Shares of video game software developer Midway Games (NYSE:MWY) moved ahead in yesterday's session following the company's announcement that strong early sales of a new game, The Suffering, for Sony's (NYSE:SNE) PlayStation 2 and Microsoft's (NASDAQ:MSFT) Xbox have prompted the company to boost first-quarter guidance substantially.

Midway now expects to report first-quarter revenue of $18 million, up from its late February guidance of $12 million in sales. Losses, meanwhile, are expected to come in less than the $19 million previously forecast. (How much less wasn't clear.)

For small game developers like Midway, one or two successful games can make a big difference to a quarter. This is particularly true in the "off," or non-holiday, months, when sales can often take a hit as business calms. The Suffering, a horror-themed adventure game released in March for the two systems mentioned above (it was originally meant, but ultimately cancelled, for Nintendo's GameCube as well) got generally good reviews and should continue to boost sales in the second quarter.

Midway is still very much in a rebuilding mode. Check out Bill Mann's late February article for more: In short, he paints a picture of a company that's working dutifully to get its feet planted and identify profitable alleys after a pretty miserable 2003, in which sales plummeted and losses were heavy. Midway, under new CEO David Zucker, is committed to a phrase that, while worthy, is fast becoming cliche: "doing less better."

Hopefully, reflected in that sentiment is the news that Midway moved to acquire Surreal Software, developer of The Suffering, Draken, and Lord of the Rings: Fellowship of the Ring. It's telling that Midway not only paid out some 540,000 of its shares -- approximately $4.3 million -- to Surreal, but also an additional 137,000 shares to Surreal employees it is keen to keep on board. Smaller developers like Midway can't afford lots of expensive flops as they look to keep Electronic Arts (NASDAQ:ERTS) and Activision (NASDAQ:ATVI) from running them out of the market, so identifying people with proven creative and project management skills is a key.

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Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article.