Warthog warns of losses, moves to reduce costs

UK development studio Warthog has warned that its first-half results are likely to show a loss of some £2 million, with more losses to come in the full year due to difficult trading conditions caused by a number of factors.

The company's figures will be well below market expectations, according to a trading update issued by Warthog, which fingers a number of factors including the failure of some smaller publishers with whom the group had development contracts as reasons for the losses.

Delays in signing new development contracts and the performance of the US dollar (which has negatively impacted revenues from certain contracts) are also mentioned as key factors.

The company has moved swiftly to reduce its costs in order to alleviate the damage caused by these difficult conditions, with moves aimed at reducing both the corporate and personnel costbase thought to include a number of redundancies.

Going forward, Warthog remains convinced that its future lies in establishing closer partnerships with the big holders of intellectual property rights, a process which the company has already started with recent work on Looney Tunes: Back In Action and Harry Potter and the Philosopher's Stone (Xbox/PS2/Cube) for Warner Brothers and Electronic Arts.

To this end, the company plans on establishing a new studio in Los Angeles, a move which it says is "essential, given the West Coast geographical focus of the games industry." Commercial director Ian Grieve will be heading up the new studio, and as such has stepped down from Warthog's board.