The Beginning (1958-mid 1970's)
In 1958, Henry Ross and Marcine Wolverton, founded Midway Mfg. Co. as an independent amusement park rides manufacturer. In 1969, Bally Midway bought the company, and continued the company as a successful Casino Slots manufacturer. During 1973, Midway started also making mechanical arcade cabinets, such as Puck Bowling and a Simulated Western Shoot-Out. Throughout the middle of the 1970's, Midway had an alliance with Japanese Developer Taito, with both regularly licensing games to each other home country.
Getting Popular (1978-1996)
Midway's breakthrough was with licensing and publishing one of the most popular arcade games of all time; Space Invaders. Space Invaders insured the company's success. In 1980 Midway licensed Pac-Man and Ms-Pac Man in 1982. Also in 1982, Bally Midway merged Midway with his pinball division, making the company name, Bally Midway Mfg. Co.. Three of Midway's games were released that year also, the popular one being Satan's Hollow. During the 1970's-1980's, Midway was the most popular game-developer and manufacturer in the United States. In 1988, Bally Midway was bought by Williams Electronic Games, through the holding of WMS. Midway then moved from it's original location in Franklin Park, Illinois to Chicago and WMS re-incorporated Midway as a Delaware corporation. Through this, only 2 original game designers were kept, those being Brian Colin and Jeff Nauman, who both created Rampage. Then, Bally left the company, and gave the rights of his name on pinball machines to WMS. Under WMS ownership, Midway kept creating arcade games under Bally-Midway and pinball cabinets under Bally. In 1991, Midway absorbed the Williams games division and stopped use of the the name Bally-Midway label. In 1992, Midway had another breakthrough with The Addams Family pinball machine, with it becoming the best-selling pinball machine of all-time. In 1996, Midway purchased Time Warner Interactive Entertainment, which in itself included Atari, Inc. Midway also changed their brand from Midway Manufacturing to Midway Games Inc., symbolising their change to video games.
The Turn-Off to Home Video Games (1996-2005)
In 1996, WMS Industries made the public offering by giving Midway the licenses to Defender, Robotron: 2084 and Joust. In 1998 gave Midway the remaining 86.8% of WMS's interest, making Midway an independent company for the first time in 30 years. Midway kept Atari wholly owned subsidiary, as part of this spin-off. Midway retained some WMS employees and used common facilities with WMS for a few more years. Over several years, Midway terminated all material agreements with WMS and had a declining number of common members of its board of directors, until only one stood and was shared by both companies. In 1999, Midway quit out the pinball industry, turning to games forever outright. Midway changed Atari Games to Midway Games West Inc., to avoid confusion to Atari Interactive. In 2001, however, Midway shutdown the arcade division due to declining arcade sales, with people turning to home consoles. In 2003, Midway shutdown Midway Games West Inc., but it remained an entity. After losing millions since the early 2000's, by 2003, Midway had lost a whopping $115 million on sales of $93 million. Despite huge losses, Midway financed its business with stock and debt offerings and various credit arrangements. In 2003, Sumner Redstone, a significant minority shareholder since the spinoff to video games, owned 80% of Midway's stocks. In 2004, in an effort to expand the market share, Midway went on a spending spree for developers, acquiring Surreal Software, Inevitable Entertainment, Paradox Development, Ratbag Games. In mid 2005, Midway shutdown Ratbag Games, leaving employees without a job. During 2004-2005, Midway lost $20 million to sales of $162 million, and lost $112 million to sales of $150 million. In 2005, Sumner Redstone voted his daughter, Shari Redstone, to Midway's board of directors, and later as chairman of the board. In 2005, Midway signed an agreement to Cartoon Network to publish games based on properties of Cartoon Network and Adult Swim, and had an option to expand their properties. In 2000, Midway was No.4 in global video game publishers, falling to No.19 in 2005, and No.20 in 2006, according to magazine Games Developer.
The Death of a Company: Bankruptcy and Assets (2006-2010)
In 2006, Midway had lost a further $77 million to sales of $166 million, and in 2007 lost $100 million to sales of $157 million. It continued to finance, debt offerings and credit arrangements. In 2007, Midway engaged in a legal battle with Mindshadow Entertainement for the Psi-Ops: The Mindgate Conspiracy rights. Midway won the battle. On March 6, 2007, Midway reported that it had entered into a new $90m credit agreement with National Amusements, a company controlled by Sumner Redstone. Midway's CEO, David Zucker, stated that the introduction of Unreal Tournament 3, and the company's growing success in mass-market games, were setting it up for a "significant 2008". On March 21, 2008, Zucker resigned as CEO. He was the third executive to resign from the company in three months. Succeeding Zucker as CEO was former Senior Vice President Matt Booty. During the summer of 2008, in an effort to trim costs, Midway closed its Los Angeles and Austin studios. These closures left Midway with four studios, in Chicago, Seattle, San Diego and Newcastle, England. During this time, Midway just released TNA Impact! and Blitz: The League II around September/October 2008, under the Midway Studios Los Angeles office (before its closure) and the San Diego branch (Midway Games San Diego/Midway Home Entertainment). In November 2008, Midway reported that its cash and other resources "may not be adequate to fund... working capital requirements" and that it "would need to initiate cost cutting measures or seek additional liquidity sources". On November 20, 2008, Midway retained Lazard to assist it "in the evaluation of strategic and financial alternatives". The next day, Midway received a NYSE delisting notice, after its stock's price fell below one dollar. Midway's last title, Mortal Kombat vs. DC Universe, released around this time, in November 2008. On December 2, 2008, Sumner Redstone sold his 87 percent stake in Midway Games to Mark Thomas, a private investor, through his company MT Acquisition Holdings LLC. Thomas's company paid approximately $100,000, or $0.0012 per share. Thomas also received $70 million of Midway's debt that was owed to Redstone. National Amusements took a significant loss on the sale, although the loss allowed it to benefit from tax losses. In December 2008, Midway disclosed that it might default on $240 million of debt after the sale of stock to Thomas triggered clauses in two bond issues totalling $150 million of debt that allowed the bondholders to demand full repayment. In 2008, Midway lost $191 million on sales of $220 million, and Redstone's sale of his shares to Thomas eliminated Midway's ability to take advantage of accumulated net operating losses and other tax assets potentially worth more than $700 million. On February 12, 2009, Midway and its U.S. subsidiaries filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The company began to operate as a Debtor in possession. A company spokesperson said, "We felt this was a logical next step for our organization, considering the change in control triggered the acceleration of the repayment options, we're looking to reorganize and to come out on the other side stronger." Midway announced on May 21, 2009, that it had received a takeover bid from Warner Bros. Interactive Entertainment, valued at more than $33 million, to acquire most of the company's assets, including Midway's Chicago and Seattle studios and rights to the Mortal Kombat and Wheelman series. The offer did not include the San Diego and Newcastle studios or the TNA video game series. Midway had previously worked with Warner Bros. on several games including Mortal Kombat vs. DC Universe. Midway announced on May 28, 2009, that it would "accept binding offers up to June 24, 2009, to acquire some or all of the Company's assets." An auction was to be held on June 29, followed by a court hearing to approve the sale to the winning bidder or bidders. However, no other bids were placed for Midway's assets, and so the auction was canceled. On July 1, 2009, the bankruptcy court approved the sale of most of the company's assets to Warner Bros. subject to the intellectual property claims of a third party, Threshold Entertainment, which produced two Mortal Kombat films and some other Mortal Kombat entertainment properties. On July 8, 2009, Midway disclosed that it intended to close the San Diego studio by September. However, on August 19, 2009, THQ purchased the San Diego studio for $740,000 and extinguished Midway obligations to it. On July 10, 2009, pursuant to the terms of the Settlement Agreement that was approved by the bankruptcy court, Midway agreed to pay to affiliates of its majority owner, Mark Thomas, approximately $4.7 million in full satisfaction of all Midway debt to Thomas and his affiliates, and Thomas and his affiliates granted to Midway's Creditors' Committee an irrevocable proxy to vote his controlled shares of common stock in Midway and forever relinquished the right to vote or dispose of the shares. The settlement reduced Thomas's claims by 93 percent, and Midway continued to operate as a Debtor in Possession. Also on July 10, 2009, the sale of assets to Warner Bros. was completed. The total gross purchase price for the sale was approximately $49 million, including receivables, and Warner Bros. assumed liabilities. The sale also triggered payments under Midway's Key Employee Incentive Plan of approximately $2.4 million to company executives. The Midway Chicago studio, responsible for the Mortal Kombat series and other games, became part of Warner Bros. Interactive Entertainment and was later rebranded NetherRealm Studios. On July 14, 2009, Midway announced that it had closed the Newcastle studio and terminated 75 employees. On August 19, 2009, Midway sold its French and German subsidiaries to holding companies called Spiess Media Holding UG and F+F Publishing GmbH, respectively. Spiess also purchased Midway's London publishing subsidiary on the same day. The European sales resulted in cash proceeds of $1.7 million and the elimination of related intercompany claims. In September 2009, Midway shut down its Chicago headquarters and terminated all but a few of its remaining employees. Many of the former Midway employees at the Chicago studio acquired by Warner Bros. were retained by Warner Bros. On October 2, 2009, Midway and two of its subsidiaries, Midway Home Entertainment and Midway Studios Los-Angeles, sold intellectual property assets, including Midway's TNA video game licenses, to SouthPeak Games for $100,000 and the assumption of related liabilities; Midway was no longer selling games and had been disposed of all fixed assets at that time. In October 2009, the U.S. District Court in Chicago dismissed a lawsuit against former officers of Midway alleging that they had misled shareholders while selling their own stock. The judge ruled that Midway's shareholders had not shown that the executives "said or did anything more than publicly adopt a hopeful posture that its strategic plans would pay off". On January 29, 2010, the bankruptcy court dismissed claims brought by Midway creditors for fraud and breach of duty against Sumner Redstone, Shari Redstone and Midway's other directors, concerning his 2008 loans to the company and his subsequent sale of his 87% stake in the company to Mark Thomas, which increased Midway's net debt and wiped out the company's net operating losses and other tax assets. Judge Kevin Gross wrote that his decision was "not an endorsement of any of the defendants' actions. The defendants oversaw the ruin of a once highly successful company, only to hide behind the protective skirt of Delaware law, which the court is bound to apply." The court permitted other creditor claims to continue. In February 2010, Midway filed its proposed plan of liquidation with the bankruptcy court. Under the plan, intercompany claims would be extinguished and a partial recovery would be allowed to the unsecured creditors of Midway Games (who held $155 million of claims) to the extent of about 16.5%, and to the unsecured creditors of Midway's subsidiaries (who held $36.7 million of claims) of about 25%. Any settlement amount under the lawsuit against National Amusements was to be paid to the two groups of unsecured creditors in the same ratio. Holders of secured and priority claims were to be paid in full, National Amusements would not receive any payment under its Subordinated Loan Agreement, and the equity holders would not receive any payment. On May 21, 2010, the bankruptcy court approved the plan of liquidation. Unsecured creditors of Midway shared approximately $25.5 million, and unsecured creditors of the company's subsidiaries shared about $9.2 million. A liquidating trust, administered by Buchwald Capital Advisors LLC as the Trustee, was created to pursue any remaining rights of Midway's bankruptcy estate and distribute any proceeds to Midway's remaining creditors. On June 9, 2010, the company filed a Form 15 with the Securities and Exchange Commission, terminating the public registration of its securities. The creditors' settlement of their lawsuit against National Amusements, in the total amount of $1 million, was approved by the bankruptcy court on June 21, 2010, ending the outstanding claims against the Redstone family. Since December 2010, the trustee for the liquidating trust of the company, Buchwald Capital Advisors LLC, has filed 57 avoidance actions seeking to recover a total of $2,936,736 in transfers made by Midway to creditors prior to its bankruptcy filing. In March 2011, the court dismissed the adversary proceeding by Threshold Entertainment. All of Midway's remaining unsold assets, as well as the remains of the company itself, were completely dissolved shortly thereafter.