Interplay Announces IPO, Seeks to Raise $72 Million
Hoping to take advantage of investors’ interest in digital entertainment, game developer Interplay Entertainment Corp. said Monday it plans to raise about $72 million by selling stock in an initial public offering.
The company--best known for its outrageous marketing campaigns--has struggled to make a profit over the last several years, according to documents filed with the Securities and Exchange Commission.
Interplay, which makes the Virtual Reality sports and Descent series of games, has not turned an annual profit since 1995. It lost $27.2 million in fiscal 1997 on sales of $83.3 million. The company lost $10.7 million through the first three quarters of fiscal 1998, although it recorded a third-quarter profit of $7.4 million.
Proceeds will be used to repay $33.6 million in debts, a $1-million bonus to 35-year-old founder Brian Fargo and $1.5 million to distributor Universal Interactive Studios.
Interplay didn’t say how many shares it planned to sell or at what price. Universal is the company’s biggest shareholder at 44%. Fargo, who made $237,500 in salary last year, owns 40%.
Brian Fargo
After two years of industry-wide troubles--including soaring production costs and missed deadlines--analysts say investors may be leery of buying into Interplay’s image.
“With Interplay, you can count on fast hits and future hype. But it’ll be very difficult to gauge the real value of this company because it’s such a grab-bag collection of assets,” said Dan Lavin, a multimedia analyst with the research group Dataquest. “There’s Interplay the independent publisher; Interplay the developer; and Interplay, the owner of Shiny Entertainment and the brightest piece of their company.”
Shiny, based in Laguna Beach, is a game developer best known for creating Murder-Death-Kill and the Earthworm Jim series.
Interplay officials declined to comment Monday. The company develops, publishes and distributes interactive titles made for both the PC and other video game platforms.
Founded by Fargo in 1983, Interplay and its staff of nearly 500 have long worked under the corporate philosophy of creating products “by gamers, for gamers.”
The company’s marketing gimmicks have reflected the game industry’s irreverence. For the 1996 release of “Virtual Reality Baseball,” Interplay announced that it intended to buy the Los Angeles Dodgers--as long as 10 million fans bought copies of the game. And last year, the company held a blood drive for its driving game “Carmageddon,” which carried the slogan “so many pedestrians, so little time.”
But like its rivals in the computer game industry, Interplay has struggled financially. The company’s troubles come from delays in developing its games and getting them to market on time, according to the filing. For example, “Stonekeep,” a glossy adventure game, took five years to make and missed two release dates.
Hoping to offset the financial drain, the company began acting as a distributor for other entertainment developers, such as the Discovery Channel and Universal.
Yet the effort did not stem the losses, because the titles did not sell as well as expected, according to the filing.
Piper Jaffray Inc., Bear Stearns and UBS Securities are underwriting the offering.
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Interplay Entertainment at a Glance
* Headquarters: Irvine
* Founded: 1983
* Founder and CEO: Brian Fargo
* Product: Entertainment software
* Employees: 500
* 1997 sales: $83.3 million
* Popular game titles: “Descent,” “Mario Teaches Typing,” “Battle Chess,” “Star Trek 25th Anniversary,” “Stonekeep,” “Star Fleet Academy”
Source: Times reports, Interplay Entertainment Corp.; Researched by JANICE L. JONES / Los Angeles Times
