Survival may be difficult
Last modified on Wednesday, 17 December 2008 14:48
It seems the situation at Midway just keeps going from bad to worse. Despite the recent buy-out by Mark Thomas of the Sumner Redstone shares of the company, the company has announced that more extreme cost cutting steps will have be taken to avoid possible bankruptcy.
The latest of these extreme steps was the announcement that the company will be slashing its current employee count by an additional 25 percent. This means that another 180 employees will be let go across multiple departments within the company and at the Chicago and San Diego facilities. The Austin Studio will be closed. The Austin studio saw a massive cut earlier in the year.
We also are being told by our sources that some projects are being scrapped. While Midway has been publically using some colorful language to describe these projects as being “cancelled” or “suspended,” it is more likely that they have been killed in favor of cost savings.
The Austin studio that is being closed was the home to the Central Outsourcing Group and two prototype projects that are now almost certainly dead. Currently, we have not been able to pin down the specific names or likely titles that might get the axe.
As we reported earlier, Midway has brought in Lazard Ltd., which is a reorganization specialist, to help guide the company in an effort to avoid bankruptcy. The majority of the current financial crisis at Midway has been magnified by the economic climate which has caused Midway to be in much worse condition than originally thought. Much of the problem seems to center around bond repurchase requests that the company is expected to have to deal with, and the company could be in danger of defaulting on.
It is now also been suggested that Midway is perhaps considering the possible sale of IP in order to help raise cash to put the company in a better situation. Despite some recent success, the company has struggled with a string of past titles that didn’t do very well.
Despite some recent titles that have shown some encouraging signs of Midway being on the rebound, the current state of the situation at Midway is going to be difficult at best for the prospect of long term recovery.