Midway closes Blacksite: Area 51 developer, lays off 25 percent

December 16, 2008

In danger of defaulting on a $240 million debt and entering bankruptcy, Midway announced it will close its Austin studio, lay off 25 percent of its employees and suspend development on some projects.

Midway will release 180 employees in addition to closing its Austin studio, which Midway acquired in 2004. The studio was formerly Inevitable Software, founded by three employees from Acclaim’s Austin studio and had produced Tribe’s Aerial Assault and The Hobbit for Sierra before creating Area 51 and 2007’s Blacksite: Area 51 for Midway. The latter game’s rushed production, low sales and bad reviews caused many problems for Midway.

Midway says the cancelled projects are “non-core” ones it hadn’t announced yet.

Midway has hired investment advisor Lazard Ltd. to help revive its operations. Former majority shareholder Sumner Redstone sold his 87 per cent stake in the company earlier this month for $100,000 and the assumption of $70 million of debt.

Midway’s latest release, Mortal Kombat vs. DC Universe, has sold 540,000 units in three weeks, according to VGChartz while Blitz: The League II sold only 40,000 after eight weeks. Wii party title Game Party 2 has sold 230,000 copies in nine weeks.

Midway’s big releases for early 2009 are Wheelman, developed by its Chicago studio and based on a Vin Diesel action movie, and This is Vegas, developed by Midway-owned Surreal Software.