RAGE IS LATEST VIDEOGAME INDUSTRY CASUALTY
U.K.-based Rage and its administrative receivers at Ernst & Young said Wed. that game publisher had to close its 4 studios after sale of company couldn’t be completed. They said “it has not proved possible to achieve a sale of the business as a going concern due to the time required to resolve the complex legal issues surrounding the transfer of license and intellectual property rights.” As of our Wed. deadline, 145 of company’s 165 jobs had been cut because there wasn’t any revenue to finance wages, Ernst & Young said. Rage had announced earlier this month that following withdrawal of its banking facilities, Bank of Scotland had appointed Ernst & Young partners Hunter Kelly and Keith Hinds as receivers to handle its assets and supervise Liverpool company.
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Kelly said Wed.: “This is a highly regrettable situation and it is obviously extremely disappointing for all concerned that the legal risks could not be overcome sufficiently to achieve the sales of all or parts of the business as going concerns. Despite the considerable interest we received in the business and our continued efforts to progress this, we were faced with increasing complications posed by the number of licence holders and owners of intellectual property contained within the games which made it illegal to hand over or give access to the information to interested parties. These were such that not only were they impossible to overcome within the necessary timescale to keep the business trading, but there was also no guarantee that these issues could actually be resolved to meet the terms of the offers being made, and there was the danger that the proposed sales would have resulted in a net loss to the company and its creditors.”
With help of remaining staff, Ernst & Young said it “will now be exploring the sales of the individual titles and intellectual property contained within the games, including the back catalog, once appropriate consents have been obtained from the owners of the licences and intellectual property rights.”
Entering holiday season, Rage had been counting on strong sales season driven by release of Rocky videogame based on Oscar- winning classic movie of same name. But company wound up facing situation in Europe akin to what was seen in U.S. over holiday season in which publishers battled it out for adequate shelf space at retail stores and only limited number of games had much success. Rocky games are published by Ubi Soft Entertainment in U.S. as part of deal companies announced in May. It was unclear at our deadline what -- if any -- impact Rage’s exit from business would have on Ubi publishing of Rocky game.
Rage, whose hit game franchises included David Beckham Soccer, said in Oct. that it was “well placed to return to profitability” despite reporting preliminary operating loss of ?10.1 million for its fiscal year ended June 30. Chmn. John Roberts sounded hopeful then when he said “our industry is expecting its biggest ever Christmas trading period” thanks in large part to growing installed base of PlayStation 2 and “both Microsoft Xbox and the Nintendo GameCube [continuing] to grow their own installed bases at encouraging levels.” Rage also said then it had more than doubled its turnover in financial year to June 2002 compared with previous financial year, while operating costs had been “substantially reduced.”
Rage said in Oct. it filed lawsuit against Edison, N.J., game maker Majesco “to recover [a] debt comprising of unpaid guarantees and… damages owed to the Rage Group in relation to a previously announced distribution agreement for the North American market.” Ernst & Young spokeswoman told Consumer Electronics Daily Wed.: “As I understand it, [the lawsuit] was already quite far advanced when the receivers were appointed but although it is likely that the debt will continue to be pursued given the amount involved, all activity is now on hold after today’s developments, pending confirmation on the funding required to progress.”
Reuters reported from London Wed. that when trading of Rage’s shares was suspended Jan. 15, company was worth only slightly more than ?2 million. As European game consolidation continues, U.S. game analysts have said in recent months they expect consolidation among American game software publishers and developers in this country will only increase over rest of current game cycle as well.