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THQ Q3: Six new core games, partner sought for DMO

Thursday, 2nd February 2012 21:38 GMT By Brenna Hillier

THQ has posted its financial results for the quarter ending December 31, 2011, revealing $9.2 million year-on-year decrease in sales but a healthy looking release schedule.

At A Glance

Sales of $305.4 million, down year-over-year and below expectations.

Six unannounced core games in internal development.

Dark Millenium Online still on the cards but THQ is looking for a “partner” for the MMO.

Tomonobu Itagaki’s Devil’s Third, Patrice Désilet’s new game, and Guillermo del Toro’s InSANE still on track.

Saints Row: The Third has shipped 3.8 million units to date.

UDraw shelved after massive underperformance.

$160 million to be salvaged through mass redundancies and an end to licensed kids’ games.

Metro: Last Light delayed.

Sales of $305.4 million, down from $314.6 in Q3 FY2011, resulted in a loss of $55.9 million, up from a loss of $14.9 million in the same period 2010. Poor sales of uDraw and related software, kids, family and casual games were pinged as the cause for lower than predicted sales revenue.

Overall sales were $100 million below expectations, with uDraw in particular failing to match both internal predications and independent external studies. CFO Paul J Pucino said the tablet’s limp reception on HD consoles had “the biggest single impact” on THQ’s results.

“To give context, quarterly earnings would have more than doubled without uDraw,” he said.

THQ had previously predicted a record-breaking quarter.

“Unfortunately we were wrong,” president and CEO Brian Farrell said, but pointed to strong performance in the core as cause for hope.

“The success of Saints Row and WWE give us confidence in our future,” he said.

THQ revealed the NPD placed it as the fifth most successful publisher in the US over calendar 2011 – fourth if you only count third-parties – and had 5.4% market share. The publisher’s quarterly digital revenues almost doubled year-on-year, and digital revenues for the nine months ended December 31, 2011 were 81% higher year-on-year.

Saints Row: The Third shipped 3.6 million units in its launch quarter, with 3.8 million units shipped to date, making it the largest THQ-owned IP launch ever and the primary motivator for an increase in a year-on-year net core sales. Player shave created over 10 million characters using the game’s creation suite and online Initiation Station, and the game produced “strong” DLC results. THQ expects it to be its highest-selling DLC title ever, and predicted lifetime shipments of 5-6 million units.

WWE ’12 was the other major winner with over 2 million units shipped, and a sell-through increase of 29% on like-for-like platforms in the US.

“Saints Row: The Third and WWE ’12 demonstrate the strengths of THQ’s core gaming capabilities. These titles performed at or better than the expectations we shared during our last investor conference call, driven by favorable critical reviews, community engagement and outstanding marketing efforts,” Farrell said.

THQ’s release slate – FY 2013 (April 2012 – March 2013)

UFC Undisputed 3 – PS3/X360 – February 14 2012

Darksiders II – PC/PS3/X360 – June 2012

South Park: The Game – PC/PS3/X360 – Q3 FY13

Annual WWE game – TBC – Q3 FY13

Metro: Last Light – PC/PS3/X360 – Q4 FY13

Devil’s Third – PC/PS3/X360 – Q4 FY13

Two unannounced titles – TBC – FY13

FY2014 (April 2013 – March 2014)

Unannounced Turtle Rock title

Dark Millenium Online

inSANE

Homefront 2

Patrice Désilets new game

Four unannounced titles

Upcoming hits
THQ detailed a line-up of eight releases planned for fiscal year 2013, which runs from April 2012 to March 2013, including “two unannounced core titles” currently in development.

One other mysterious release – an “un-named original title” from Turtle Rock Studios – was listed for FY 2014, along with a further “four unannounced core titles for release in fiscal 2014 and beyond”.

THQ notes that the “the majority of all unannounced titles are company-owned IP”.

No details were given for the multiple unannounced titles on the schedule, but Farrell said THQ intends “to launch new franchises as new platforms are released”, and that “all of our future games will be designed to excel in an always-on world”. When pressed for details about next-gen hardware, Farrell said THQ would not announce games for new hardware before the proper time, to preserve relationships with first-parties.

“We will say that Volition is dedicated to the Saints Row franchise,” Farrell added when asked about rumours.

Dark Millenium Online, rumoured to be shelved, was also listed for FY 2014 release, but in a conference call to investors, Farrell said THQ is being “realistic” about the project, and is “actively seeking a partner for this compelling MMO”.

Guillermo del Toro’s InSANE and a new IP from Assassin’s Creed veteran Patrice Désilets were also pipped for FY 2014.

Farrell said THQ will throw more weight behind its core releases. Darksiders and Metro: 2033 were described as successful but under-marketed, and both sequels will be more aggressively marketed. A Crytek-developed Homefront sequel and South Park: The Game were noted as highlights of the coming year.

Metro: Last Light has been delayed, moving back to Q4 FY 2013 – that is, the first quarter of calendar 2013; it had been expected in time for the holidays this year. Farrell said the delay will give time to “enhance and polish the gameplay of this hidden gem” as well as secure a better launch window; the game’s marketing budget has been doubled.

Strong Measures
Farrell touched briefly on THQ’s restructuring in the accompanying press release.

“We are implementing a plan to bring costs in line with our lower anticipated level of revenue,” he said.

“With our focused product plan, leaner cost structure, cash balance, and existing credit facility, we believe the company has adequate resources to execute on our plan and deliver on our strong multi-year pipeline of games.”

THQ expects to reduce its general administrative costs by $60 million as a result of 240 redundancies, and save up to $100 million by exiting children’s games. The publisher has already terminated two licensing contracts and is in negotiations to end two more; the uDraw tablet has been shelved entirely and THQ has no remaining financial commitments to it.

The overall cost of restructuring will reach $11.0 million, of which $8.5 million will be cash, and the great streamlining is expected to be mostly complete by the end of the 2012 fiscal year in March.

THQ has been threatened with NASDAQ delisting for failing to maintain a share price above $1 over the past year. In the wake of its financial results release, THQ’s stock dropped by 24% to 58 cents, as results failed to meet even the low expectations of analysts.

The company declined to give detailed advice regarding its future, preferring to delay until end of year results.

“Directionally we believe net sales will be half [of earlier predictions],” Pucino said, estimating $800-$820 million for FY2012 as a whole.

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13 Comments

  1. The_Red

    Wait, why didn’t they mention the South Park? PLEASE don’t tell me it was cancelled. Seriously, I’m all for Turtle Rock’s game and InSANE but South Park is THE game I’m looking forward to the most.

    #1 3 years ago
  2. Patrick Garratt

    It’s on the list, yeah. The press release is here: http://investor.thq.com/phoenix.zhtml?c=96376&p=irol-newsArticle&ID=1656195&highlight

    #2 3 years ago
  3. DSB

    Great news for Saints Row 3. Well deserved.

    I really hope the new line-up comes soon enough to turn things around.

    It took them far too long to realize their mistakes with Dawn of War, but at least they’re going back to the roots. It seemed to me like they realized pretty early, and just couldn’t do very much about it.

    Either way, I hope Brian Farrell has enough common sense to get the hell out once the worst is behind them.

    @1 I don’t see how they could. If THQ dropped South Park, they’d still have to either pay Obsidian, or let them ship it elsewhere, and since it’s based on a major license, it’s exactly the kind of release that THQ needs. If they were to scrap it, that would be downright self-destructive.

    #3 3 years ago
  4. The_Red

    Thanks for the update Pat.

    After all the rumors surrounding THQ, the terrible and massive layoffs and then not seeing it mentioned at first, I was almost ready for news of cancellation (I mean, a TURN BASED RPG with craze 2D look based on a super violent, vulgar and controversial show!? SERIOUSLY? I still can’t believe something this awesome could exist! I’m super serial).

    #4 3 years ago
  5. Edo

    Darksiders II and Metro Last Light awaiting patiently,and very pleased that SRTT did that well as it was very fun game to play,and Devil’s Third coming to PC?Are you sure that’s wright?

    #5 3 years ago
  6. The_Red

    @3 Good point. I still think some of the best features of the game like turn-based combat, 2D look and controversial themes will probably prevent it from becoming a really successful game in terms of sales but at least the game is still coming and by the looks of it, we can all expect Fox News reporting “Games make children mock Jews which Jew classes and are evil”.

    #6 3 years ago
  7. Brenna Hillier

    @5 so THQ says.

    #7 3 years ago
  8. GrimRita

    I hope THQ come through this stronger. They are one of my favourite publishers with such a decent, varied line up. Please – Dawn of War 3 or get Relic to bring some DoW original core elements BACK into DoW 2 and I will end up buying more expansions

    #8 3 years ago
  9. Edo

    #7 OK,thanks,that’s actually a good news,too bad Metro got delayed till 2013 though.

    #9 3 years ago
  10. DSB

    @6 I’m not so sure about that.

    JRPG style combat is easy to get into, and hard to fuck up. I think it’s a great idea for a license.

    And if it does get picked up by Fox News, that’s going to be great for sales. I don’t think Medal of Honor would have done nearly as well if it hadn’t been for all the controversy.

    On the other hand, I think South Park has somehow managed to get past the sheen of “American civility” – So many people have tried to name and shame them, but at the end of the day it’s a clever show, it’s popular with people who aren’t so sensitive and it’s basically good satire, so I think most people have given up on trying to “nail” Trey Parker and Matt Stone.

    They know they’re going to come out on top, every time.

    #10 3 years ago
  11. Da Man

    #10 I think what you meant is ‘FF style combat’. tri-Ace games are very easy to fuck up and hard to play well.

    #11 3 years ago
  12. DSB

    @11 I’m a bit of a japanophobe, so that’s probably what I meant! :P

    #12 3 years ago
  13. Christopher Jack

    They could have continued with their casual games if they had made them exclusive to Nintendo’s consoles, their analysts should have picked up on that.

    Only a very select few casual games do well on hardcore consoles, such as dance & singing games but they leave little room for competition. As for everything else, well they are simply over playing their hands, trying to run alongside the likes of EA & Activision before they can even walk.

    THQ have far too much faith in their franchises, as good as some of their past games may be, it’s not so much the title that sells the game as it is review scores, Red Faction: Battlegrounds is a perfect example. Their games need much more testing & polishing & that’s a well known fact.

    They also appear to be generic, Warhammer 40’000: Kill Team was a very mediocre twin stick shooter that sold on its name alone only because of its very dedicated fanbase, Space Marine was also pretty average & unfulfilling but the fact that Kill Team didn’t even release on PC where the majority of them are is is just another poor show from THQ’s marketing team & their analysts, luckily they got their act together & gave in to common sense for Space Marine.

    #13 3 years ago

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