Midway Games lays off nearly half of its staff while investor makes a 4,900% return

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Screen shot from Mortal Kombat vs. DC Universe. Credit: Midway Games.

Midway Games has cut 46% of its 520 employees in the last few days, including about 100 developers in its San Diego office who have been working on a wrestling game under a license with TNA.

Some of the layoffs were detailed in a document filed yesterday with the Securities and Exchange Commission. In addition to the San Diego crew, the layoffs include 60 executive and administrative staff members in the company’s Chicago headquarters and 75 developers in a U.K. studio. About 210 Midway developers got to keep their jobs as Warner Bros. employees.

The filing also disclosed the final price Warner paid for most of the bankrupt Chicago game publisher’s assets: $49 million, or $16 million more than the originally announced price of $33 million. The difference comes from the final tally of the value of Midway’s inventory of games and its accounts receivables on July 9, the day before the deal closed, according to Geoff Mogilner, a Midway spokesman.

In addition, the filing shows that Mark E. Thomas, the mysterious Massachusetts investor who in November paid former majority owner Sumner Redstone a mere $100,000 for an 87% stake in Midway, received $5 million for his trouble. That’s a 4900% return, minus a few percentage points for legal and administrative fees. That’s a tidy score in any economic climate.

Warner, meanwhile, has not said what it would do with its purchase, which includes a development team in Chicago that makes the Mortal Kombat franchise and a Seattle studio that is working on an adventure game called This is Vegas. Warner emerged as the sole bidder for Midway’s assets last month, but it didn’t take the whole company. Left out of the deal were two studios, one in England that has been shut down, and the other in San Diego. Unless Midway finds a buyer, the San Diego studio faces a similar fate to its U.K. counterpart’s.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.