The encyclopedia · Product & Design · Product decision · 2007–2009
Midway made Mortal Kombat — then lost $400M in two years and went bankrupt
Midway created Mortal Kombat and NBA Jam. After a $400M loss in 2007–2008, it filed Chapter 11 in February 2009. Warner Bros. bought the assets for $49M.
Midway Games · Warner Bros. · 2009-02
What happened
Midway Games, founded in 1958, was one of the oldest names in gaming. It created Mortal Kombat (1992), NBA Jam (1993), and Ms. Pac-Man (1981). At its peak in the 1990s, Midway was a dominant force in arcade and console gaming.
The decline began in the 2000s as the industry shifted to high-budget console titles. Midway's games — including the expensive Stranglehold and Unreal Tournament 3 — underperformed. The company lost over $400 million across 2007 and 2008. Its stock fell from $20 to under $1.
Midway filed for Chapter 11 bankruptcy on 12 February 2009. Warner Bros. Interactive Entertainment acquired Midway's assets — including Mortal Kombat, DC Universe Online, and the Midway name — for just $49 million. A company that had defined arcade gaming for three decades was sold for less than the marketing budget of a single AAA title.
Why it happened
- Midway's arcade DNA did not translate to the console era; the company could not compete with EA, Activision, and Ubisoft on production budgets.
- The $400M losses in 2007–2008 reflected a portfolio of expensive games that did not sell — the hit rate was too low for the spend.
- The stock collapse from $20 to under $1 cut off capital-market access, leaving no runway for a turnaround.
- Warner Bros.' $49M acquisition price shows how little the market valued Midway's IP without a functioning studio behind it.
The lesson
A legendary IP portfolio is not a business. Midway owned Mortal Kombat, but without the studio to ship competitive games, the IP was worth $49M to a buyer who could.
Aftermath
Mortal Kombat continues under Warner Bros. subsidiary NetherRealm Studios and remains one of the best-selling fighting game franchises. The Midway name was retired. The case is cited as an example of how the gaming industry's shift to high-budget console development eliminated mid-tier publishers.
Sources
- Midway Games — Wikipedia (founded 1958; Mortal Kombat 1992; NBA Jam 1993; $400M+ losses 2007–2008; Chapter 11 filed 12 February 2009; Warner Bros. acquired assets for $49M)
- CBS News — Warner Bros. Ends Up Paying $49 Million For Midway Games (final price $49M per SEC filing; judge had approved $33M deal subject to adjustment; Mortal Kombat franchise; Chicago HQ closed, 60 laid off; 75 more laid off in Newcastle UK; Sumner Redstone sold 87% stake for $100K)
spotted an error? The club wants to know.
More like this
Frigidaire's gas ranges delayed ignition long enough to build up gas
191,000 Aroeve air purifiers recalled after 37 overheating reports
Panasonic recalled 11,480 toaster ovens over an exposed power cord
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.