NEW YORK (Reuters) - Video game publisher Acclaim Entertainment Inc., which has been hampered by a lack of hit titles, filed for bankruptcy liquidation on Thursday after failing to line up new financing.
Acclaim, one of the oldest brands in the industry, has been known as much for failures like "Turok: Evolution" and controversial titles like "BMX XXX" as it has for its successes in the highly competitive industry.
The company, which filed for bankruptcy to liquidate its assets under Chapter 7 of U.S. Bankruptcy Code, has also faced lawsuits from some of its top licensees, including ones from teen superstars Mary-Kate and Ashley Olsen and biking legend Dave Mirra.
Acclaim is the second well-known company in the business to go bankrupt in recent times, after 3DO Co. in 2003.
It was not immediately clear what would happen to Acclaim's properties, including upcoming games like "100 Bullets" as well as new entries in the "Worms" franchise.
Rival developers are always looking to acquire popular games, and companies such as Majesco Holdings Inc. (OTC BB:MJSH.OB - news), Atari Inc. (Nasdaq:ATAR - news) and Take-Two Interactive Software Inc. (Nasdaq:TTWO - news) may be interested in Acclaim's roster, according to Wedbush Morgan Securities Inc. analyst Michael Pachter.
But opinions differed on the value of those assets.
"Games like 'Juiced' and 'Red Star' are worth quite a bit," Pachter said. "Majesco and Take-Two have a strong distribution presence so they would be able to get them out quickly."
On the other hand, RBC Capital Markets analyst Stewart Halpern noted that with 3DO's liquidation, none of their franchises sold for much more than $100,000.
"If that's any guide, then it doesn't seem like the asset sale story is going to be an exciting one," he said.
TRUSTEE APPOINTED TO SELL ASSETS
Acclaim attorney Jeff Friedman said a trustee has been appointed whose duties will be to sell Acclaim's assets, including several titles that are ready to market.
"(However) the games that are in the middle of development are more problematic because it is not clear that there will be money to finish those games," he said.
According to its annual report filed with the U.S. Securities and Exchange Commission (news - web sites), the company's assets totaled $47.3 million with liabilities of $145.3 million as of July 1.
Friedman said at least one creditor was owed more than $20 million but he did not know the name of that person or entity.
Acclaim in early July said it faced bankruptcy unless it could negotiate a new credit facility, reiterating that warning in late August.
"Negotiations with a proposed lender to replace the company's former primary lender, GMAC Commercial Finance (a unit of General Motors Corp. (NYSE:GM - news)), had terminated and the company's credit facility with GMAC expired on Aug. 20 and was not extended," Acclaim said in a filing with the U.S. Securities and Exchange Commission
RBC analyst Halpern said that while Acclaim's demise may be its own fault, other smaller developers in the $10 billion interactive gaming industry must struggle to compete in the face of rising marketing and developing expenses.
"The numerous errors and misjudgments that Acclaim made along the way make this a company specific situation," he said. But there is no question that the cost of doing business continues to increase, making it harder for smaller companies to compete broadly.
Shares of the Glen Cove, New York-based company, which was founded in 1987, peaked at more than $30 a share in late 1993 but last broke $5 in mid-2002 and have traded below $1 since last September. Over-the-counter Pink Sheets of Acclaim traded at around 2 cents on Thursday
Midway made the arcade versions, and acclaim ported them to consoles. Then acclaim became greedy bastards and made their own arcade version, and stole the name from Midway. Then Midway had to think of other names. Like Hangtime, Showtime, Hoopz, Ballers. Stupid Names
NBA Showtime: NBA on NBC, it was made by Midway. Acclaim hasnt made a decent basketball game since NBA Jam: Tournament Edition.
Midway this is your chance to reclaim the name "NBA Jam." Well maybe not, since NBA Jam 2004 sucked so hard, and now lameness is associated with it.
Late 1995/Early 1996
Acclaim obtains--steals? swipes?--the name "NBA Jam," since use of the phrase is actually controlled by the NBA itself. The resulting game is Acclaim's first arcade entry, NBA Jam Extreme, a polygon-based coin-op with a fourth button, "Extreme." Midway's programmers, meanwhile, continue work on their own 2D game, vowing not to go to 3D until they are ready to do so.
I worked for Acclaim for about a year during college. That place was full of idiotic management then, and aparently that hasn't changed. Noone ever said "hey it's not a good idea to make bad games based on big movie licenses" back then... and they pretty much always approached the game industry from a business angle instead of publishing games that gamers wanted. This bankruptcy is 10 years in the making, and they got what they deserved.
Ah-hem... What about Forsaken (also Probe). That was tons of 3D fun.
Acclaim was responsible for bringing Bust-a-Move to the US home audience. Acclaim also published Midway games like the Mortal Kombat series and Williams games like Smash TV.
Given that our previous US publishing partner (Acclaim) is now bankrupt and is no longer trading, I can confirm that we are currently in negotiation with several US publishers regarding publication and hope to have news on that very soon.
We apologise for any disappointment, particularly for the people who had pre-ordered Worms3D on Xbox (which is complete), the delays in it's publishing are entirely out of our control.
__________________
Martyn 'Spadge' Brown, Team17.
Acclaim shouldn't get any credit for hit games it published. It got lucky with games that were produced from the developers and picked up after the fact... Probe and Iguana being their star developers. All their other failures were due to inept marketing/business-based game publishing... "Let's make a DragonHeart game. Doesn't matter if it sucks... movie licensing sells, bitch!"
Management was also notorious for dropping killer features in order to rush titles out the door. There were bad games that could have been hits if they had stuck to the original design docs.
among others... (Not going to look them up, but I had quite a few.)
Yes, Acclaim didn't actually make any of the decent games they published. They're kinda like MS in a way. Bungie, Big Huge, Digital Anvil, Rare, Tecmo, etc. all made the cool MS games. Not MS.
<-- Acclaim