Oberon Media To Cut Back On Spending To Reach Profitability Next Year, Says Memo

Casual gaming publisher Oberon Media is freezing wages and new hiring, cutting back on travel budgets and reducing non-essential costs with the goal of reaching profitability by the second quarter 2009, according to a memo that was sent to the company’s employees by CEO Tomer Ben-Kiki. In a copy leaked to us by an employee, Ben-Kiki explains that consumer spending and the casual-games industry is beginning to feel the impact of the financial crisis. “While Oberon Media is still, and will continue to be, a strong leader in the casual gaming community, we are experiencing the same pressures as every other business in the marketplace.” The company declined to comment on the memo.

The New York-based company, which operates under brand i-Play, develops casual games for mobile, PC and TV. Over the past several months, the company restructured its organization and raised $20 million from Infinity I-China. Despite this funding, Ben-Kiki wrote: “We need to make sure that we optimize both our short- and long-term strategies to ensure that we are well positioned currently and over time. As a result, after a couple of years of significant investments we made to grow our business, we will now be focusing on achieving sustained profitability no later than Q2 of 2009.”

To achieve profitability, the memo outlines “Project Green,” a plan that includes curtailing travel and entertainment, eliminating outsourcing and consulting costs, and freezing both new hires as well as salary increases company wide. Founded in 2003, Oberon Media is backed by some big money from Goldman Sachs, Morgan Stanley, Oak Investment Partners and Lehman Brothers. As of a year ago, the company had 500 employees.

With this latest news, the cuts in the gaming industry are really starting to add up. In the past week, Electronic Arts (NSDQ: ERTS) said it plans to shed 540 employees and THQ (NSDQ: THQI) said it will layoff about 250. Although the memo doesn’t mention layoffs, they could still be coming, or else it could be a sign that the company is better suited for an economic downturn. In general, casual games are less expensive to build and more affordable for customers to buy.

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