High Moon Studios Rides High on 'Transformers'

CARLSBAD -- Most of the news surrounding the video game industry lately hasn't been good.

Sales are down, studios are closing and people are losing their jobs. The end of the current console cycle casts a gloomy cloud over the nearly $25 billion industry landscape.

But in North County, Carlsbad's High Moon Studios is seeing a silver lining.

"The new generation (of consoles) is just around corner," studio president Peter Della Penna said. "This is a natural cycle. Whenever you go through that transition, the industry tends to get tough.

"You weather that storm and look forward to the growth years ahead."

Della Penna and his team of nearly 100 employees are riding high after the release of the critically acclaimed "Transformers: Fall of Cybertron," a video game based on the popular "Transformers" franchise. The game was well-received by critics, scoring an 81 out of 100 at metacritic.com -- a website that aggregates reviews of music, games, movies and TV -- and has sold more than 100,000 copies since its release on Aug. 21.

"Fall of Cybertron" marks the third Transformers game for High Moon Studios, but its success is more a testament to its employees than its source material.

"The group at High Moon Studios is a phenomenal team and we've had a great experience working with them the past few years," Scott Bandy, Activision vice president of production, said via email. "Their passion is undeniable and it shines through in everything they do. We couldn't be happier with the reception of 'Transformers: Fall of Cybertron,' and we have nothing but bright hopes for all future games under their development."

High Moon Studios was founded in 2002 by the Sammy Corp., the leading developer and retailer of pachinko and pachislot systems (like slot machines) in Japan. In 2004, the company merged with Sega and became Sega Sammy until Sammy Studios split in 2005 to become High Moon Studios.

After a brief stint as an independent studio, the company was purchased by Sierra Entertainment, which was eventually purchased by video game behemoth Activision Blizzard Inc.

It has been a wild ride, but it's this latest partnership that has allowed High Moon Studios, which is celebrating its 10th anniversary, to prosper.

"(Activision has) one of the best studio-publisher relationships," Della Penna said. "They really allow studios to maintain their own culture and character. They believe in the talent."

They also believe in profitability and success.

Activision Blizzard and its subsidaries are responsible for some of the biggest games on the planet, including the "World of Warcraft" and "Call of Duty" franchises. Its stock has slipped from its 2007 high of $14.85 a share, but has rebounded from its 2008 low of $8.64 a share to $12.08 a share.

The company posted earnings in the second quarter of this year with a GAAP net revenue of $1.08 billion. Its third- and fourth-quarter sales should be even higher, buoyed by the release of "Fall of Cybertron," "World of Warcraft: Mists of Pandaria" and "Call of Duty: Black Ops II."

Activision's commitment to its studios despite economic turmoil appears to be paying off.

And Della Penna and his team couldn't be happier.

"We're very fortunate to have the support of a parent like Activision," Della Penna said. "Without their support and belief in us that we can make great games, none of this happens."

High Moon Studios is already working on its next two games -- an undisclosed title and a game featuring legendary Marvel comic book character Deadpool.

"Deadpool" was announced at the San Diego Comic-Con and is already generating quite a buzz on the Internet. Della Penna assures fans that this is the game they've been waiting for.

"If you're a true fan, and you understand the true nature of Deadpool, that's who we're going for," he said.

With a track record of success, it seems High Moon Studios is on its way to becoming the next big thing in video games. But given the cyclical nature of the business, Della Penna isn't going all in just yet.

"I want to make sure we make great games," he said. "If that's one game, so be it. If that's two games, three games or whatever ... it's all about high-quality results."

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