Midway's losses continue, Area 51 delayed

Beleaguered game publisher Midway today released financial figures for the first half of 2004. The company lost $25.7 million over the six-month period ending June 30, losing $10.7 million in the April-June period. Expecting to release only three games in the next six months, Midway predicts overall losses for 2004 to be $20 million--$2 million more than it had previously stated.

The news is not all bad, however. Today's numbers show a marked improvement over last year, when Midway lost $65.3 million during the first half. Furthermore, sales were also up this year, rising $16.6 million to $67.4 million during the first half. And for the quarter, revenues were $47.3 million, up from $5 million the prior year for the same quarter (that's approximately $9 million higher than the company's guidance to analysts provided last April 28). The upside from guidance is primarily due to NBA Ballers, which has experienced strong sales and reorder demand since its introduction into the North American market on April 5. During the second quarter, the company released three well-received games--MLB SlugFest: Loaded, NBA Ballers, and Psi-Ops--which helped support sales during the period.

There may be light at the end of the tunnel for Midway--at least next year. What was once the company's big game for the holiday season will instead add its sales to 2005's financial figures. The Xbox and PlayStation 2 shooter Area 51 has been pushed back to early 2005, during which time Midway hopes there will be "much more attention in a launch period with comparatively less crowding." Midway will use the time to "add extra features and improve gameplay," Zucker said.

Given that the company also acquired the publishing rights for three new Unreal games, including Unreal Championship 2, due February 2005, the first quarter of next year does not look so bleak to Midway execs and investors.

"Securing the rights to publish the next three Unreal titles is an important accomplishment for Midway, particularly in light of the competition we faced to secure this franchise," said president and CEO David Zucker. "With these titles, we are entering the premium PC market with one of the most respected brands in the industry."