Company News Interplay = fuct

[Saint_Proverbius]

Tags: Interplay

I just spotted this on <A href="http://www.nma-fallout.com">No Mutants Allowed</a>. Anyway, <A href="Http://www.interplay.com">Interplay</A>, the company that freaks out any time someone mentions that a sequel to <A href="http://www.interplay.com/fbos/">Fallout Enforcer</A> is already in production, is basically screwed financially. How screwed? Well, there is <A href="http://www.sec.gov/Archives/edgar/data/1057232/000117091803000601/iec10q093003.txt">this report</a> which includes some comments from the <i>Inspector Clouseau</i> of game company CEOing, <b>Herve Caen</b>. He says:
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<blockquote>If we are unable to substantially reduce our working capital needs, are unsuccessful in collecting amounts owed to us, fail to adequately exploit our game assets, or otherwise do not receive sufficient financing we may pursue a number of actions, including, but not limited to, (i)liquidation of any or all of our assets, (ii) sale or merger of the Company and/or (iii) seek protection from our creditors.
<br>
<br>
To reduce its working capital needs, the Company has implemented various measures including a reduction of personnel, a reduction of fixed overhead commitments, cancellation or suspension of development on future titles which management believes do not meet sufficient projected profit margins, and the scaling back of certain marketing programs. Management will continue to pursue various alternatives to improve future operating results, and further expense reductions, some of which may have a long-term adverse impact on the Company's ability to generate successful future business activities.</blockquote>
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I just like the wording, <i>adequately exploit our game assets</i>.
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[Sol Invictus]

Now that's what I'm talking about!

I told you silly shits that the game got canned. To everyone who doubted me, my souces and just about everything I've said pertaining to the matter which you passed off as 'just another doom and gloom post': bend over and prepare to get fucked in the ass, lubejockeys.

 

[Seven]

I have some valium if you want it? :D

 

[DarkUnderlord]

Now that's what I'm talking about!

I told you silly shits that the game got canned. To everyone who doubted me, my souces and just about everything I've said pertaining to the matter which you passed off as 'just another doom and gloom post': bend over and prepare to get fucked in the ass, lubejockeys.

You're talking about the game getting canned at a meeting held about two days ago in November, and referencing a filing made on September 30th (9-30-2003), about two months ago? Riiiight. Especially considering VB was still continuing after that time. Companies don't make filings on things they haven't discussed internally already.

That said, VB probably was canned.

 

[Volourn]

Kinda disspaointing; but let's face it the writing was on the wall for a long time now. It's time people just get use to thinking of Interplay/BIS in the past tense.

 

[chrisbeddoes]

Exitium your emulation of Rosh could be better.

Learn to be meaner without using bad words.

Thank you.

 

[Grifman]

Interplay is in a finanicial death spiral. Their revenues are falling because they only released one gold master in 3Q, 2003, and sales from their back catalogue of older games is declining because they have fewer games going into the back catalogue because of their downsizing. As noted they are looking at cutting titles that don't meet profit projections, but yet they need titles to generate cash and cover fixed overhead. They're damned if they do and damned if they don't.

Current assets are only $5.3MM, total assets are $7.7MM, while total liabilities - all current - are $23.6MM. There is no way they are coming back from this - all they are doing is running out the clock. It looks like the only thing that kept them afloat last year was the gain on sale of Shiny for $28.7MM - apparently they have already run through that. They also say that this year they sold the rights to "Run Like Hell" for $15MM, which is most of their revenue for this year in looking at the numbers ytd. So, with no more sources of quick cash, I don't see them lasting much longer, which they pretty much admit to in their filing:

As of September 30, 2003, we had a working capital deficit of $18.3 million, and our cash balance was approximately $7,000. We anticipate our current cash reserves, plus our expected generation of cash from existing operations, will only be sufficient to fund our anticipated expenditures, including payroll, into the fourth quarter of fiscal 2003. The Company expects to receive certain funds in November 2003. However, if such funds are not received, the Company will not be able to meet its current cash obligations. We expect that we will need to substantially reduce our working capital needs and/or raise additional funds. We entered into the August 2002 distribution agreement with Vivendi, which accelerates cash collections through non-refundable minimum guarantees. If we are unable to substantially reduce our working capital needs, are unsuccessful in collecting amounts owed to us, fail to adequately exploit our game assets, or otherwise do not receive sufficient financing we may pursue a number of actions, including, but not limited to, (i) liquidation of any or all of our assets, (ii) sale or merger of the Company and/or (iii) seek protection from our creditors.

These conditions, combined with our historical operating losses and deficits in stockholders' equity and working capital, raise substantial doubt about our ability to continue as a going concern.

The filing is interesting reading. Their finances are all screwed up. IP's majority shareholder is Titus - and IP's European distributor is Avalon, a Titus subsidiary. But Avalon is in financial difficulty and has been unable to make payments to the developer of "Galleon" which IP was producing and Avalon was supposed to distribute - so IP has had to take up the slack. Subsequently, Avalon filed for the UK equivalent of bankruptcy. So Titus obviously can't cover Avalon's debts, and ends up not covering IP since Avalon owes IP - which screws Titus since they own the majority of IP. So Titus ends up screwing itself, LOL!

What I can't figure out is what happened to the cash they got from the sale of Shiney. In looking at the statement of cash flows, they got $33.1MM for Shiney. It's clear they used that to pay off some debt, but there is also $21.9MM in "Advances" they used cash for. Wonder what that was for? That seemed to be their largest use of cash, but I can't figure that out.

Anyway, lots of interesting reading if you're interested in the game industry. Too bad IP is imploding. With only two releases planned in 4Q, and maybe one in 1Q, I don't see much cash coming in to keep them going

Grifman

 

[chrisbeddoes]

Interplay is in a finanicial death spiral.
Grifman

Most excellent news.

If they are bunkrupt then the Fallout license could be sold cheap.


I pity their developers but their managers lost touch with their customers.

 

[Visceris]

R.I.P. Interplay and Black Isle.

 

[Voss]

Woo. Thats a fun little document. Apparently that Shiny sale was the only thing keeping them afloat last year- and they burned through the $20 million they had left in september 2002 in less than a year.

The Commitments and Contingencies section is really fun reading:

- They owe ~$700,000 due to nonpayment of Payroll Taxes.
- They're in several lawsuits. Interestingly the one with Vivendi that caught Fobos up?
Iplay accused Vivendi of breach of contract (including non-payment of money owed), but then settled a month later giving Vivendi exclusive rights to distribute in North America and Asia-Pacific until 2005 for all future titles... The hell? Did vivendi realize they had Iplay's balls in the crusher and agree to pay some money they *already owed* in exchange for what litle was left of interplay's soul? (metaphorically speaking).
- Owe Warner Brothers $1,333,333. To be paid, in full, by Jan 30, 2004. 80 odd days from now. Whee! With $7000 left in their current reserves...
- Another lawsuit with Atari, saying Atari is wrongful terminating a multi-year license...
huh, what could this be?
- Yet another lawsuit, with yet another company (Special Services group) for another $1.3 million.

In all cases, apparently, Iplay is "vigourously defending its position"

Holy shit. Iplay sold the Hunter: the Reckoning rights to Vivendi for $15 mil, fully paid as of June. Where the hell are the losing all this money?


Wow. Getting long. More as I go through that lovely document.

 

[Voss]

Ah. Some comments:
Saint, don't call him Inspector Clouseau... That implies that his bumbling will accomplish something.
And I love the phrase, "seek protection from our creditors". It makes me think someone is going to come around and start busting kneecaps.

More fun stuff:

The Company expects to receive certain funds in November 2003. However, if such funds are not received, the Company will not be able to meet its current cash obligations

FOBOS?

These conditions, combined with our historical operating losses and
deficits in stockholders' equity and working capital, raise substantial doubt
about our ability to continue as a going concern.

I love that phrase. A going concern. That and historical operating loses...
The big chart of revenue on page 18 is fun and revealing. Selling Shiny kept them up lsat year. And despite having $20 mil from that after Sept, 2002, and then $15 mil from Hunter the Reckoning, they're still $2 mil in the hole this year.

Theres some semi-dodgy crap going on too. At least it looks that way to me- padding the chart for the people who don't read the text. A major area of income is licences and royalties, but they include the sale of Hunter in that- a one time transaction that they won't see again, which is, in point of fact, 60% of their net revenue this year. It works out to all but $1.5 million of their operating costs, as well. Sales of PC and Console games come to under $5 million each.

Fun number time:
Net revenues as of 9/30/2003:
PC games : $4,633,000
Console games: $4,753,000 total : $9,386,000
Cost of goods sold: $9,948,000
= - $562,000

Uh, Iplay? You're doing something seriously wrong.

And that doesn't even cover this years product development costs, which come to a bit
over $11 million.

Interestingly, they blame lower sales on two things: a smaller back catalog due to lost rights, and the limited effective lifespan of games.
Having fewer new titles to sell. Due to not having any gold masters to give to Vivendi in 2003 (up to Sept 30).

We expect our PC net revenues to decrease in fiscal 2003 as compared to
fiscal 2002 as we expect to release no new PC titles during the rest of 2003 as
we continue to focus more on console products. We anticipate delivering the gold
masters to the following new console titles: Baldur's Gate: Dark Alliance 2
(Playstation 2 and Xbox) and Fallout: Brotherhood of Steel during the rest of 2003. We expect our console net revenues to decrease in fiscal 2003 due to receiving a lower per unit rate on more of our titles as compared with fiscal 2002 in exchange for not assuming any credit, price concessions and inventory risk, including product returns

Ah. They really are just playing out the cycle. Even *if* FOBOS and BG:DA2 do sell well, it still probably won't save them since they're putting them through Vivendi at a cut rate so they don't have to cover most of the costs or risks.

We expect our product development expenses to decrease in fiscal 2003
compared to fiscal 2002 due to a decrease in personnel costs and general
expenses.

Chop people and hire less talented ones on the cheap, perhaps?

Basically it looks like they're scrambling for short term deals that will keep them staggering for a bit longer, all the while hoping for salvation to simply fall from the sky.

Bai Bai, Iplay.

 

[Rosh]

Apropos name, FOBOS, as Phobos was the Greek God of Terror, son of Ares. Ares being the Greek equivalent of the Roman Mars as the God of War.

Chop people and hire less talented ones on the cheap, perhaps?

How do you think Chuck got into a position that is usually reserved for more experienced people?

 

[Sammael]

Ares being the Greek equivalent of the Roman Mars as the God of War.

Shouldn't this be the other way around?

 

[Sabotai]

Whooah,
$7.000 cash. This is the real killer. Cash is king. They don't even have enough cash to throw a decent party, let alone pay salaries or lawyers. If they don't get a capital injection this instant IPLY will implode.

An accumulated debt of $ 137.782.000 without a big cash cow in the near future... IPLY is doomed, unless the parent company is willing to chip in.

 

[Elwro]

Ares being the Greek equivalent of the Roman Mars as the God of War.

Shouldn't this be the other way around?

Well, equivalence is commutative.

 

[Briosafreak]

Van Buren continues in production, it wasn`t canceled, no one left this week, but Iplay situation isn`t great.

 

[EEVIAC]

I haven't seen this posted anywhere, but has anyone read the Gamespot news item about JE? Some quotes :

I am reluctant to publicly give those reasons, but I would like to say that it is not for personal or medical reasons.

So he didn't just get fed up with Interplay and he's not having a nervous breakdown, the only other possibility I can think of is that he was reassigned to something else, i.e. Van Buren has been cancelled, or has been turned into FOBOS 2.

Further "evidence" :

Sawyer's departure came as a shock to those following Fallout 3's development. An avid poster on the BIS forums, he had put up an enthusiastic message gushing about the game's nonplayer character AI just 15 hours before his resignation announcement. Shortly after he took over as lead, Sawyer pledged his devotion to the project in another message, saying "If I abandon my team, I don't know if I'd be able to respect myself." He went on to say that he had wanted to work on the third installment in the sci-fi role-playing series since 1999--the year after Fallout 2 was released--and said he'd persevere despite receiving negative feedback. "If I didn't think the trade-off was worth it, I wouldn't still be around," said Sawyer.

So if there's no FO3, there's no reason for him to stay.

On his future :

So what's next for Sawyer? Although there was some speculation that he would join other former Black Isle workers at Obsidian Entertainment, the designer told GameSpot he's taking some time off from the RPG industry. "I've been trying to work on hardcore PC RPGs for the past three years, and it just hasn't been panning out," he said. "I need to try something else for the next few years before I dive back in."

 

[Major_Blackhart]

I prophesize that within the next year, IPLY will be either gone, sold, or gone. Happy days are here again. Only 7k in cash? WTF are these guys thinking?

 

[Diogo Ribeiro]

I prophesize that within the next year, IPLY will be either gone, sold, or gone.

There's still the possibility of them being gone

 

[Seven]

I wonder whose fault Iplay's situation is. Fargo knew that going to Titus for financing would cost him in the long run and yet he still did it. Then Titus superficially lowers Iplay stock to help sink it, and now Titus is stuck with the sinking ship and a whole in its wallet. This is poetic justice.

 

[Voss]

Hmmm. I wonder if Iplay has, or will, spun off and sold Black Isle?

Its entirely possible and in keeping with their trends over the past couple years.
- selling off licenses and whatnot (Shiny) for quick cash...
- focusing more on console games, which is a stated goal in that document (and probably reinforced by Lionheart). Anyone know the current figures for Lionheart, by the by?
- spinning off and selling a division a company can no longer support is a not uncommon business practice.
- it'll reduce operating costs and headcount...


Heh. Bioware South?

 

[Major_Blackhart]

What I want to know is how they pulled this shit off in the first place: Staying afloat for so long

 

[Grifman]

Interplay is in a finanicial death spiral.
Grifman

Most excellent news.

If they are bunkrupt then the Fallout license could be sold cheap.

I pity their developers but their managers lost touch with their customers.

You know, I've never understood someone that takes pleasure in someone else's misfortunes. Whether you like IP or not, they have done nothing to you. Taking joy in other's misfortune is just piss poor, and says more about you than you'd like to be known, frankly.

Grifman

 

[Briosafreak]

Voss: they can`t sell it, since it`s a division, it has no autonomous legal personality. And that`s the tragedy...

 

[Visceris]

Interplay deserves it due to its idiocy.