PaulH
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ElizabethS
The financial woes for the video game industry deepened this past week with THQ announcing a $56 million loss for their financial quarter ending December 31, 2011. This loss comes days after reports that THQ recently underwent a wave of layoffs, which affected their administrative and publishing departments. While the news is pretty grim, if there is a silver lining here at all it's that rumours of THQ's demise have been greatly exaggerated.
The story first broke in mid-January, when Kevin Dent, head of the IGDA Mobile Special Interest Group, claimed via a series of tweets that THQ cancelled their 2014 MMO, Warhammer 40k: Dark Millennium Online. His claims worsened later in the day when Dent tweeted that THQ "cancelled all of their 2014".
THQ quickly responded with an official comment, squashing the false claims made by Dent:
"THQ has not cancelled its 2014 lineup and has not made any decisions regarding the planned MMO."
Further clarifying the company's direction moving forward in 2012 and beyond, the THQ statement went on to say:
"As part of the ongoing review of our business, we have made decisions to ensure that the company is strategically addressing the most attractive markets. As we have previously announced, we have dramatically reduced our commitment to the kids' boxed games sector, which leads to a significantly more focused release schedule moving forward. Our slate for calendar 2012 and beyond is focused on high-quality core games and continues to build our digital platform and business. We are excited for our pipeline of original and high-quality content along with our relationships with some of the best talent in the industry."
During an investors call on February 2, THQ CEO Brian Farrell announced the performance of the company was worse than anticipated, resulting in a $56 million loss for Q3. Sales dipped slightly, from $314.6 million to $305.4 million.
Despite strong sales of THQ's Saints Row: The Third and WWE '12, Farrell said that sales of the uDraw GameTablet and related software were weaker than anticipated, and that the launch of the interactive game tablet was particularly weak on next-generation consoles, Xbox 360 and PS3. As such, THQ has decided to no longer manufacture the uDraw GameTablet hardware. Furthermore, due to low sales of kids, family and casual games, the company has decided to focus on their key franchises for core gamers.
In total, 240 THQ staff members are being laid off between now and September 30, 2012.
As a commitment to reversing the financial woes of THQ, Farrell will take a one-year, 50% pay cut, starting February 15. This will reduce his salary from $718,500 to $359,250. The board of directors have also elected to take a one-year, 50% pay cut, effective February 1.
To show just how dire the situation is for THQ, the publisher has received a delisting notification from the Nasdaq stock exchange. Under the warning, the publisher has 180 days to lift their stock price above the $1 mark and keep it there for 10 consecutive business days. At the time of writing, the THQ stock is at $0.53 on the Nasdaq.
According to THQ, the company is currently the #5 publisher in U.S. with a 5.4% market share.
This bad video game financial news comes days after Nintendo recently announced a $629 million loss for Q3.
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