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Company Background
Eidos was founded in 1990 as a video services company and for the first five
years of its existence was focused upon developing its proprietary video codec (compression / decompression) software, Escape. Charles Cornwall ( CEO from 1995 to 2000) prompted the move into the games
industry and embarked on a rapid growth strategy, funded by a £21.6m placing and £18m ADR in 1996, a $48m convertible bond in 1997. This funding was later supplemented in July 2001, under current CEO Mike McGarvey,
with a £53m rights issue. The Company used the first three fund-raisings to finance its expansion into games publishing. The funds were also used to acquire a number of games companies:
§ Domark – a struggling UK-based publisher and developers Simis and Big Red – acquired for a total of £13.4m in 1995.
§ CentreGold plc - A UK listed publisher/distributor for £17.6m in 1996. Eidos subsequently sold the distribution arm of CentreGold but retained most of its development resource, including Core Design, the
creators of Tomb Raider.
§ Crystal Dynamics – a US developer, for £28.4m in 1998.
§ IO Interactive - Danish developers of the Hitman series, acquired for £23m (plus up to £5m depending on unit sales performance of IO products) in 2004.
During the Cornwall years, Eidos also made
a number of investments in non-games concerns and during 1997 built up a 15% stake in Norwegian data storage hardware company Opticom ASA, for approximately £11m. Although the Company failed to take advantage of the
technologies being created, it did achieve a considerable return on its investment, its stake in 2000 and 2001 for around £95m.
A less prudent investment was made when the Company acquired a 19.96% stake in
Maximum Holdings (which later merged with DVD Express) for $55m cash in November 99. With the "dotcom" market suffering the wrath of the capital markets during 2000 and 2001, DVD Express failed to secure additional
funding and went into liquidation in March 2001, forcing Eidos to write off its entire investment.
The appointment of McGarvey as CEO spelt an end to Eidos' non-games distractions. The Company divested itself of
its remaining non-games assets, completed a 2 year, £22.7m cost reduction programme and began to refocus its development investement on internal rather than third party projects.
The Company currently
employs around 650 people and has 8 offices in 6 territories. Included within this are 400 personnel within 13 internal development teams.
Eidos initiated a strategic review in mid 2004 to identify a potential
merger or acquisition partner. 2 potential acquirers emerged in March 2005, private equity firm Elevation Partners and UK publisher SCi.
Activities/partners/subsidiaries/investments
GAMES DEVELOPMENT
Core: Core was the key
element in the CentreGold purchase and represented Eidos' most succesful wholly-owned development team. Responsible for the global best-selling Tomb Raider series (which have collectively clocked up over 30m unit sales). Core
were also responsible for the 1.7m unit selling Fighting Force, but despite this, the quality and management problems associated with Tomb Raider: The Angel of Darkness led Eidos to strip the Tomb
Raider franchise from Core and place it under the stewardship of Crystal Dynamics in mid 2003. Since then, Core has been reduced down to a single development team (from 3).
Crystal Dynamics:
US development company behind platform-game hits Pandemonium and Gex, and adventure hits Soul Reaver and Blood Omen. Crystal Dynamics were acquired by Eidos in September 1998 for £28.4m
and will be used for the next Tomb Raider product, due during Eidos' FY05.
IO Interactive: Danish creators of the 3.5m unit selling Hitman series for Eidos as well as the 900k unit-selling Freedom Fighter game for EA. Acquired in March 04 for £23m. Currently creating a new Hitman title for release in FY05 a well as an unannounced new product for FY06.
Beautiful Game Studios: Wholly owned studio set up specifically to undertake the continued development of the Championship Manager series.
Pyro Studios:
Developers, 25% owned by Eidos, of the 2.2m unit selling Commandos series. Currently developing Commandos III for Eidos, Pyro has 75 employees.
OTHER
Proein: A leading
Spanish distributor, 75% owned by Eidos, 25% owned by the same family that owns 75% of developers Pyro.
Tomb Raider Films: Eidos licensed the film rights for Tomb Raider
to Paramount Studios in 1999. The first film, which began production in May 2000 and was released in summer 2001 is understood to have grossed in excess of $300m at the box office and in DVD/VHS and merchandise sales to date. Indeed its success has not only flown in the face of the historical precendent for films based on games IP to fail, but has spawned a (less succesful) sequel, launched in Summer 2003. As with the first film, Eidos will receive a very small share of gross cinema/video sales as well as a sign-on fee for each film (of around £1m) and a share of all other merchandising sales. Although the second Tomb Raider film failed to make as significant impression at the box-office as the the first film (grossing around half the amount), DVD/VHS sales have been brisk. However there is very little chance of a third film.
The Deus Ex Film: Currently under option with Columbia pictures, a film based around Eidos' hit game Deus Ex, was expected to be greenlit for production by the end of calendar 2002. However, over
two years later, the film has not yet received the green light although neither has it been cancelled.
Key Titles
Tomb Raider 7, Hitman IV and V, Lego Star Wars
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