Media magnate Sumner Redstone has sold his majority stake in Mortal Kombat publisher Midway for a paltry $100,000, according to the Wall Street Journal.

Analyst Michael Pachter once estimated that Redstone spent between $500 and $700 million on Midway stock since 1983. But Midway's stock price has plummeted in recent years, falling from $23 a share in 2005 to 38 cents last Friday.

Redstone's controlling interest was sold to investor Mark Thomas for $0.0012 a share. Redstone will take a loss on the sale, but stands to gain from tax benefits.

Thomas will inherit the company's $70 million in debts, and will be charged with stomaching the company's growing losses and frequent layoffs.

Following news this week that Midway's decision to use the Unreal Engine was implicated in the publisher's rapid decline, Ben Fritz of Variety clarified his original story, stressing that the Unreal Engine itself is not at fault.

"To be direct: my sources are not saying Unreal Engine, and Epic Games, are the cause of its problems," Fritz wrote. "Rather it's the decision by Midway to use UE3 for all its games, and subsequent problems adapting the code, which caused game delays and then cash flow problems," he added.

The publisher had decided to license the engine for its whole portfolio as a cost-cutting measure. The intent was to allow Midway studios to share resources more efficiently, but instead individual projects demanded adapting the engine to their needs.

The tweaks not only negated the supposed benefits of the license, but their complexity caused a host of delays for the publisher, which in turn caused financial losses.

Midway, sensing its hand was forced, then pushed out games in a desperate grab for revenue, but the games' critical and retail failures only worsened the publisher's financial problems.

A number of ex-Midway employees, when asked about the publisher's downward spiral, had a variety of answers, but almost all of them mentioned Unreal Engine 3, the technology licensed from Epic Games that powers Gears of War.

"One issue popped up again and again: Midway's decision to license Unreal Engine and use it for ALL its games," wrote Variety's Ben Fritz of his interviews with former Midway staffers.

Epic's Gears of War 2, built on Unreal Engine 3

The technology had been licensed to give Midway a common technical base for its projects, but individual teams lacked the know-how to tweak the engine for their own purposes. "It was a ton of new technology which they just weren't capable of doing. It put all the games way behind schedule," said an anonymous ex-employee.

When those delayed games finally were released, they suffered at the hands of critics and sold poorly, forcing Midway to push bad games out the door in a desperate grab for revenue.

This isn't the first time Epic's technology has been implicated in another studio's misfortunes. Too Human developer Silicon Knights sued Epic for breach of contract over its Unreal Engine 3 license after the developer encountered a number of issues while working on the game.

The persistently-troubled publisher Midway has relieved its Chicago studio of a "small number" of employees following the completion of "two major frontline games:" Blitz: The League II and Mortal Kombat vs. DC Universe.

"As large projects are completed, it is expected for any multi-team studio to evaluate the appropriate staffing levels and team composition needed going forward," said a Midway representative to Edge.

Exact numbers were not revealed, but the rep did say that the layoffs affected "well below 10 percent of the studio population." The representative added that many of those employees were moved elsewhere within Midway, although that number also was not specified.

"No other changes are being made at this time," said the representative, signaling that there were not cancellations like the last round of Midway layoffs. In August, the publisher laid off 90 employees--around 70% of the workforce--at its Austin branch, and cancelled an unannounced game in the process.

The difficulties continue to mount for the struggling Midway, which announced massive losses this week. The company doubled its Q3 losses over the year before and lost the involvement of Shari Redstone, daughter of media mogul Sumner Redstone.

Game publisher Midway is facing yet another setback: a reported loss of $75.9 million for the July-September quarter of 2008, a massive drop from the $33 million losses in Q3 2007.

Shari Redstone, daughter of media mogul Sumner Redstone, has resigned from her position as chairperson of the board, signaling another high-profile executive departure for the embattled publisher. She leaves to focus on National Amusements, the financially-troubled owner of Midway. At the end of 2007, Midway planned a revival through "fewer, bigger, better" games and greater personal involvement on the part of Redstone.

CEO Matt Booty has been confirmed as the company's chief executive going forward, after serving several months in an interim position.

The publisher's losses add to those of $30-million-plus losses in Q1 and Q2 of this year. Meanwhile, its workforce is set to be slashed by 10%, and massive layoffs at the company's Austin offices carried out in Q3 contributed to that goal.

Industry analyst Michael Pachter found that despite Midway's problems, the company may well survive and return to profitability. "Notwithstanding the continued restructuring theme and likely delay of a return to profitability by another year, we remain cautiously optimistic that Midway will perform better in 2009 than it is expected to perform in 2008," said Pachter in a Gamasutra report.

Electronic Arts has confirmed that its urban basketball series NBA Street is now on hold, with rumors suggesting that Midway's NBA Ballers franchise has been halted.

"We'll still do traditional sports, but we're going to do them a different way," EA Sports president Peter Moore explained to ESPN. "In the old days we had things like SSX that were our own intellectual property, but since then we've kind of moved away from that. We need a mixture of experiences that are not only for the hardcore."

"If Wii Sports has taught us anything, it's that people will sit there and play big head tennis all day long," he explained. "We need to have something for that sports fan who might not necessarily be a sports gamer, but who wants that 15-minute... Read more

Now available for download at FileShack is a free PC edition of The Suffering, Surreal Software's 2004 prison-themed survival-horror action game.

Now supported by advertising, publisher Midway's release of the game is meant to help promote the upcoming feature film of the same name.

Publisher Midway has laid off 90 of its Austin studio's 130 employees and cancelled an unannounced project in development, the developer announced today.

The layoffs were part of a "strategic workforce reduction" enacted by the troubled publisher, which will see a cut of about 10% of the company's global workforce. Interim CEO Matt Booty expressed remorse over the reduction.

"While this was a very difficult decision, we feel it was the right thing to do for the future of Midway," Booty said. "We view every game as an investment that must meet certain standards for quality, scheduling, and profitability."

While Booty did not specify which title was axed, sources within the company told Kotaku that the cancelled game was Criminal, an open-world crime effort in development at Midway's Austin branch.

Midway had announced in October of last year that it was developing two "ambitious open-world games." The first of the two was eventually revealed as Surreal... Read more

Struggling publisher Midway announced that it incurred a weighty $34.8 million net loss in its fiscal year 2008 second quarter, which ended on June 30, 2008.

Net revenues for the company's second quarter amounted to $23.4 million, down from $31.8 million in the same period last year. The posting follows a similarly disappointing first quarter for the publisher, which saw $34 million in net losses.

Following the company's quarterly disclosures, Kotaku is reporting that three of Midway's senior staff have resigned. Among the departing staff is Mike Bilder, head of Mortal Kombat vs. DC Universe and Stranglehold developer Midway Chicago, who accepted a position at another Chicago-based game development studio.

"We are evaluating internal and external candidates for the role, and both Blitz: The League II and Mortal Kombat vs. DC Universe, as well as other projects in... Read more

Ever-struggling publisher Midway today posted a whopping net loss of $34 million across the first quarter of its 2008 fiscal year, which ended on March 31, 2008. The company has not posted an annual profit since 1999.

During that same time frame, Midway amassed $29.9 million in revenue, a figure that actually surpassed expectations of $28 million. In the same period last year, it only pulled in $11.1 million.

Of the company's $29.9 million revenue, 45.8% was attributed PlayStation 3 software, such as Epic's Unreal Tournament 3. Wii software, including Game Party and Cruis'n, accounted for 36% of its overall revenue, with Xbox 360 games representing 5.7% and PC titles making up 2.8% of that figure.

As it looks ahead to the road towards profitability, Midway expects similar losses for its second quarter. However, the company is optimistic for the performance of its 2008 lineup, which includes Mortal Kombat vs. DC Universe, This Is Vegas, Wheelman, and the Xbox 360 edition of Unreal Tournament 3.

The Mortal Kombat franchise will be returning later this year in the form of Mortal Kombat vs. DC Universe (PS3, X360), publisher Midway announced today. A trailer featuring Sub-Zero and Batman has been released to go along with the announcement. More information will be available later today here at Shacknews.

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Publisher Midway Games today announced two executive promotions within its corporate structure, naming Miguel Iribarren as senior VP of publishing and Martin Speiss as international executive vice president.

Irabarren joined the company in 2002, and most recently served as the company's vice president of publishing. Speiss joined Midway as managing director for Midway Games' Europe division in 2005.

"Both Miguel and Martin are proven executives and will be key to putting Midway back on the path to profitability," said Midway interim CEO Matt Booty. "With... Read more

Publisher Eidos has announced that a reimagining of Midway's classic cooperative arcade title Gauntlet is headed to the Nintendo DS this fall, courtesy of developer Backbone Entertainment.

Supporting online play and voice chat for up to four players, the game features four different character classes: Elf, Warrior, Wizard and Valkyrie. Multiplayer modes include deathmatch, team deathmactch, and treasure hoarde game types.

"With Gauntlet we've revitalised all of the action and fun of the original 1980s arcade classic, whilst updating the visuals and gameplay for today's DS gamer," said Eidos brand manager Ray Livingston. "With four-player Wi-Fi cooperative mode, one of the most memorable multiplayer gaming experiences of all time is back with a bang."

Midway has revealed that Epic Games' Unreal Tournament 3 (PC, PS3) and Midway Chicago's Stranglehold (PC, PS3, X360) have sold over a million copies worldwide.

The milestone was announced by Midway CEO David Zucker in a recent conference call. Sales milestones for both titles account for copies sold across multiple territories on several platforms.

Zelnick noted that while it may seem as though the PC gaming market is slowing, international PC sales continues to be strong in a number of markets.

"As we expected, our European PC sales of Unreal Tournament 3 are outpacing North America and, overall, the title is turning out to a success," Zucker added. "Later this year we are scheduled to launch the Xbox 360 version of Unreal Tournament 3 and expect it to perform equally well."

The CEO went on to say that Pipeworks Software's Rampage: Total Destruction (Wii), originally released in 2006, also broke the one million milestone.

It came out late last year that Eidos-parent company SCi was open to the possibility of a merger. For the second time in recent years, Midway has now entered talks with SCi as a merger candidate, according to Next-Gen.

The two companies began courting initially in 2003 after CEO David Zucker arrived at Midway. Next-Gen claims a source "within a major game publisher" informed them of the merger talks.

London-based game publisher SCi owns Eidos, known for publishing the Tomb Raider and Hitman series of video games among others. Chicago-headquartered Midway publishes and internally develops titles like BlackSite: Area 51 (PC, PS3, X360) and John Woo's Stranglehold (PC, PS3, X360).

Shacknews contacted both Eidos and Midway for comment, but has not yet received a response.

According to Midway senior VP and chief marketing officer Steve Allison, only 7% of the new game-related intellectual properties introduced across the past four years can be considered successful and review scores had no bearing on the sales of those games. "In other words, 93 percent of new IP fails in the marketplace," he explained on N'Gai Croal's Level Up. "So while the 90-plus review scores and armfuls of awards create the perception that titles like Psychonauts, Shadow of the Colossus, Okami and other great pieces of work were big successes...they were big financial disappointments and money losers."

"The truth is that there is no correlation between review scores and ... Read more

Midway has announced it has snapped up the North American publishing rights to Earth 2160, the sci-fi strategy game from Reality Pump Studios. The game will be released in the U.S. and Canada this November.