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Midway Acquires Paradox Development

Midway Games Inc. announced Nov. 29, 2004, it has acquired privately-held Paradox Development, the studio now developing Midway's upcoming videogame, MORTAL KOMBAT: SHAOLIN MONKS, via an all-stock transaction for 333,334 Midway common shares. This acquisition further strengthens the Midway's internal development capabilities.

This is Midways third acquisition in recent months to bolster its 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-based Surreal Software Inc., the highly accomplished videogame developer behind the successful videogame, THE SUFFERING.

One of the most well-known and best-selling franchises in videogame history with more than 22 million home games sold the MORTAL KOMBAT series has generated some $1 billion in retail sales through games, movies, music, toys and other merchandise since it was first released in 1992.

"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, said David F. Zucker, Midway president/ceo. 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 fighting genre games. 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, 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 Paradox. The Paradox employees who received restricted shares were: Teresa Chang, Damon Dubois, David Gautrey, James Guintu, Christine Hsu, Paul Interrante, Peter Jefferies, Ben Kutcher, Mark Lappin, James Maxwell, David Ollman, Adam Phul, Richie Romero, Barclay Smith and Paul Stapley.

Midway Games (www.midway.com) is a leading developer, publisher and marketer of interactive entertainment software for all major videogame platforms.

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