GigaMedia's 'dysfunctional business model' leads to notable 2011 losses

Asian online game developer and operator GigaMedia has posted its financial results for the full 2011 fiscal year, with notable losses down to "a dysfunctional business model." Based in Taipei, Taiwan, GigaMedia has licensed numerous big-name titles for operation in Asia in the past, while also owning the FunTown casual gaming portal. It has experienced financial problems over the last year, although it managed to regain compliance with NASDAQ's minimum bid price listing requirements earlier this year. The company's CEO John Stringer admitted that the fiscal fourth quarter reflected "continued underperformance" due to a poor top line and an expensive cost structure. "Unfortunately, costs and expenses were not adjusted quickly enough in response, leaving a dysfunctional business model," he said. GigaMedia's IAHGames subsidiary, which supplies Asian regions with big-name releases such as Counter Strike Online, FIFA Online 2 and Dragonica, saw a 52 percent decrease in revenues during the fourth fiscal quarter. However, its casual games portal FunTown saw a 5 percent increase in revenues year-over-year from $5.5 million to $5.8 million, thanks to user growth from licensed games A.V.A. and Tales Runner. GigaMedia has big plans for 2012. It is under new management as of earlier this year, and has made several major moves in the hope of turning around its business and increasing shareholder value. "We are now increasing focus on key business sectors and beginning to adjust our business model to improve our expense to revenue ratio," stated Stringer. "We look forward to updating our progress in 2012, confident in our ability to deliver improved performance by year-end." For the fiscal year ended December 31, 2011, GigaMedia reported revenues of $34.4 million, down 47 percent compared to the previous fiscal year's $64.7 million. Losses were $71.2 million, compared to profits of $2.7 million year-over-year.