Midway Reports $11.1 Million Q1 Sales, $19.8 Million Losses

Midway Games has announced the results of its first quarter, with sales down from $15.4 million to $11.1 million and a net loss of $19.8 million, up slightly from the prior year's $22.6 million. With the majority of Midway's expected blockbuster titles due for release later in the year, sales were somewhat slow for the quarter, though president and CEO David Zucker did say that the developer and publisher "exceeded our expectations during the first quarter primarily due to the continuing sales of our holiday 2006 releases and other catalog titles." The sales exceeded earlier analyst estimates of $8 million, as well, with Wedbush's Michael Pachter saying the company was "unlikely to be profitable until it can generate revenues at much higher levels," but adding that the firm is “cautiously optimistic” regarding Midway's future. The company has just launched its MMO The Lord of The Rings Online: Shadows of Angmar on April 24th, after what it calls "the most successful North American pre-order program in Midway’s history," the results of which will be reported in its second quarter results. "The second quarter is off to an excellent start with the launch of The Lord of The Rings Online," said Zucker, "and our resources are focused on successfully launching several more titles later in the quarter.” The company has announced it expects second quarter sales to reach approximately $29 million, on both current sales of The Lord of The Rings Online and the forthcoming releases of the Wii's Mortal Kombat: Armageddon, Hour of Victory for the Xbox 360, Hot Brain for the PSP, and Touchmaster for the Nintendo DS. The company also announced that it expects its fiscal year sales to grow 36 percent to $225 million. Concluded Zucker, “We are very excited by the strong response of gamers and the press alike to the launch of The Lord of The Rings Online, and we are encouraged by the early excitement we are seeing for such front-line titles as Mortal Kombat: Armageddon for the Wii, Stranglehold, BlackSite: Area 51, The Wheelman, Unreal Tournament III and Hour of Victory. As the next generation systems build momentum through this year, we believe we are well positioned to take advantage of the growing base of gamers looking for the highest quality content.” [UPDATE: In its conference call, CEO Zucker noted that the company's light results were expected and communicated, and that sales were primarily due to continued success of licensed movie title Happy Feet and the PS2 and Xbox versions of Mortal Kombat: Armageddon, which combined, he said have sold over a million copies. Though the company wouldn't expound on early figures for its Lord of the Rings launch, Zucker did say that consumers "responded well" to its unique pre-order program which allowed players to take their beta characters into the full game, a feature the CEO said drove sales. Zucker also said its downloadable titles such as Gauntlet, Smash TV, Root Beer Tapper, and Ultimate Mortal Kombat III were amongst Xbox Live's top sellers and that it expected to soon expand further on the PlayStation Network with Championship Sprint, Mortal Kombat II, and Rampage World Tour. Its downloadable efforts have found, Zucker said, an "eager consumer base," adding that, in addition to sales of microtransactions for existing games (such as upcoming expansion packs to Stranglehold) and in-game ads which have seen "slow but steady growth," online sales would become a "meaningful revenue stream." Zucker did later add, though, that it was a "couple years away from it becoming material." The executives were upbeat on "showing the market the fruits of [its] labor and investments," promising a BlackSite: Area 51 demo later this month on Xbox Live to generate interest in the Midway Austin-developed title. Asked about the company's efforts for the Wii, the executives noted that the company was already a strong proponent of the platform, offering four launch window titles, and also promised three more unannounced titles for 2007 in addition to the forthcoming Mortal Kombat, two of those exclusive to the console. The company also is supporting the long tail steam of PlayStation 2 sales, the executives said, with the upcoming release of "action-adventure combat golf, cart racing" Adult Swim tie-in, Aqua Teen Hunger Force Zombie Ninja Pro-Am.]