Midway Games Placing Bets on Quality

David Zucker, CEO of Midway Games (MWY Quote - Cramer on MWY - Stock Picks), is trying to learn from the company's mistakes.

While the video-game market boomed over the last five years, Midway largely missed out, posting 16 straight quarters in the red and seeing its revenue shrink to less than $95 million in fiscal 2003 from nearly $335 million in fiscal 2000.

Zucker has started turning Midway around. Not only did the company finally post a profit in the fourth quarter of 2004, but revenue for the year jumped 75%. With a new generation of consoles coming soon to store shelves, Zucker is hoping to build on that momentum.

I spoke with Zucker at last week's Electronic Entertainment Exposition about the keys to Midway's turnaround effort, his goals for the company, and majority stakeholder Sumner Redstone. (For other interviews from E3, click here.)

David Zucker

Q: What's Midway's approach to the console transition?

There are a couple of things. First, there are a lot of existing, legacy consoles out there, so we're continuing to make games for the current generation of hardware. We have a bunch of big titles, even next year, on the PS2 and some on the Xbox.

We're also investing in the kids business. We're launching with (Time Warner's(TWX Quote - Cramer on TWX - Stock Picks)) Warner Bros.-The Cartoon Network a number of products this fall And then, of course, we're also in the high-end PC business. Both the kids business and the high-end PC business can work well through a transition.

And, of course, we're also investing in and we're building next-generation games at all of our internal studios. We just announced today John Woo's Stranglehold game, which is really sort of in the spirit of "Hard Boiled," his first Hong Kong action movie. And we've got Chow Yun-Fat reprising his role as Inspector Tequila. So that's really our strategy. We plan to make some very ambitious games that are in development for the next generation of hardware.

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