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Interplay returns to operating profit, but faces major cash problems

Publisher Interplay has announced a return to operating profitability in its full year figures, but the company still has significant cashflow difficulties which are affecting its ability to meet lease and payroll obligations.

Publisher Interplay has announced a return to operating profitability in its full year figures, but the company still has significant cashflow difficulties which are affecting its ability to meet lease and payroll obligations.

For the twelve months ended December 31st last year, Interplay reported an operating profit of $1.4 million, as compared with a $12.4 million operating loss the year before. Net revenues fell 18 per cent to $36.3 million from $44 million, while net income dropped to $1.3 million from $15.1 million.

However, revenue and net income figures for the company are misleading, because Interplay has been divesting itself of many of its key assets aver the past two years. This asset-stripping procedure - which has left the publisher as little more than a shadow of its former self - saw Shiny Entertainment being sold in 2002 at a gain of $28.8 million (hence the higher net income figure), while this year the sale of the Hunter: The Reckoning franchise added $15 million to the bottom line.

Although it's certainly significant that Interplay's core operations turned a small profit during the year, years of serious financial problems have taken their toll. "We continue to operate under cash constraints," Interplay chairman and CEO Herve Caen - who moved in from parent company Titus after Interplay founder Brian Fargo quit last year - admitted in a statement. "Specifically, Interplay is three months in arrears on its corporate lease obligation, may have short-term payroll difficulties and has outstanding payroll tax obligations."

Despite this, the company has announced that it plans to develop sequels in a number of its franchises, with a sequel to PC FPS title Kingpin, sequels to Airborne and Exalted and a further Fallout action title all in the works. Although it's entirely possible that work on these franchises is simply a case of trying to build more IP to the stage where it's lucrative to sell it off, Caen was adamant in a conference call that the company's objective was to "solidify its position as a leading RPG publisher."

In fact, it's almost misleading to describe the company as a publisher any more. All of its duties in that department are undertaken by Vivendi, who are responsible for all manufacturing, marketing and distribution expenses, and even assume all the financial risks resulting from product return or price concessions, in return for which they pay Interplay a lower per-unit rate.

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Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.

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