Interactive Magic announced Thursday that it will spin off its retail CD-ROM business and concentrate solely on online interactive games, including its online service iEN and the new acquisition MPG-Net.

　　The new spin-off company, iMagicGames, will be officially formed on March 31, 1999, and will continue to develop CD-ROM games. It will generate its own funds through product sales and possibly some financing candidates, to be announced later. ImagicGames would also provide four proprietary online games for Interactive Magic over the next 18 months.

　　"IMagicGames is very lucky to inherit the hits we have on tap for this year and the long term strategic contracts with award-winning developers like Enlight Software and Sinister Games," said Interactive Magic Chairman and CEO, J.W. "Bill" Stealey. "In 1998, we laid the important groundwork for becoming one of the leading providers of entertainment on the Internet. For 1999, the focus will be on achieving significant revenue growth, increasing Internet market share, making additional Internet acquisitions and adding new strategic partners like the AT&T WorldNet service."

　　Interactive Magic stock jumped 25 percent Thursday, closing at 5 5/8 on the news.