December 1^st, 2004 (11:13am) - Midway Games Inc. announced today that it has acquired Paradox Development, the studio that is now developing the upcoming Mortal Kombat: Shaolin Monks.

Midway acquired privately-held Paradox in an all-stock transaction for 333,334 Midway common shares. The acquisition further strengthens the company’s internal development capabilities as it brings two talented development teams to Midway.

This marks the third acquisition in recent months to bolster Midway’s high quality game development. In October 2004, Midway acquired Austin, Texas-based Inevitable Entertainment Inc., the development studio working on Midway’s upcoming new videogame, Area 51. In April 2004, Midway acquired Seattle, Washington-based Surreal Software Inc., the highly accomplished video game developer behind the successful videogame, The Suffering.

"In acquiring Paradox Development, we have added a talented and established developer that not only deepens our internal product development organization but also brings incremental fighting-genre expertise to Midway," commented Midway President and CEO David F. Zucker. "We have made great strides in improving our overall quality of games, and the industry and our customers have recognized this accomplishment. Today’s acquisition further strengthens our ability to expand on our current portfolio of games and produce new high quality, top-selling games for the future. Furthermore, the Paradox teams’ expertise in the fighting genre is an excellent fit with Midway’s product strengths and will help us extend the Mortal Kombat franchise into the action-adventure genre and release a highly engaging title in the Mortal Kombat universe annually."

Based in Moorpark, California, Paradox Development is a successful creator of high-quality interactive entertainment products, with an emphasis on games within the fighting genre. Founded in 1994 by Christine Hsu, the former COO/CFO of Malibu Comics, Paradox Development has developed 13 titles, including seven fighting games, across multiple platforms.

In addition to shares issued for the acquisition of Paradox Development, a total of 261,906 restricted shares of Midway common stock were issued to key Paradox employees as retention incentives. The restrictions on the stock will lapse in stages over a period of three years, provided the employee remains at the Company.