SouthPeak Interactive Loses $12 Million in Fiscal '09

SouthPeak Interactive, which is probably best known for publishing the Two Worlds RPG, has announced its fiscal year 2009 results for the period ended on June 30. Net revenues rose 18% from $40.2 million to $47.4 million, but the company ultimately suffered a net loss of $12.1 million versus a profit of $1.5 million a year earlier. 

SouthPeak said some of these costs were related to the Gamecock acquisition, the company's reverse acquisition with Global Services, about $4 million in marketing expenses "for products being shipped in future periods and significant investment in the creation of the brand for the My Baby franchise." SouthPeak also had to incur increased expenses related to its first year as a public company.

Although losing $12 million is tough, SouthPeak stressed that it's building a foundation for the future. "During the past year SouthPeak invested heavily in its infrastructure by developing and strengthening its core systems, processes and hiring of key personnel. This allowed the company to expand in both domestic markets and around the world. In this period SouthPeak established international operations in Leicester, England, which has proved to be a successful marketing venue as the company continues to penetrate European and Asian territories with its products," the publisher stated. "These investments in SouthPeak’s infrastructure also allowed the company, for the first time, to launch several global titles on multiple next-gen platforms simultaneously. Along with these expanded capabilities, system-wide flexibility has increased, allowing SouthPeak to reposition its product pipeline and release schedule in order to take advantage of recent changes in consumer demand and preferences of videogame products."

“This past year SouthPeak achieved several impressive metrics and made investments in its groundwork and foundation for our further sales growth,” said Melanie Mroz, CEO of SouthPeak. “Although 2009 proved to be a challenging year, SouthPeak’s overall game sales increased by over one million units compared to fiscal year 2008 as we continue to take advantage of strong consumer demand for games on portable devices. In fiscal year 2009 we invested and expensed approximately $4 million in marketing programs creating strong brand recognition for several of our IPs, of which we expect to see increasing returns in the future. As we move forward, our fiscal year 2010 lineup is anchored by product extensions of several of our key brands, including a sequel to our highly successful title: Two Worlds II, which will be released on both the Xbox 360 and PlayStation 3, in addition to My Baby First Steps on the Nintendo DS and Wii, and a highly anticipated sequel to Dementium on the Nintendo DS.”

She added, “As a further example of SouthPeak’s continued innovation, we will soon be launching our first Nintendo DSi product, entitled Sushi Go Round (Nintendo DSi, Wii and iPhone), which takes advantage of the DSi’s interactive camera. This title has strong brand-name recognition, having been downloaded over 60 million times through the online game portal Miniclip.com.”