Videogame publisher lost $162 million in '07

British vidgame publisher Sci, parent company of Eidos Interactive, is laying off 25% of its staff amid a major restructuring after negotiations to be acquired fell through.

News came as Sci reported dismal financial results for the past six months of 2007, during which it lost some $162 million on revenue of $145 million. Sales were down 2% despite double-digit growth for the industry overall.

Along with the layoffs, Sci is canceling 14 projects in development and shifting to a studio-based model that will focus on core franchises such as “Tomb Raider.” It also is forming a new division, Eidos Play, to develop casual and Web-based games.

“Our quality has slipped below acceptable standards. And through disappointing game development and working within an ineffective operating structure, we are failing to realize the commercial return our creative ability and our shareholders demand,” the company said in a statement. “Our infrastructure is too big and expensive for the scale of the business.”

Sci announced in January that talks with several unnamed suitors had broken off. Like other midsize publishers such as THQ, Midway and Take-Two, which is fighting off a $2 billion acquisition bid by Electronic Arts, Sci is struggling to compete against much bigger industry players as the cost of making and marketing games has rapidly risen.

News sent Sci stock tumbling 14% on the London Stock Exchange.

That’s bad news for Warner Bros., which owns a 10% stake in Sci and distributes its games in the U.S.

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