Southpeak Announces Third Quarter Results, Achieves Break Even

Author: by Staff

Though revenues are down on a smaller publishing slate, Two Worlds publisher Southpeak says its Q3 results are a response to market conditions, with a $192,000 profit and 1 million My Baby units sold. Net revenues are down to $7.5 million from $13.5 million for the same period of fiscal 2009. Net revenues for the first nine months of the company's fiscal 2010 $34 million, however, which is more comparable to the $39 million it saw in the same slice of fiscal 2009. Importantly, the company made a small net profit of $192,000 for the period, compared to a $692,000 loss in fiscal 2009. This was on the back of a major gross profit decrease -- $413,000 for the quarter compared to $5.3 million for the same period of the prior year. The company says that its decision focus on publishing games for Nintendo platforms has had a positive effect, pointing to the success of its My Baby series, which has sold over 1 million units in North America; however, lower prices of Nintendo titles have caused the drop in revenue, says the company. In its results, the company reports it has resolved its outstanding litigation with German publisher CDV, which has been a sticky, complicated issue for both companies in recent times. SouthPeak had reserved $3.2 million for dealing with the issue, and that reserve is now reversed to its accounts. The company had also previously resolved a legal situation with Paradox Interactive. No mention is made in its statement of the TimeGate lawsuit. In its statement, SouthPeak CEO Melanie Mroz said, "In conjunction with our previously announced strategy, we limited the number of titles released for the third quarter to better align our activities with the current retail environment and broader gaming industry. While this impacted our sales, we believe this conservative strategy will enable us to more effectively compete among the current market conditions while continuing to maintain tight control of our expenses." In its statement, Mroz also said that the company has plans to expand into digital download games with both its catalogue and with new titles. The company has also acquired the rights to release digital title Stronghold 3 in packaged form, and continues its relationship with Germany's Koch Media's gaming arm, Deep Silver.