Oasys bets on gaming virtuoso

Bernard Stolar's resume reads like a history of the video-game industry.

Arcade games. Atari. Sony PlayStation. Sega Dreamcast.

Now he's placing another bet, this time on Oasys Mobile, a small Raleigh company that makes games for mobile phones.

"The mobile space is new. It's coming," said Stolar, 60. "This company has some real potential here. ... The world's their oyster."

But first, he has to turn around Oasys' struggling operations.

The company reported revenue of $1.8 million in the second quarter, barely more than the year before, and its net loss more than tripled to $3.1 million. Oasys, formerly known as Summus, will release third-quarter results Wednesday.

Investors aren't pleased with the performance. Oasys' stock has lost about 90 percent of its value since July 2005, closing Monday at 30 cents per share.

"My function here is to help fix the company," said Stolar, lead director at Oasys.

It's also to help Oasys find a new CEO after Gary Ban's resignation Sept. 29. That announcement could come as soon as next week, he said.

This role isn't a new one for Stolar, who got Mattel's educational toy and software division in shape before its sale in 2000. In the late 1990s, he slimmed down and restructured Sega of America's operations, then orchestrated the introduction of the Dreamcast game system. He also was part of the team behind the original PlayStation in 1994.

Oasys' problem isn't the quality of its products, which put it among the top five or six companies in its industry, Stolar said. He is examining the company's costs, productivity and marketing.

Stolar declined to be specific about his plans, but he said restructuring is certain. The changes could include losses from Oasys' 64-person staff, but some of those decisions will depend on the company's next CEO, he said.

"There is nothing sacred here," Stolar said. "I don't think anybody likes losing money, so we're going to right-size the company and deliver shareholder value."

One thing is for sure. Oasys will be moving out of its offices downtown to find a cheaper space with a funkier atmosphere.

"I think this looks like an insurance office," he said of the space in Two Hannover Square in Raleigh. "I want something a little more open."

Oasys is paying Stolar an annual retainer of $60,000 and 100,000 shares of stock, plus stock option grants and a $100,000 bonus if he improves the company's operations so that it can operate "in the normal course of its business" until Dec. 31, 2007, according to a regulatory filing. The contract term is one year.

Stolar spends every other week at Oasys' headquarters, where he has converted a small conference room into his office.

He also is chairman of Adscape Media in San Francisco, where he lives. An agreement with Adscape bars him from being an executive or chairman of any other company, hence the "lead director" title at Oasys.

Stolar joined Oasys' board in January and became lead director in September when Ban left the company.

The company's chief executive since 2004, Ban transformed Oasys from a quiet company that sold mobile content to cell-phone providers to an irreverent, youth-focused business that also sells directly to consumers via its Web site.

"I think the former CEO did a great job to a certain level, but companies have a way of sort of maturing and moving forward in ways that unless you really understand that industry, it's tough," Stolar said. "Gary did a great job up to a certain time, and the company needed a change."

Stolar and Ban declined to say whether he was asked to resign.

Oasys faces more large competitors and a consolidating industry, said Ban, who is still a shareholder. Still, he's optimistic.

"They're a small, scrappy company with a lot of opportunities and a lot of promise," he said.

Stolar relishes the idea of fighting companies such as Glu Mobile and Mforma, also known as Hands On Mobile, for market share. Oasys' biggest challenge is working as a team to put out cutting-edge products that are realistic, authentic and quick and easy to play, he said. The company will work with licensees to adapt its games for computers and console systems.

To win customers in the market for mobile games, Oasys will have to have games "that are better than anything else," said Roger Entner, vice president of wireless telecom for Ovum, a research and consulting firm.

The market for mobile phone games is plateauing, with 90 percent of people in the prime 12- to 30-year-old segment already playing games on their phones, he said. They are still buying games, but no more frequently than in the past.

"Basically now it's a market-share grab, where it's really critical who has the better game and who gets the better promotion," Entner said.