Two Christian video game companies are joining forces, hoping to leverage their combined products and distribution channels in order to reach a larger faith-based audience. One of those companies hopes that the merger will help bring itself back to the financial upside.
Publicly-held Left Behind Games, publisher of the 2006 strategy game Left Behind: Eternal Forces
, said Wednesday that it entered into a merger agreement with Digital Praise, developer of the Guitar Hero
clone Guitar Praise
California-based Left Behind Games said in a statement that the new entity will be able to "significantly raise the visibility and appeal of the Christian video game market."
Michael Pachter with Wedbush Morgan Securities agreed. "I think that the Christian video game market is a significant market currently underserved by traditional publishers," he said. "This merger will allow Left Behind Games to be well positioned to serve the millions of people of faith that enjoy Christian entertainment."
But a quarterly regulatory filing for Left Behind Games showed that the company reported a net loss of $6.29 million for the nine months ended December 31, 2009, and an accumulated deficit of $50.29 million.
The company said in the filing that it has "started generating revenue," but its financial situation "raises substantial doubt about the ability of LBG to continue as a going concern," which means the business could be subject to liquidation in the not-too-distant future if the situation doesn't improve.
The merger with Digital Praise is part of the company's plan to improve its business. "We plan to continue to control and reduce costs where necessary while continuing our pursuit to find one or more merger/acquisition candidates, to expand our business," the regulatory filing read.
Left Behind Games CEO Troy Lyndon said that his company will benefit from Digital Praise's "strong brands and products, multi-channeled distribution, a solid management team and a history of generating millions of dollars in the emerging Christian video game market..."
Digital Praise has business partners in Christian-focused companies such as Thomas Nelson, EMI, and Focus on the Family, as well as at a variety of Christian, online, and general brick-and-mortar retailers, which opens up opportunities for Left Behind Games to reach a wider target market.
Digital Praise CEO Tom Bean added that the merger gives his company access to capital that will allow the studio to create better, more innovative video games. Digital Praise is also behind Dance Praise
, essentially Dance Dance Revolution
set to Christian music.
Left Behind cited statistics from the Gospel Music Association, which said in its 2009 industry overview that Christian and gospel music sales are nearly half a billion dollars annually, with over 56 million units sold in 2008.
"We believe every child and gamers of all ages should have the opportunity to play Christian games,” Lyndon added.
Left Behind Games ran into some controversy with its game Left Behind: Eternal Forces
. The PC RTS is based on the Biblical end times, in which good and evil stand off against one another. But the Council on American-Islamic Relations argued that the game glorified religion-based violence and could hurt inter-faith relations. The group also called for the game to be pulled from Walmart shelves.
In 2007, the publisher saw a shakeup
that resulted in the departure of three top executives.