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Midway Games

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Midway Games Inc.
Company typePublic
IndustryVideo games
PredecessorMidway Manufacturing, Bally Midway
Founded1958
FounderHenry Ross, Marcine Wolverton
Defunct2010
FateBankruptcy; assets acquired by Warner Bros. Interactive Entertainment
Headquarters
Chicago
,
United States
Area served
Worldwide
Key people
Sumner Redstone (majority owner until 2008), Mark Thomas (owner from 2008), David Zucker (former CEO), Matt Booty (former CEO)
ProductsMortal Kombat, Rampage, Spy Hunter, NBA Jam, Cruis'n, NFL Blitz, Defender, Joust, Robotron: 2084, Rush collection

Midway Games Inc.—previously known as Midway Manufacturing and Bally Midway—was a prominent American video game developer and publisher that operated from 1958 until 2010. The company gained recognition for popular franchises such as Mortal Kombat, Rampage, Spy Hunter, NBA Jam, Cruis'n, and NFL Blitz. Additionally, Midway secured rights to several titles originally created by WMS Industries and Atari Games, including classics like Defender, Joust, Robotron: 2084, and the Rush collection.

The company was established in 1958 under the name Midway Manufacturing, initially focusing on amusement game production. In 1969, it became part of Bally Manufacturing. Midway ventured into interactive entertainment in 1973, developing and distributing arcade games. Its major breakthrough arrived in 1978 with the U.S. distribution of Space Invaders. In 1982, Bally merged its pinball operations with Midway, creating Bally/Midway. Later, in 1988, Bally divested its amusement games division to WMS Industries, which reinstated the Midway brand for its video game segment.

By 1994, WMS had acquired Tradewest, incorporating home video game publishing under the banner of Midway Home Entertainment by 1996—the same year Midway went public through an initial public offering. WMS fully separated from Midway by 1998. Although ranked as the fourth largest video game publisher by 2000, Midway faced substantial financial losses, leading to various funding rounds and debt issuances. The company withdrew from the arcade sector in 2001. Between 1998 and 2007, Sumner Redstone, head of Viacom and CBS Corporation, increased his ownership stake from approximately 15% to nearly 87%. In December 2008, Redstone sold all his shares along with $70 million in debt to private investor Mark Thomas for $100,000.

In February 2009, Midway filed for Chapter 11 bankruptcy protection. Most of its assets were subsequently acquired by Warner Bros. Interactive Entertainment. The company reached a settlement with Thomas to release his stock and debt interests. Lawsuits accusing former executives of misleading shareholders were dismissed, and in 2010 the bankruptcy court approved a liquidation plan for Midway. The company officially ended its public securities registration on June 9, 2010.

Arcade games

Midway Manufacturing Company was founded in 1958 by Henry Ross and Marcine Wolverton as an independent producer of amusement equipment. In 1969, it was acquired by Bally Manufacturing, a leader in slot machine production at the time. Initially focused on mechanical arcade games, Midway emerged as one of the early American pioneers in video gaming by partnering extensively with Japanese publisher Taito throughout the 1970s to license and distribute games across their respective territories.

The company's landmark achievement came in 1978 when it secured U.S. licensing and distribution rights for Taito's Space Invaders. This success paved the way for releasing Namco’s Pac-Man in the U.S. market in 1980, followed by its sequel Ms. Pac-Man in 1982. That same year, Bally merged its pinball division with Midway to form Bally Midway Manufacturing Company, introducing the Bally/Midway brand on titles like Satan's Hollow. Throughout the late ’70s and ’80s, Midway dominated the U.S. arcade video game industry.

In 1983, Bally Midway purchased Sega Electronics’ arcade manufacturing assets from Gulf and Western Industries, acquiring U.S. distribution rights for Sega games such as Astron Belt, Flicky, and Up 'N Down for a two-year period.

In 1988, Williams Electronics Games acquired Bally Midway via WMS Industries, renaming it Midway Manufacturing and relocating its headquarters to Chicago. While retaining key research and development personnel, only two original designers—Brian Colin and Jeff Nauman, known for their work on Rampage—remained. The company continued producing arcade titles under Bally/Midway branding while maintaining pinball production under Bally.

By 1991, Midway had absorbed Williams’ video game division and discontinued using the Bally/Midway label for arcade products. Its pinball machine released in 1992, The Addams Family, became the best-selling pinball game ever produced. In 1996, following WMS’s acquisition of Time Warner Interactive—which included Atari Games—Midway Manufacturing was rebranded as Midway Games Inc., reflecting its growth into the home console market. This restructuring also involved transferring WMS’s home console division (formerly Tradewest) to Midway, establishing Midway Home Entertainment alongside the original arcade-focused Midway Amusement Games.

Over time, Midway developed various proprietary arcade system boards that supported its global product lineup and service operations.

Spin-off and emphasis on home video games

In 1996, WMS conducted a public offering of Midway shares, transferring its video game intellectual property rights to Midway, while Midway handed over its pinball assets to WMS. Two years later, in 1998, WMS distributed its remaining 86.8% stake in Midway to its shareholders, rendering Midway an independent entity for the first time in nearly three decades. Midway continued to own Atari Games as a fully owned subsidiary and gradually phased out executive overlaps and shared facilities with WMS over the following years.

On December 22, 1999, Midway rebranded its Atari Games division as Midway Games West, Inc., aiming to prevent confusion with Atari Interactive. In 2000, the company’s home entertainment division acquired the remaining Psygnosis titles for the PlayStation platform. Due to a declining arcade market, Midway shuttered its arcade division on June 22, 2001. Although Midway Games West ceased operations in February 2003, it remained a legal entity. After enduring continuous losses since 2000, Midway’s deficits worsened in 2003, reaching $115 million against $93 million in revenue. Nevertheless, the company sustained operations by raising capital through stock and debt issuances. That same year, Sumner Redstone increased his ownership stake to 80%, becoming a dominant shareholder.

To expand its market presence, Midway acquired several independent development studios: Surreal Software in April 2004; Inevitable Entertainment in October 2004 (which was renamed Midway Austin); Paradox Development in December 2004; and Australian developer Ratbag Games in August 2005. Ratbag was closed by the end of 2005. Financially, Midway posted losses of $20 million on $162 million in sales during 2004 and $112 million on $150 million in sales in 2005. Sumner Redstone appointed his daughter Shari Redstone to the board of directors and subsequently named her chairperson.

On February 15, 2005, Midway entered into a publishing agreement with Cartoon Network to develop games based on Cartoon Network and Adult Swim franchises, with options to leverage their own intellectual properties.

Midway was ranked as the fourth largest video game publisher by sales in 2000 but declined to nineteenth place by 2005 and twentieth in 2006 according to Game Developer magazine.

Late 2000s and bankruptcy proceedings

In both 2006 and 2007, Midway reported substantial losses—$77 million on $166 million revenue and $100 million on $157 million revenue respectively—continuing to finance operations through debt offerings. During this time, Midway was engaged in a legal dispute with Mindshadow Entertainment concerning rights to the Psi-Ops video game; however, a court ruling in 2008 found no infringement of copyright.

On March 6, 2007, Midway secured a $90 million credit facility from National Amusements, controlled by Sumner Redstone. CEO David Zucker emphasized anticipated growth fueled by the upcoming launch of Unreal Tournament 3 and expansion in mainstream gaming markets as key factors for a "significant" year ahead. Zucker resigned on March 21, 2008, with former Senior Vice President Matt Booty assuming leadership. To cut expenses, Midway closed its Los Angeles and Austin offices during summer 2008 while maintaining studios located in Chicago, Seattle, San Diego, and Newcastle (UK).

During this period, titles such as TNA Impact! and Blitz: The League II were released. In November 2008, the company issued warnings regarding potential cash shortfalls for working capital needs and initiated cost reduction strategies. Lazard was retained to evaluate strategic and financial options. The company received notice from the New York Stock Exchange regarding delisting after its stock price fell below one dollar. The final game released prior to bankruptcy was Mortal Kombat vs. DC Universe in November 2008.

On December 2, 2008, Sumner Redstone sold his controlling 87% interest in Midway to private investor Mark Thomas for roughly $100,000 through MT Acquisition Holdings LLC. Thomas also purchased $70 million of Midway’s debt owed to Redstone. While this transaction caused significant losses for National Amusements, it provided tax advantages. The sale triggered clauses requiring immediate debt repayment that placed approximately $240 million of corporate debt at risk of default.

In fiscal year 2008, Midway recorded a loss of $191 million on revenues totaling $220 million. The change of ownership eliminated access to more than $700 million in tax benefits derived from net operating loss carryforwards. On February 12, 2009, Midway along with its U.S.-based subsidiaries filed for Chapter 11 bankruptcy protection and continued operations as debtor-in-possession. A company representative described this filing as a strategic measure aimed at restructuring and strengthening the business following ownership transition and accelerated debt obligations.

2009 asset divestitures

On May 21, 2009, Warner Bros. Interactive Entertainment (currently known as Warner Bros. Games) submitted a takeover proposal exceeding $33 million to purchase the majority of Midway’s assets. This included the Chicago and Seattle development studios along with the rights to the Mortal Kombat and Wheelman franchises. Notably, the bid excluded the San Diego and Newcastle studios as well as the TNA game series. Prior to this, Midway had partnered with Warner Bros. on projects such as Mortal Kombat vs. DC Universe. By May 28, Midway declared that binding offers would be accepted until June 24, with an auction planned for June 29; nevertheless, no competing bids were received, leading to the auction’s cancellation. On July 1, the bankruptcy court sanctioned the sale to Warner Bros., pending resolution of intellectual property claims from Threshold Entertainment.

Although Midway intended to shutter its San Diego studio by September 2009, THQ acquired it on August 19 for $740,000, thereby relieving Midway of related liabilities. On July 10, Midway resolved roughly $4.7 million in debt owed to affiliates of majority shareholder Mark Thomas, who in turn surrendered voting rights on his shares and reduced his claims by 93%. That same day, the asset transaction with Warner Bros. was finalized for approximately $49 million, inclusive of receivables; Warner Bros. assumed liabilities and triggered $2.4 million in executive incentive payouts. The Chicago studio—known for developing Mortal Kombat—was absorbed into Warner Bros., later renamed NetherRealm Studios.

Midway closed its Newcastle studio on July 14, resulting in the dismissal of 75 staff members. Subsequently, on August 19, it divested its French and German subsidiaries to Spiess Media Holding UG and F+F Publishing GmbH respectively; Spiess also acquired Midway’s London publishing subsidiary. These European transactions generated $1.7 million in cash and eliminated intercompany receivables. By September 2009, Midway had shut down its Chicago headquarters and laid off most personnel; however, many employees were retained by Warner Bros. On October 2, Midway and its subsidiaries sold intellectual property assets—including TNA licenses—to SouthPeak Games for $100,000 plus assumption of associated liabilities. By this stage, Midway had ceased all game development activities and disposed of all fixed assets.

Litigation and dissolution

In October 2009, the U.S. District Court in Chicago dismissed a lawsuit brought against former Midway executives accusing them of misleading shareholders during stock transactions. The court concluded that shareholders failed to demonstrate that executives did more than communicate optimistic strategic intentions. In January 2010, bankruptcy court rejected fraud allegations against Sumner Redstone, Shari Redstone, and other board members concerning 2008 loans and the transfer of Redstone’s controlling 87% stake to Mark Thomas—a transaction that increased company debt and eliminated tax benefits—while allowing other creditor claims to continue.

Midway submitted a liquidation proposal in February 2010 that offered partial repayment to unsecured creditors—approximately 16.5% for claims totaling $155 million against Midway Games and about 25% for $36.7 million in subsidiary claims. Secured and priority creditors were slated for full payment; National Amusements was excluded from distributions, as were equity stakeholders. The bankruptcy court approved this plan in May 2010, facilitating distributions of roughly $25.5 million to unsecured creditors of Midway and $9.2 million to those affiliated with subsidiaries. Buchwald Capital Advisors LLC was appointed as trustee of a liquidating trust charged with managing remaining assets and overseeing payments.

In June 2010, Midway withdrew its public securities registration with the SEC. A settlement worth $1 million with National Amusements resolved outstanding claims involving the Redstone family. Since December 2010, the liquidating trustee has initiated 57 avoidance actions recovering close to $3 million in funds transferred prior to bankruptcy proceedings. By March 2011, all residual unsold assets and subsidiaries had been dissolved; nonetheless, Midway Games continues to exist as a Delaware shell corporation as of . The rights to the Midway trademark and logo were acquired by Warner Bros. following the asset sales completed in 2009.

North America

  • Midway Amusement Games, LLC, located in Chicago, Illinois, evolved from the arcade division of Midway Manufacturing Company. After divesting its parts and service operations to Happ Controls in 2001, the company withdrew from the arcade sector but preserved intellectual property rights for the Midway, Bally, and Williams catalogs. Notably, former staff such as Eugene Jarvis went on to establish Raw Thrills.
  • Midway Home Entertainment, based in San Diego, California, was originally founded as Tradewest in 1985 in Corsicana, Texas. It expanded through the acquisition of Cinematronics (which was renamed Leland Corporation) in 1987. WMS Industries purchased Tradewest in 1994 to enter the home console arena, first rebranding it as Williams Entertainment and later as Midway Home Entertainment in 1996. By 2001, operations in Texas and San Diego were consolidated. This branch was responsible for publishing and marketing all Midway home console titles.

Europe

  • Midway Games Ltd., headquartered in London, UK, managed publishing and distribution throughout the UK and European territories. On August 19, 2009, it was acquired by Martin Spiess, a former Midway executive, and merged with Midway Games SAS to form Spiess Media Holding UG. The unified company adopted the name Tradewest Games.
  • Midway Games SAS, based in Paris, oversaw publishing and distribution within France. It was sold simultaneously with the UK division to Spiess in 2009 and integrated into Tradewest Games.
  • Midway Germany GmbH was established in Munich in 2005 by Midway Games Ltd. In August 2009, it was sold to F+F Publishing GmbH under the leadership of ex-manager Uwe Fürstenberg.

Sold

  • Midway Studios Chicago began as Midway’s primary arcade development facility before shifting focus to home and portable consoles after exiting the arcade market in 2001. This studio created titles such as Blitz: The League and Stranglehold, as well as overseeing the Mortal Kombat franchise. Following its acquisition by Warner Bros., it was renamed WB Games Chicago and later rebranded as NetherRealm Studios in 2010.
  • Midway Studios San Diego, which succeeded Leland Corporation, developed games including Gauntlet: Seven Sorrows, Ready 2 Rumble Boxing, and Blitz: The League II. Although Midway announced its closure in July 2009, THQ purchased the studio in August 2009 and renamed it THQ San Diego, retaining roughly 40% of its workforce. THQ ultimately filed for bankruptcy in 2012.
  • Midway Games West, originally founded as Atari Games in 1984 and acquired by Midway in 1996, specialized in arcade game development. Despite ceasing operations in 2003, it continued to exist as a holding entity for copyrights and trademarks now owned by Warner Bros. Games.
  • Surreal Software, established in Seattle in 1995, was acquired by Midway in 2004 before being sold to Warner Bros. in July 2009.

Defunct

  • Midway Studios Austin, initially known as Inevitable Entertainment, was founded in 2000, acquired by Midway in 2004, and closed down in 2008.
  • Midway Studios Australia (formerly Ratbag Games), founded in Adelaide in 1993, was acquired by Midway in August 2005 but shuttered by December of the same year.
  • Midway Studios Los Angeles (formerly Paradox Development), established in 1994 and acquired in 2004, ceased operations in 2008 with a subsequent merger into the San Diego studio.
  • Midway Studios Newcastle (originally Pitbull Syndicate), founded in 1996 and acquired by Midway in 2005, closed its doors in July 2009 following asset sales to Warner Bros.; several former employees went on to create Atomhawk Design and later Pitbull Studio.

Pinball

All games were issued under the Bally label unless otherwise specified.


External links

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