Midway trims fat, cuts to the bone

Kotaku - http://kotaku.com/5111432/midway-to-lay-off-25-of-staff-austin-studio-closing said:

As if in response to the rumor posted earlier today, Midway has officially announced cost-reduction measures that including cutting 25 percent of staff and closing their Austin, TX studio.

Speaking to a Midway representative just moments ago, Kotaku learned that around 180 people lost their jobs today due to the cost-cutting measures, which includes the complete closure of Midway Austin, which was working on long-term projects not due out until 2010 or 2011. Workforce reductions affected Midway locations in Austin, San Diego, and Chicago.

    “The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed,” said Matt Booty, president and CEO of Midway. “These initiatives, along with the other steps we have taken this year, are a response to the specific challenges we are facing at Midway, many of which have been amplified by the current economic conditions.”

Those specific challenges of course include a tremendous amount of debt and the threat of delisting on the New York Stock Exchange. We wish the former Midway employees the best of luck. Hit the jump for the full release.

Midway Announces Cost-Reduction Measures
Actions include layoff of 25% of staff, closure of Austin studio, and suspension of several non-core projects

CHICAGO—(BUSINESS WIRE)—Midway Games Inc. (NYSE: MWY) today announced that the company is taking significant steps to reduce its cost structure, including a reduction in workforce, the closure of its Austin, TX, studio, and the suspension of development on several non-core games.

The cost-cutting initiatives will involve a reduction in force across multiple disciplines within the company in its Austin, Chicago and San Diego locations. Headcount will be reduced by approximately one quarter of Midway’s global workforce. The suspended non-core projects were previously scheduled to release in 2010 or 2011 and have not yet been made public.

“The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed,” said Matt Booty, president and CEO of Midway. “These initiatives, along with the other steps we have taken this year, are a response to the specific challenges we are facing at Midway, many of which have been amplified by the current economic conditions.”

Additional details on the reduction and the financial impact can be referenced in the report filed today on Form 8-K with the Securities and Exchange Commission.

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Gamespot - http://www.gamespot.com/news/6202368.html?tag=latestheadlines;title;1 said:

Mortal Kombat and Wheelman publisher to lay off 25 percent of workforce, close Austin studio, cease development on multiple unannounced titles.

Earlier this month, Midway Games lost its highest-profile supporter when media mogul Sumner Redstone ditched his majority stake in the publisher for just $100,000. That triggered change-of-ownership clauses in the company's loans, allowing creditors to demand repayment of $150 million within 30 days.

While it's still unclear how Midway (whose total assets amounted to less than $168 million as of September 30) will pay that debt, the publisher today instituted an array of cost-cutting measures to keep afloat. To start, the company will lay off 25 percent of its global workforce, roughly 180 full-time employees. Additionally, Midway plans to shut down its Austin, Texas, studio entirely and has suspended development on multiple unannounced "non-core" games previously scheduled for release in 2010 and 2011.

"The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed," Midway president and CEO Matt Booty said in a statement. "These initiatives, along with the other steps we have taken this year, are a response to the specific challenges we are facing at Midway, many of which have been amplified by the current economic conditions."

The shuttering of Midway Studios Austin comes just months after the publisher had already made deep cuts to the operation. In August, Midway laid off roughly 90 of the 130 or so employees there, equal at the time to 10 percent of the publisher's global workforce.

Midway Studios Austin was originally known as Inevitable Entertainment until October of 2004, when Midway purchased the studio outright. Its previous games included Sierra Entertainment's multiplatform The Hobbit in 2003 and Tribes: Aerial Assault on the PlayStation 2. For Midway, the Austin studio revamped the Area 51 franchise with a 2005 first-person shooter on the PC, Xbox, and PlayStation 2. Midway Austin's final released project was last year's Blacksite: Area 51 for the PC, Xbox 360, and PlayStation 3.

As of press time, Midway shares were trading at $0.17, down about 10 percent from their previous close of $0.19.

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