The expected sales drop is also more than 12 percent lower than initially expected.

Yves Guillemot, Chief Executive Officer for Ubisoft, places much of the blame for the drop on what he calls a "very sharp slowdown" in sales of DS games in Europe and the United States. Guillemot says that DS sales are down 67 percent. He also pointed out that the company's back catalog of Playstation 3 and Xbox 360 titles were also lower than expected.

"We are currently experiencing a very sharp slowdown in our sales for Nintendo DS as well as sales of back-catalog titles, in the context of a market that is tougher than anticipated," Guillemot said. "This will have a significant impact on our first-half showing. Against this backdrop, the solid performance of our Wii titles combined with the successful launches of Anno and Call of Juarez are points of satisfaction and demonstrate that good products are continuing to sell well."

In a follow up question, Guillemot seems to place much of the blame on the drop in DS sales on rampant piracy in Europe.

"Piracy is strong so we are working to put new figurines and new elements in the boxes that will change that in the future… for example in Europe we have the same market share in DS this year as last year…," Guillemot said. "We see a different attitude toward piracy in the U.S. than Europe. We did a survey that said our consumers will be more willing to buy products than pirate them. "

The news came during today's first-quarter report by Ubisoft. In the report the company also announced that they would be delaying four games: Splinter Cell Conviction, Red Steel 2, Ghost Recon and I am Alive.

Wright voiced his concerns over the game's development last Friday in an interview with fan site GateWorld, calling the lack of progress on the project "a terrible shame." Now Cheyenne's senior marketing manager Kevin Balentine addresses those concerns, revealing that Brad Wright is actually a creative consultant on the title who they hadn't been keeping in the loop.

Our official response is that the lights here are still on and the development team is working hard every day to get this game built. Team members are in the office seven days a week to deliver Stargate Worlds. Brad Wright is the Stargate expert and a creative consultant on Stargate Worlds who advises us on the story; unfortunately we had not recently updated him on our progress or the impact from the current global economic crisis, and he was not fully aware of the continuing progress on our game.

Balentine went on to explain that while development had been impacted by the economic downturn, they are seeking outside funding to keep their expenses covered while continuing to work on the game.

"We are currently negotiating several deals that will cover our financial responsibilities and fund the remainder of development. When we sign those deals, you'll hear about it. Until then, we'll keep building Stargate Worlds, because right now, that's the only thing that matters to us."

Let's hope it still matters to the show's fans as well.

Stargate Worlds Dev: 'The Lights Are Still On, Development Continues' [Gamesutra]

According to our sources, Warner Brothers, Ubisoft and a private Chicago investor are all looking over the company for possible acquisition.

We're told that Ubisoft has been in talks with Midway for weeks now and that a vice president for Warner Bros. was visiting the studio just last week.

Reached for comment this morning, a Midway rep said the company does not comment on rumors or speculation.

If our sources are correct, then Warner Bros. is the most likely candidate for a possible purchase.

With 2008 sales rising 24.4% over last year to $8.8 billion dollars, GameStop laughs at our puny economic recession. In the fourth quarter of 2008 alone the company's sales hit $3.5 billion, up 21.9% over last year's $2.9 billion, with net earnings of $232.3 million and comparable store sales up +9.6%. I could go on, citing their 2008 overall net earnings of $398.3 million, with comparable store sales increasing +12.3&, but why bother? Half of you don't understand this, and the other half just find it completely obnoxious.

Let's just sum things up. GameStop is doing very well, and expects to continue to do so. They opened 1,002 stores in 2008, and plan on opening another 400 this year. They are feeling no pain, and just wanted to make sure everybody knew it. Good for them, but in the current economic climate it's like walking into a room full of starving people, rubbing your stomach and saying, "Mmmmm, I am sooo stuffed!"

Visitors to FileFront today are being directed to a farewell message, explaining that the current economic environment has forced the website to close its doors indefinitely. Members of the site are cautioned to save any blog posts or stored files before Monday, March 30th, or risk losing them forever.

We would like to give a warm thank you to all of you who have been part of the FileFront communities we have built together. Your support has had a meaningful impact for all of us here at FileFront. Again, we want to give you a sincere "thank you" for your support over the years and wish you all the very best.

FileFront owner Ziff Davis held on to the PC games site during the sale of the 1UP Network to UGO early this year, but alas, it wasn't meant to be.

Farewell, FileFront! You had a great run, and your 90 terabytes of storage space shall be sorely missed.

Farewell from FileFront [FileFront - Thanks everyone]

While some 50 studios and publishers will have booths in the conference's career pavilion, most of the big names at the conference have gone through well publicized rounds of layoffs, making this get-together a little more schmooze than fest, especially for the unemployed.

"It's kind of like let's celebrate, but do it quietly," Meggan Scavio, the event director for GDC09, told the AP. She expects attendance to be "slightly down" from the 18,000 last year but even that may be optimistic. Scavio notes that travel, training, and wave-the-flag parties are among the first to be cut when times get tight.

It's also interesting to see the AP working the indie angle. It mentions Flower, a great example of an acclaimed commercial release by an independent studio. The flash game "You Have to Burn the Rope," is also namedropped; I always thought that to be more of a commentary on game design, or a satire, than a full game experience. But it's up for an award at the Independent Games Festival, which runs concurrent with the conference.

Recession Casts Shadow over Video Game Conference [The Associated Press on Google]

While the recommended retail price of the Nintendo Wii in the United Kingdom will remain at £179.99, Nintendo is increasing the price they charge retailers to stock the console by £18-20.

"Due to the severe and continuing depreciation of the pound, we are, unfortunately, having to raise our trade price to UK retailers of Wii hardware," said the company. "The price that they then offer to consumers is, of course, up to the retailers."

Video game consoles have traditionally been very low profit margin items, with retailers relying on sales of software or bundled items to increase their margins. Nintendo has left it up to the retailers whether or not they raise the price of the console accordingly. Now retailers have a choice: raises the price to raise their margins, possibly alienating customers, or sucking up the lost profit and bravely soldiering on.

I suppose Nintendo can hardly be blamed for adjusting in the face of the global economic situation, but they could have taken a bit of the pressure off of the retailers by hiking the retail price accordingly. I guess we all have to do what we have to do to survive in these rough times.

Wii price to rise for UK trade [GamesIndustry.biz]

The recession hasn't been kind to online game developers, with companies like Mythic, Nexon America, Funcom, and NCsoft all experiencing job cuts and studio closings over the past few months, yet EVE Online creator CCP is growing strong. Mike Tinney explains that it's all a matter of self-sufficiency.

While all these other companies are doing layoffs and scaling back, because we're pretty self-contained - we're not a developer beholden to a publisher; we're not a publisher waiting for a developer. We self-publish EVE Online and support it in its entirety, so we have a lot more ability to react as the world economy shifts, and that's allowed us to retool focus on the core drivers for our business, and steadily grow while a lot of other companies are shrinking.

Growing while other companies are shrinking also gives CCP the benefit of a rather large pool of talented individuals who suddenly find themselves looking for work, as well as developers who are employed, but losing confidence in the way their employees are handling the harsh economic times.

It's given us an opportunity to go into a rapidly filling job market and open up new positions at all three of our locations and start looking for the next round of industry like-minded professionals.

Between EVE Online's steady growth and the development of the World of Darkness online title with its built-in audience of dedicated fans of White Wolf's Vampire role-playing game, CCP has all the pieces in place to continue its growth well into the next decade.

Activision Blizzard's top publishing executive Mike Griffith told Bloomberg that the current economic climate is perfect for creating acquisition possibilities, whether they be game companies or intellectual property rights held by companies hungry to make a quick buck.

"The combination of Activision holding a fair amount of cash and presumably prices being depressed, not only for publicly traded companies, but also likely for new intellectual property licensing rights, should certainly create opportunities"

So who is on the menu? Griffith wouldn't say, but don't worry. Activision Blizzard didn't become the world's largest video game publisher by making rash decisions. "We won't rush to judgment just because we have cash. We will be very disciplined."

Activision Looks for Acquisitions Amid Recession, Griffith Says [Bloomberg]

"Today we notified 86 of the 102 employees in the Volition quality assurance department that they will be let go," a THQ spokesman told Kotaku. "Our quality assurance will now be primarily conducted through THQ's centralized QA facilities, with a small staff remaining on-site in Champaign.

Volition developed games Descent, Freespace, Summoner, Saints Row 2, The Punisher and are working on upcoming shooter Red Faction: Guerrilla as well as Saints Row 3.

"It's important to note that this is not a new reduction, but part of the scheduled lay-offs announced during our last earnings call," the spokesman added.

THQ announced in February that they lost $191.8 million over the holidays and expected to layoff about 600 employees, or 24 percent of its total workforce.

Update: THQ contacted us to clarify who specifically the layoffs impacted:

"The layoffs include 47 temporary employees who will not be having their service extended. Unfortunately, fluctuating headcount among the temporary staff is common based on when our games ship. In addition, 39 full-time staff will be laid off.

"All laid off employees (both full-time and temporary) will be given at least sixty days' notice. We will do what we can to assist them in finding work in the community or elsewhere in THQ."

"We're seeing a lot of expensive video game systems, PlayStation 3s and X-Box and others, and a lot of LCDs (flat-screen televisions)," Ace Pawn Shop manager Chris Banul told the Associated Press.

Cash America, the biggest pawnbroking group in the country, pulled in more than $1 billion in revenues for the first time in its 25-year history last year.

Pawning things. That's got to be the worst. But if you had to, where in your list of pawnable items would your console hit?

Recessions boosts pawn shop business [Chicago Tribune]

The ruling Monday allows Midway to spend its cash to continue paying salary and expenses and to pay off certain critical vendors.

"Approval of these motions is an important first step in this planned and orderly reorganization, enabling Midway to continue to operate as usual during this process," said Matt Booty, Chairman and CEO. "We remain confident in Midway's ability to use this proven process to address our capital structure and explore our strategic alternatives."

That means if Midway has any games left to put out, besides Wheelman, they can continue to work on them.

MIDWAY RECEIVES COURT APPROVAL OF CASH COLLATERAL AND OTHER FIRST DAY MOTIONS [Midway]

That was the message Electronic Arts CEO John Riccitiello delivered to the more than 9,000 employees earlier this week at the company's annual town hall meeting.

The company-wide meeting came just a day after Riccitiello walked investors through his company's last bad news of high losses and more layoffs and closures.

Officially, Riccitiello's talk was about the long haul, the tough road ahead, but he was also making it clear that despite the hard times, EA wasn't going to become a shadow of itself.

"We can take risks because we are pretty sure our blockbusters are going to generate good revenue that allow us some cushion," Jeff Brown Vice President of Communications Electronic Arts, told me. "So we're not living hand to mouth."

Companies like Electronic Arts and Activision, he said, can really afford to take on more risk than small studios.

That's good to hear. This blow to Electronic Arts' bottom line comes at a time when the publisher seemed to be entering a sort of renaissance, refocusing its efforts more on original and innovative ideas and less on sequels.

And there are still plenty of new concepts, new games hidden away inside the company that have yet to see the light of day. Like a rumors of a new mixed martial arts game or of a innovative new shooter. Those cuts, Brown says, doesn't mean they will be dead.

"At any given moment, in an operation as big as EA worldwide, there are a whole lot of people with a whole lot of ideas and they are given a bit of money to flesh them out," Brown said. "Some will work, some won't. There will be projects that will be killed no matter the economy."

Wedbush Morgan Securities analyst Michael Pachter isn't so optimistic.

Developers "can't afford to take risks," Pachter said. "If you take too many in a row you end up with no money and no franchises. Even EA got in trouble last year doing way too much. "

"The right idea is to have your core franchises and then take measured risks."

THQ, which announced this week that they would be laying off 600 people or nearly a quarter of its workforce, seems to have essentially curled back into itself, betting its future on the few new games that were nearly finished and a slew of sequels.

"It's sad," Pachter said. "It's easier to sell a (bad) Iron Man game or a 50 Cent game with the right license and it's hard to create a new Dead Space. The cost of potential failure (on a new idea) is too high."

"I think you're going to see moving forward one new game a year from a publisher, not five."

But EA's Brown says that this year's EA line-up will be just as innovative and include just as many new titles.

"We are working on Dante's Inferno, Dragon Age, things like that, new games, either announced or about to be announced," he said. "You will not be able to see a dramatic drop off original IP."

Instead what we might see is another consolidation of sorts, perhaps more independent developers signing on with Electronic Arts Partners to get their games out.

Well Played is a weekly column about the big news of the week in the gaming industry and its bigger impact on things to come. Feel free to join in the discussion.

A few weeks ago Indian film distributor Eros International released a 3D video game inspired by their hit thriller Ghajini and earlier this week a mobile game based on the classic Indian novella about unrequited love was unveiled.

"Every person would be able to relate himself or herself with this game and would be able to play the game by donning the persona of Dev," said Mahi Gill, one of the actors in the film.

I'm sort of surprised we haven't seen more Bollywood-inspired video games. Afterall, the Indian film industry is the largest in the world, in terms of volume.

According to the Reuters story the market for Indian video games is expected to grow to about $1.3 billion this year, up from $300 million in 2006 and employs about 30,000 animators alone.

Second Bollywood hero goes virtual in new mobile game

The agreement is in a consent injunction ordered by a federal judge on Thursday. It grew out of an injunction the government had earlier sought, barring the shipment of any finished or unfinished Sensory Sweep product. The studio has developed Tales of Despereaux and Jackass: The Game, among other titles.

According to the agreement, Sensory Sweep can't deliver any product to a publisher without clearing it first with the Salt Lake City wage and hour office of the Department of Labor. The money Sensory Sweep gets from such shipments must be kept in a separate account; at least two-thirds of it must be used to pay current and back wages to employees. The rest may be used for operating costs to stay in business.

An amended consent injunction, specifying the total amounts to be repaid and to whom, will be filed by Feb. 9. An affidavit filed by Labor's wage and hour investigator in this case estimated more than $2 million is due to employees. However, "It is likely that the actual amount due is not this great. We have not had the opportunity to substantiate any information [Sensory Sweep CEO Dave Rushton] has provided this far. We know he owes back wages but it has not been determined the exact amount at this time."

Kotaku has contacted Sensory Sweep vice president Chris Rushton for comment. Earlier this week, he made a brief statement that said the company was working on an agreement with the government, and it was grateful for employees who had stayed on "through these troubled times." He declined further comment, citing the ongoing negotations. It's unknown if the consent injunction, assuming it is followed, effectively ends the government's complaint against Sensory Sweep or not.

Many readers have wondered how 200 employees would continue working for an employer that was no longer paying them. Earlier this week I spoke to a former employee and asked the same question.

"People like to say I work for a video game company," said the designer, who requested anonymity because he is still seeking work in the industry. "It's very important to them. It's so important, they'll sacrifice their lives, their houses, their cars. We had a few threats of divorce come out of this. It's because they want to make games and that’s all they want to do."

Add to that the super-saturated development market in Utah, and many employees seemed to feel they were better off in a job that wasn't paying than out looking for one with hundreds of others who are unemployed, too.

Kotaku will have more on this as it develops, of course.

The move would allow the company to retain control over its operations while it reorganizes to pay its creditors.

We searched the filings for U.S. District Court in the Southern District of Ohio but could find nothing under Brighter Minds Media or the attorney said to represent them. But if it was filed late Friday it may not show up in the system until Monday or later.

World of Goo was the big hit out of Brighter Minds' family friendly catalog of titles last year. It took top indie game honors at the 2008 Video Game Awards, and also won the prize for design innovation and technical excellence at the 2008 Independent Games Festival. It was our runner up for best indie game.

It was also popular among pirates; released DRM-free, developer 2D Boy estimated that it suffered from a nearly 90 percent piracy rate.

World of Goo Publisher Brighter Minds Media Goes Bankrupt [GameDaily BIZ via Joystiq

The website MyMMOShop.com, which specializes in the farming and selling of in-game money from massively-multiplayer online games like World of Warcraft, Final Fantasy XI, and Everquest II, has by purchased by My MMO Inc. to the tune of $10 million.

“MyMMOShop.com appealed to us because of its strong reputation for providing optimal customer service,” says Hunter Crowell, My MMO Inc.’s Media Relations Agent. “That focus will continue with our purchase.”

Crowell noted that with more and more people spending their time at home playing video games in the face of a troubled economy, traditional investing is a risky prospect. In this volatile time, virtual currency is one of the few in-demand items left to invest in.

I wonder how much of that $10 million the farmers themselves will see?

"Given the economic environment out there, obviously we're being impacted, like everyone else," said ESPN executive Rick Alessandri.

Among the sponsors to drop out: Zune, TV maker Olevia and 20th Century Fox.

Playstation's sustained sponsorship meant that the X Games got a Playstation tent with playable LittleBigPlanet levels created by some of the games' athletes including Sarah Burke, Tanner Hall, and Louie Vito.

But video games are indeed recession proof, it’s the developers and publishers who aren’t.

“A recession is about the impact on sales, and layoffs are a function of profitability,” said Wedbush Morgan Securities analyst Michael Pachter.

The reason Microsoft is cutting 5,000 jobs, Sony is promising across the board lay-offs, Eidos is shuttering studios and Electronic Arts just let more than a hundred people go is because they’ve made some bad decisions, Pachter said. Not because their games aren’t selling.

"That’s not the fault of the economy,” he said, “that’s the fault of bad planning.”

Pachter thinks that Electronic Arts, and others, are dumping too much money on research and development and not enough on the meat and potatoes of gaming. That’s right, sequels. The companies that are sticking to the basics seem to be doing fine.

And that’s in line with what I’ve been hearing. EA is already trying to pull back from some of their more grandiose ideas. Like the Stephen Spielberg developed game code-named LMNO. I hear that while the game isn’t officially dead, it has been mothballed indefinitely. I’ve also heard that EA-owned Black Box Studios, where I’m told about 120 people were let go earlier this week, was working on a new, deeply creative and innovative project. It’s unclear where these latest cuts leaves the new game.

Pachter sees the issues that EA faces as endemic in the industry, but he still maintains that gaming is recession proof. (Look at the jump in retail sales in December.) And why is it recession proof?

“People have less money to spend so they shift from expensive to inexpensive entertainment,” Pachter says.

Which means lots more television, lots more Internet. And gaming? Gaming is a relatively affordable escape, with increased console sales driven more by guilt than smart fiscal planning.

“The family who cancels the Disney vacation feel guilty and buy a Wii,” he said.

While developers need to be more careful these days, Capcom spokesman Chris Kramer still thinks the industry is healthy overall.

“It’s for the first time in a long time, people I know are losing their jobs. I was around in the last economic downturn and this economic situation does seem to be impacting games more deeply,” he said.

But Kramer says that with two major titles on the way for the publisher, Street Fighter IV and Resident Evil 5, this could be the most profitable fourth quarter in the company’s history.

Looking past these next two games, Capcom is starting to play around with the idea of downloadable content. The idea of selling add-ons and expansions directly to customers without the high overhead of producing a new game from scratch is certainly appealing to developers.

Their new Street Fighter game, for instance, will be getting at least two least two downloadable packs. And why not do the same for Resident Evil 5? Expand the storyline and turn the game into a platform of sorts.

“Currently,” Kramer said, “we’re evaluating DLC for Resident Evil 5.”

That’s what Rockstar Games is experimenting with in Grand Theft Auto IV. Next month the Lost and the Damned will allow gamers to return to game to experience new adventures in Liberty City.

“I think all of the smart publishers are looking at ways to add-on to existing games,” Kramer said. “It stems the flood of used game sales and every used game sale is money out of the pockets of the developer and publisher.”

Well Played is a weekly column about the big news of the week in the gaming industry and its bigger impact on things to come. Feel free to join in the discussion.

The news first leaked out when Bill Harbison, an artist at the Manchester studio, twittered that it was closing. Videogaming 247 than confirmed the news with Eidos.

"As a company we need to focus our efforts on high-quality titles that will deliver long-term franchise value, and in these incredibly challenging and competitive times we need to pro-actively manage our cost base. This decision was a difficult one to make and we would like to thank these employees for their hard work and we wish them well in their future careers."

The studio employed about 14 people.

Confirmed: Eidos closes Manchester studio