SCi defies expectations in first half financials

"We are firmly on course to deliver sustained profitability for the foreseeable future," was SCi CEO Jane Cavanagh's positive message to the city this week, as the company announced best-ever first half turnover figures of £9.4 million for the six months to March 31st 2003, up 29 per cent on the same period last year on the back of strong sales of its catalogue titles - notably The Italian Job and the first Conflict Desert Storm title. The company also shifted an undisclosed sum of development expenditure into the second half of the year to boost the balance sheet.

The publisher enjoyed brief chart topping success with Conflict Desert Storm II in the run up to Christmas last year, and despite only releasing Rolling since then, the company has managed to keep losses before tax down to £0.79 million, a fraction below the £0.85 million pre-tax loss it posted in the same period last year. The company had budgeted for a £4 million loss for the period, so this represents a massive boost to the company.

The company expects full year results to September 30th 2004 to be profitable, and is banking on the success of the long awaited Galleon on Xbox (out June 11th) - a product that SCi acquired from Titus/Interplay, where it was in development for over six years.

The development studio behind the swashbuckling adventure, Confounding Factor, is headed up by Toby Gard, the man credited with creating the original Tomb Raider at Core Design back in 1996 - which he left shortly after its initial release.

However, the problem for SCi is that technology has long since overtaken the project and much of the momentum behind Galleon's launch has dissipated with its extensive development time. Its exclusivity to Xbox is also a puzzle, given its long term multi-format development, and it's stating the obvious that a PS2 version would have given the game much greater commercial potential.

Meanwhile, the company also has two multi-format releases lined up: Richard Burns Rally and Conflict: Vietnam, which are both expected to emerge in the company's financial second half.

While there seems a strong chance that Conflict: Vietnam will continue the success that the previous two Conflict-branded titles have enjoyed, it's worth bearing in mind that several Vietnam-related games have launched to date and struggled commercially, notably Atari's Line Of Sight, Gathering's Vietcong, and even EA's Battlefield Vietnam. Saturation point is likely to be an issue for Vietnam-based titles once Eidos' Shellshock: 'Nam 67 and VU Games' Men Of Valor hit the streets, while Gathering also plans to release console versions of Vietcong to add further competition to the equation for SCi.

Its other big hope, Richard Burns Rally, is another title that has serious competition to overcome. Not only has SCi got the mighty Colin McRae Rally franchise to compete with directly in the same month, it's worth bearing in mind the limited success it enjoyed in 2002/3 when it launched the Warthog-developed Rally Championship Extreme. The addition of the license will help matters, but Microsoft/DICE's exceptionally well-rated Rallisport Challenge 2 has so far struggled to break the brand loyalty of Colin McRae and the all-encompassing WRC licence from Sony - which in itself underperformed last year.

Chief executive, Jane Cavanagh commented in a statement to the City: "This has been another record financial performance for SCi. We are considerably ahead of expectations which, in particular, demonstrate the strength of our back catalogue. I am delighted to report that our forthcoming releases scheduled for 2004 are all on track and these, combined with some exciting new opportunities, mean our pipeline is very healthy. We are firmly on course to deliver sustained profitability for the foreseeable future."

Meanwhile, the company revealed in its report that it is in "advanced negotiations" for a further product which it expects to announce 'shortly'.

SCi also has four products on track for release in 2005 financial year: Battlestations: Midway, Carmageddon, Rogue Trooper and Conflict 4 - SCi's highest ever number of planned releases. In 2006 it plans to release three titles, including Reservoir Dogs, a new Conflict title and "another original product currently in the prototype phase". "We aim to add a number of new high quality products to this pipeline," the report said, but says it won't release products on the next generation platforms "until the installed base of the platform has achieved critical mass".

"We are carefully assessing the potential impact on the market of the future introduction of next-generation hardware platforms and technologies. Our policy is to only develop for commercially viable platforms and to time development for next generation platforms, such as PlayStation 3 and Xbox 2," it said. The report also mentioned that it was adding online functionality to its releases from the 2005 line up.