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Vivendi to Market, Distribute Interplay Games

28 Aug, 2001 By: John Gaudiosi

French video game publisher Titus Interactive, which has assumed control of troubled Irvine-based video game publisher Interplay Entertainment, has struck a deal with Vivendi Universal Interactive Publishing to market and distribute all Interplay games in North America, which includes the upcoming Matrix video games and the best-selling Dungeons & Dragons franchise, Baldur’s Gate.

"Existing synergies with Vivendi Universal, which has very strong distribution in North America, provide Interplay with the best opportunity of improving profitability," Titus Interactive said in a statement on Monday in France.

“Interplay will save at least $10 million a year on the back end by having Vivendi Universal Publishing handle the North American marketing and distribution of its titles,” said Patrick Sutton of the Liolios Group, which handles Interplay’s Investor Relations. “This deal will allow Interplay to focus on game development.”

Several of Interplay’s key marketing executives had left the company over the past few weeks, as Titus increased its ownership in the company to 51.5%. Interplay laid off 63 employees in late July, as part of cost-cutting moves. Titus said it will now cut Interplay’s marketing and distribution staff.

Sutton said that Titus Interactive is now in control of the company and he expects Interplay’s management future to be decided at Interplay’s annual shareholders meeting on Sept. 18. The fates of c.e.o. Brian Fargo, whose employment contract expires Nov. 2002, and c.f.o. Manel Marrero, whose five-year contract expires in March 2004, are expected to be decided.

“I think Fargo will continue to be a major figurehead with Interplay, although possibly not in his current position,” said Sutton.

Sutton said that although the VUIP deal is good for Interplay, it doesn’t provide money up front. Interplay is running low on cash as a result of several key games having their releases delayed and the increased costs of developing games for next-generation consoles. Interplay is transitioning out of the PC games business to the more lucrative console video game business.

Interplay reported a net loss of $12.4 million for Q2, or 34 cents per share, on revenues of $14.8 million, compared with a net loss of $1.9 million, or 7 cents per share, on revenues of $24.9 million, a year earlier. The company shipped only four games in Q2, compared to 10 games in Q1.

Titus is expected to make more changes to turn Interplay around.

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