REF: next-generation.com
Let the Bidding War Begin
September 11, 1997
The sale of Virgin Interactive is drawing the
interest of companies such as Electronic Arts, Sega,
GT Interactive and Spectrum Holobyte.
According to the European trade magazine CTW, a bidding war is
shaping up for Virgin Interactive. The company was originally
bought by Viacom for a total cost of $250 million dollars, and
while it has remained profitable in Europe and Asia, the company
lost significant money in the US recently.
In 1995 Viacom reported operational losses of $14 million dollars
and a year later announced a $255 million dollar write-off
attributed to the cost of divesting it interest in Virgin. Actual trading losses for 1996 are believed to be much lower, around $25
million.
The company's problems stem from several different areas. The
spiraling cost of software development and high overhead were
major factors in the losses. Also, lower than expected results in the
US hurt overall performance.
However, Virgin Interactive remains a hot property for publishers
primarily due to one of the industry's most successful developers,
Westwood Studios. The company bought Westwood for only $6
million five years ago a move that has proven to be one of the
wisest studio acquisitions of the 90's.
Electronic Arts and GT Interactive seem to be most interested in a
share-swap like EA used to acquire Maxis, Bullfrog, and Origin.
Sega and Spectrum Holobyte, on the other hand would probably
pursue a cash deal, with Spectrum requiring significant funding to
do so. Other sources suggest that Virgin Group founder, Richard
Branson, has taken an interest in buying back Virgin Interactive
because of the current strength of the videogame market.
Of all these companies, EA has possibly the biggest interest
towards a buyout. the company has traditionally sought after
franchises, and few are bigger than Westwood's Command &
Conquer. EA could also use the purchase to shore up its already
strong European distribution. Virgin has an infrastructure set up in
Europe to handle distribution for companies such as LucasArts,
Capcom, Hasbro, Bethesda, JVC, and others. This division is
traditionally responsible for more than 70 percent of Virgin's global
revenue.
Those interested in buying Virgin Interactive are also spurred on
by Westwood's upcoming titles. Along with the highly publicized
PC title, Blade Runner, more Command & Conquer games are
on the way. A PC mission disc entitled Aftermath and a
PlayStation version of Red Alert will maintain the franchise until
the fully redesigned C&C III is released.
the due date for official bids is believed to be within the next
month or so.
Coy |
