It's game over for VIS

The company’s Dundee studio is to close its doors with immediate effect, and all 26 staff were made redundant, while a further 28 employees have lost their jobs at the firm’s office in Edinburgh, with the remainder of staff sent home for the time being.

Set up in 1996 by entrepreneur Chris van der Kuyl, VIS develops games for the Playstation 2, Xbox and Gamecube consoles. Its greatest hit was State of Emergency, and its efforts over the past year have largely been in developing a second version. The company came close to collapse last year despite the transatlantic hit, which sold a million copies.

But yesterday sources said that it had been "unable to secure sufficient funding to complete State of Emergency 2".

More than 12 million is believed to have been pumped over the years into VIS, which Van der Kuyl once said would be worth 500m. The 35-year-old is still the president and chief executive of VIS and is considered one of the country’s up and coming young business figures, having been named as Ernst & Young’s Young Entrepreneur of the Year 2003.

Last May, VIS reported it had completed a merger with Bam Entertainment of San Jose, California, and still had products waiting to be completed, including State of Emergency 2. Investors such as Sir Angus Grossart and Scottish Equity Partners, the private equity house, were given Bam stock for their VIS shares in May.

Last month there were suggestions that a large American publishing house was believed to be close to a takeover deal that would have secured the future of VIS.

But yesterday, joint-administrators Tom Maclennan and Kenny Craig, directors of Tenon Recovery, said they were now carrying out a full assessment of the business and looking to reach agreements that will "enable us to complete the work on the games under development". Bam remains unaffected by yesterday’s wind-up.

Maclennan added that he was in discussion with a number of parties interested in buying the VIS business.

In 2003, VIS had a turnover of around 5.8m, with losses at 1.9m. In January, VIS iTV, a 6m joint venture between it and Telewest, was put into administration after talks with a US buyer failed. It made software which generated animated horse races for betting shops and cable television.

It is now understood that its ongoing projects will be assessed as a matter of priority, and the administrators will look at the financial situation before deciding whether staff should finish them.

Only two months ago, Dundee-based games software start-up Simian Industries laid off two-thirds of its workforce after failing to get to grips with what its management called the "famine-feast" like economics of the games industry.

And last July, one of the country’s top games programmers, Glasgow-based Steel Monkeys, collapsed with the loss of 30 jobs after being unable to pay the 500,000 it owed to creditors.

EIDOS BACKS SCI TAKEOVER OFFER

UK VIDEO games maker Eidos has backed a takeover offer from rival games firm SCI Entertainment, withdrawing support for an earlier bid by venture capital firm Elevation Partners.

Eidos, best known for computer game icon Lara Croft, switched its allegiance to SCI after it offered 103 million for the group, trumping the 71m offer from Elevation last month. Shares in Eidos were down 9.5 per cent at 69.5p

A deal with SCI would create one of the largest firms in the UK games industry. SCI’s titles include the military-themed Conflict series and The Italian Job.