams Electronics Games through its holding company WMS Industries Inc. Midway moved its headquarters from Franklin Park, Illinois to Williams's then-headquarters in Chicago, and WMS re-incorporated Midway as a Delaware corporation. Although WMS retained many of Midway's R&D employees, only two game designers were retained: Rampage designers Brian Colin and Jeff Nauman. WMS obtained the right from Bally to use the "Bally" brand for its pinball games since Bally had completely left the arcade/pinball industry to concentrate on casinos and slot machines.

Under WMS ownership, Midway initially continued to produce arcade games under the Bally/Midway label while producing pinball tables under the "Bally" brand. In 1991, however, Midway absorbed Williams' video game division and started making arcade games under its own name again, without the "Bally" part (pinball tables continued to be produced under the "Bally" brand until Midway discontinued this part of the business in 1999). In 1996, WMS also purchased Time-Warner Interactive, which included Atari Games, part of the former giant Atari Inc. 1996 is also when Midway changed its original corporate name Midway Manufacturing to Midway Games Inc. due to its entrance in the home console market. The original arcade division of the company became Midway Amusement Games and the newly created home division was known as Midway Home Entertainment.

Spin-off and home videogame focus

In 1998, Midway was spun off by WMS to its shareholders, making Midway an independent entity for the first time in almost 30 years. Midway kept Atari Games as a wholly owned subsidiary as part of this spin-off. Midway retained or shared some of the WMS executive staff and used some common facilities with WMS for a few more years. Over several years, Midway gradually terminated all material agreements and executive overlap with WMS and had a declining number of common members of its Board of Directors, until it shared only one with its former parent company.

In late 1999, Midway left the pinball industry in order to concentrate on video games. In January 2000, Midway changed the name of its "Atari Games" subsidiary to Midway Games West to avoid confusion with the other Atari company, then owned by Hasbro Interactive. In June 2001, Midway shut down its arcade division due to financial losses. In February 2003, Midway closed Midway Games West, putting an end to what was left of the original Atari. In 2003, Midway sustained losses of $115 million on sales of about $93 million.[5] Despite continuing losses since 2000, the company was able to finance its business with stock and debt offerings and various credit arrangements. In 2003, Sumner Redstone, a significant minority shareholder, began to increase his stake in the company and soon came to own over 80% of the stock.

In 2004 Midway began a purchasing spree of independent video game development studios in an effort to strengthen its product development teams (from Midway's May 2005 quarterly report). In April 2004, Midway acquired Surreal Software of Seattle, Washington. In October 2004, it acquired Inevitable Entertainment of Austin, Texas (now known as Midway Austin). In December 2004, it acquired Paradox Development of Moorpark, California. On August 4, 2005, Midway acquired the privately held Australian-based developer Ratbag Games. The Studio was renamed Midway Studios-Australia. Four months later, on December 13, Midway announced to its employees there that it was shutting the studio down, leaving its employees based at that studio without a job. Two days later, on December 15, the studio was closed and their Adelaide premises emptied. During 2004 and 2005, Midway lost $20 million on sales of $162 million, and $112 million on sales of $150 million, respectively.[5]

Recent years

In 2006 and 2007, Midway lost a further $77 million on sales of $166 million and $100 million on sales of $157 million. It continued to finance its business with debt offerings and other credit arrangements.[5]

As of 2007, Midway Games was engaged in a legal battle with Mindshadow Entertainment for the Psi-Ops video game rights. Mindshadow alleged that Midway Games copied Psi-Ops's story from a screenplay written and owned by their client. On December 2, 2008 Judge Florence-Marie Cooper of the United States District Court for the Central District of California issued a ruling granting summary judgment on all counts in Midway's favor. Judge Cooper found no evidence of copyright infringement.[6]

Midway announced plans to open a new casual games portal. Zucker said that the successes of internally-developed mass-market Nintendo DS and Wii games Touch Master and Game Party had inspired the company by "returning to its roots"—the Midway brand first rose to prominence in the arcade era.

On March 6, 2007, Midway reported that it had entered into a new $90m credit agreement with National Amusements, a company controlled by Sumner Redstone. CEO David Zucker stated that the introduction of PS3 exclusive Unreal Tournament 3, and the company's growing success in mass-market games, were setting it up for a "significant 2008".[7] On March 21, 2008, Zucker resigned as CEO. He was the third executive to resign in three months from the company. Succeeding Zucker was Senior Vice President and now CEO Matt Booty.[8]

During the first nine months of 2008, Midway lost $145 million on sales of $105. The company reported that its cash and other resources " may not be adequate to fund... working capital requirements" and that it "would need to initiate cost cutting measures or seek additional liquidity sources".[9] On November 20, 2008, Midway retained Lazard to assist it "in the evaluation of strategic and financial alternatives".[10] On November 21, 2008 Midway received a NYSE delisting notice, since its stock's price fell below one dollar.[11]

On December 2, 2008, Sumner Redstone sold his 87 percent stake in Midway Games to Mark Thomas, a private investor. Thomas paid approximately $100,000, or $0.0012 per share. Thomas also took on $70 million of Midway Games' debt. National Amusements took a significant loss on the sale, however the loss improved the company's tax situation.[12] On December 5, 2008 the Chicago Tribune reported that Midway would default on $240 million of debt after the recent sale of stock to Thomas triggered clauses in two bond issues totalling $150 million of debt allowing the bondholders to ask for full repayment.[13] According to Variety, Midway currently has $10.3 million in assets.

On February 12, 2009 Midway announced that the company and its U.S. subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing does not include Midway's European operations. The company said in a a statement that it expects the bankruptcy protection to allow it to continue its normal business operations. A company spokesperson said, "We felt this was a logical next step for our organization, considering the change in control triggered the acceleration of the repayment options...we're looking to reorganize and to come out on the other side stronger" [14].


List of subsidiaries

Divisions

  • Midway Amusement Games : This was the original arcade division of the company (founded as Midway Manufacturing Company), and is now an honorary entity which maintains Midway's former arcade games. The Midway, Bally/Midway, and Williams arcade game library are now copyrighted as "Midway Amusement Games, L.L.C.". Midway Amusement Games is located in Chicago just across the street from Midway's main offices.
  • Midway Home Entertainment: Based in San Diego, California, Midway Home Entertainment publishes and markets all video games made for home consoles and operates with a good degree of independence from its Chicago parent. Midway Home Entertainment is also largely in charge of the relationship between Midway and the console manufacturers of its games (Sony, Microsoft and Nintendo). The division originally started in 1986 as a popular Texas video game publisher called Tradewest. The latter company was acquired by WMS Industries in 1994, and was renamed Williams Entertainment, Inc. which in turn became Midway Home Entertainment in 1996. It was Midway Home Entertainment who enabled Midway to enter the video game console market for the very first time and, back then, all console video games were developed by Midway Home Entertainment while all arcade games were by the Chicago studio. For several years, Midway Home Entertainment operated in both Corsicana (Tradewest's original site) and San Diego until 2002 when the Corsicana location was shut down.
  • Midway Technical/Customer Support: Midway's customer service department. Handles customers inquiries either through the internet or over the phone. The division is located in San Diego but not in the same building as Midway Home Entertainment.
  • Midway Games Ltd: Midway's European branch situated in London, England. The tasks of Midway Games Ltd. can be easily compared to those of Midway Home Entertainment in North America. The division Midway Games Ltd. should not be confused with Midway Games Inc. which is the official name of the whole Midway entity.
  • Midway Germany GmbH: Based in Munich, Germany, Midway Germany GmbH publishes, distributes and sells all Midway video games in Germany. Midway Germany GmbH was inaugurated on February 2005 by Midway Games Ltd of London.
  • Midway Games SAS: Midway's French division located in Paris, France. Midway Games SAS does the equivalent in France of what Midway Germany GmbH does in Germany.

Studios

  • Midway Studios — Chicago: Midway's original studio that developed all of its arcade video games. However, the studio now focuses solely on titles for home consoles. Midway Studios — Chicago remains one of Midway's major studios, having developed Blitz: The League for the PlayStation 2 and Xbox and Stranglehold for the PlayStation 3, Xbox 360, and PC. The studio is housed with Midway's main corporate offices.
  • Midway Studios — San Diego: Located in the building of Midway Home Entertainment, this was the first studio to develop video games by Midway for home consoles. The studio was rumored to have been shut when Midway closed Ratbag. Midway Studios — San Diego is still alive and has been handed the task of completing the game Rise and Fall: Civilizations at War which was started by Stainless Steel Studios and have also developed, in the past, Gauntlet: Seven Sorrows.
  • Midway Studios — Austin Inc.: Formerly Inevitable Entertainment which was acquired in 2004 by Midway. Responsible for developing Area 51 and its 2007 sequel BlackSite: Area 51. On August 11, 2008, Midway announced it was canceling the game in development at it's Austin location and was laying off between 90 and 130 of the Austin employees.[15]
  • Midway Studios — Los Angeles Inc.: Formerly Paradox Development, acquired in 2004 by Midway. Despite its name, the studio is actually located in Moorpark, California. The studio has developed Mortal Kombat: Shaolin Monks. This studio was featured in Rampage: Total Destruction. Their last game was TNA iMPACT! the video game. As of July 2008, Midway announced plans to close its LA location, and combine the studio with its unit in San Diego.[16]
  • Surreal Software: From Seattle, Washington, this is the only studio that has kept its original name following its acquisition by Midway in 2004. Surreal Software has been credited for developing The Suffering: Ties That Bind.
  • Midway Studios — Newcastle: Midway's only studio located outside the U.S, which operates from Gateshead, south of Newcastle, England. The studio was originally named Pitbull Syndicate before being acquired by Midway in October 2005. Immediately prior to that, Pitbull had finished work on the titles L.A. Rush and Rush for the company.

List of arcade games developed or licensed by Midway (selection)

Video games

  • 1 Originally developed by Williams
  • 2 Originally developed by Atari Games
  • 3 Originally owned by Rareware
  • 4 Co-owned by Nintendo
  • 5 Owned by Namco

Pinball (under the Bally brand)

List of console games developed or licensed by Midway (selection)

Arcade system boards

Some of Midway's arcade system boards:

  • Astrocade
  • MCR
  • MCR II
  • MCR III
  • MCR-68
  • Y-Unit (1991–1992)
  • T-Unit (1993)
  • X-Unit (1994; used only in Revolution X)
  • Wolf Unit (1994–1996)
  • V-Unit (1994–1996)
  • Zeus (1997–1999)
  • Zeus II (1999–2000)
  • Seattle
  • Vegas
  • Quicksilver II

References

  1. ^ Midway in its current form was incorporated in 1988 in Delaware by WMS Industries. Midway Games Inc. considers 1988 as its official founding year.
  2. ^ Game Developer's Top 20 Publishers, 2006 from Gamasutra
  3. ^ Midway Games Form 10-K
  4. ^ Redstone sells Midway Games to ease debt - WSJ | Deals | Mergers & Acquisitions | Reuters
  5. ^ a b c Midway Games, Inc. Annual Report on Form 10-K for 2007
  6. ^ Case No. 2:07-cv-00967-FMC-JCx (docket entry No. 175)
  7. ^ MCV Reports Midway Financials
  8. ^ Matt Booty appointed interim CEO, Chicago Tribune, 2008
  9. ^ Midway Games Inc. Quarterly Report on Form 10-Q for the first 9 months of 2008
  10. ^ Midway Games Inc. current report on Form 8-K dated December 4, 2008
  11. ^ Midway Games Receives NYSE Delisting Notice | Digital Media Wire
  12. ^ | Gamastura
  13. ^ Chicago Tribune story, December 5, 2008
  14. ^ http://www.chicagotribune.com/business/chi-midway-games-chapter-11-feb12,0,4504994.story
  15. ^ Rockwell, Lilly (2008-08-12). "Midway to lay off much of staff at Austin studio". Austin American-Statesman. Retrieved 2008-08-11.
  16. ^ Midway to close LA studio
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