Interplay's 10-K Form Filed
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In February 2003, we amended our license agreement with the holder of the interactive entertainment rights to D&D. This license allows us to publish the BALDUR'S GATE, BALDUR'S GATE: DARK ALLIANCE, and ICEWIND DALE titles. Pursuant to this amendment, among other things, we (i) extended the license term for approximately an additional two years to December 31, 2008 for an advance payment on future royalties of approximately $200,000 and (ii) extended our rights with respect to certain of the D&D properties. The amendment terminated our rights to certain titles in the event we are unable to obtain certain third-party waivers in accordance with the terms of the amendment.
We were unable to obtain the required waivers within the permitted time period and as a result have lost rights to publish BALDUR'S GATE 3 and its sequels on the PC. We historically invested in platforms such as the PC and consoles such as the PlayStation and Nintendo 64, which was important strategically in positioning us for the current generation platforms such as the PS2, Xbox, and Nintendo GameCube. During fiscal years 2003, 2002, and 2001, the video and computer games industry has experienced a platform transition from the PC and PlayStation to the current generation platforms PS2, Xbox, and Nintendo GameCube. The transition to the current generation systems was initiated by the launch of Sony's PS2 in fiscal 2001, and continued with the launches of the Nintendo GameCube and Microsoft's Xbox in fiscal 2002. As the market continues to shift to the current generation systems, our sales of PC based products have been declining. We expect this decline to continue in fiscal 2004. As a result, we do not anticipate that losing the rights to publish BALDUR'S GATE 3 and its sequels on the PC will have a significant impact on our future operating results.
Subsequently, we also relinquished the rights to publish any future titles using the D&D license in exchange for the continued rights to publish our DARK ALLIANCE titles on console platforms such as the Xbox and PS2. As part of this exchange, we secured ownership to the DARK ALLIANCE trademark. As a result of securing the DARK ALLIANCE trademark we no longer pay licensing royalties on this trademark. We do not anticipate the loss of the rights to publish future titles using the D&D license will have a significant impact on our future operating results. We intend to publish future DARK ALLIANCE titles on the PS2 and Xbox platforms.
