Midway Games Placing Bets on Quality

Q: The conventional wisdom after the last transition was that developers were too quick to abandon old consoles in favor of the new. How are you balancing old development between the old and new generation machines?

We're doing both. Certainly, our major technology thrust right now is next generation development, but we're also going to continue to make big investments in PS2 games. So, we're really balancing both.

Q: I understand you want to balance both of those, but what are the tradeoffs of doing that?

We're certainly going to have games for the launch of the PS3, but we don't have any games for the launch of the Xbox 360.

Q: Why?

[It's a] pretty small install base. To really maximize, to get the performance out of some of the games, it's going to take some time to do that. And we want to make sure we're launching high-quality titles.

Q: You posted your first profitable quarter in a while in the fourth quarter. Then you swung back to a loss again in this past quarter. Do you have an expectation of when the company will post consistent profits?

We're not big enough at this point to consistently generate significant profits. We've said that on a number of occasions. We have a plan to get there, and we're focused on growing our revenue -- we grew our revenue last year by 70%. We'll grow it this year by 40% -- that's our plan. And we'll grow it again in 2006. Our goal is to get to critical mass in terms of revenue as quickly as possible in the next generation of consoles. But right now, we're investing. We're investing in more ambitious games, so that we come out with a bigger market share on the next generation of consoles.

Q: What are the keys to getting to critical mass?

More games and more ambitious games -- look, I've been here almost two years now. The prior management, coming into this console cycle, really slowed down its investment in the product pipeline. We've been addressing that aggressively. We've doubled the run rate of our product development spending on an annual basis. We have doubled the size of our internal product development teams. We have 12 teams today; we had five teams a year ago. We went from 275 people to 540 people. And we're going to grow again this year. We're going to make some additional acquisitions. And we're going to continue to grow headcount at our existing studios.

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