THQ Q1 losses nearly triple to $27M

1 million WALL-Es help April-June revenues increase by $33.1 million, but ballooning development costs push Saints Row and SmackDown publisher into the red.

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In the middle of a week full of earning reports from gamemakers--including Sony, Nintendo, Capcom, and Electronic Arts--THQ today opened up its financial books. For the quarter ending June 30, 2008, the company posted net earnings of $137.6 million, $33.1 more than what it took in a year ago.

THQ's increased earnings came in very large part to its game based on WALL-E, the critically acclaimed computer-animated film from Pixar. Released for the Mac, PC, DS, PSP, Xbox 360, PlayStation 2, and PlayStation 3, the game sold over a million copies as of the end of June, despite receiving only middling reviews.

WALL-E is the latest--and one of the last--Pixar tie-ins from the publisher, which has a deal that only covers two more films from the Disney subsidiary: 2009's Up! and an unnamed 2011 project. Disney will self-develop and publish the game based on Toy Story 3, due out in 2010. To keep its film tie-ins coming, THQ inked a deal with Pixar archrival Dreamworks Animation to make a game based on its 2010 offering, Master Mind.

But while WALL-E boosted THQ's revenues, the publisher's bottom line was torpedoed by the ballooning cost of making games. Citing the cost of "important improvements in our creative development organization," the Agoura Hills, California-based company reported a net loss of $27.2 million ($0.41 per share) for the April-June quarter. The shortfall is nearly triple the $9.3 million ($0.14 per share) deficit it suffered during the same quarter last year. The red ink is expected to continue during the current three-month period, for which THQ expects a net per-share loss of between $0.35 and $0.39.

Unsurprisingly, though, THQ executives are optimistic. "Our fiscal 2009 product line-up and long-term product pipeline are well-positioned to take advantage of the expanding demographic of gamers on the growing installed base of game platforms," said CEO Brian Farrell in a statement. "We have a robust product slate of key titles scheduled to launch in each of the next several quarters, starting with de Blob in September; Saints Row 2 and WWE SmackDown vs. Raw! 2009 in the holiday quarter; Red Faction Guerrilla, Darksiders: Wrath of War, and Legends of Wrestlemania in our fiscal fourth quarter; and UFC 2009 Undisputed in the first quarter of fiscal 2010."

For its overall 2009 fiscal year, which ends at the end of next March, THQ expects revenue of $1.15 billion to $1.175 billion and earnings per share of $0.80 to $0.90.

Discussion

66 comments
rotnem
rotnem

THQ will be okay. It just needs to make sure that the above titles are launched without a hitch. Sometimes you need to lose money before you gain money. Also, they won't have to worry about production cost for said games once their launched because their launched. They'll get the money they lost, plus more. With those titles above it looks like they'll be fine, just a bit of a rough patch right now. No worries. I just hope it doesn't go under at all, or if it does, not so bad to the point where EA could buy them out. God knows we don't want them to buy out another company.

gangsterjc
gangsterjc

[This message was deleted at the request of the original poster]

gangsterjc
gangsterjc

Dident kno SR2 and RF3 were kid games...

ahmedbilal1993
ahmedbilal1993

Nah.They wont cance SVR 2009. Saint rows 2 is their trump card. This might not be the end of THQ.

osiris
osiris

they lost money this quarter, but they'll make it back with the games they have coming, just like they said. I wouldn't be worrying to much... THQ is not almost done

Pete5506
Pete5506

It sounds like THQ is almost done

agordplayer
agordplayer

THQ needs to make better games than just kids games

PA_DUTCH
PA_DUTCH

That is a shame, i really loved playing Warhammer 40k: SC on PSP :(

darkeknight
darkeknight

With SR2 they are going to be alright.....

fasbas
fasbas

i hope they get over with there losses real soon or we wont be able to see sum good games such as SR2,RF2,SD09!

BigE181
BigE181

I hated when they has to cancel the games...i will be pissed if they cancel the SvR 09...

toad1956
toad1956

Och! I hope they do not start cancelling games. I guess this is more proof that there has to be any easier way to port games, as long it is not a port to PC.

Miteme
Miteme

I'm sure all that will change when they release some anticipated next gen titles. Therefore making the next quarter higher

jknight5422
jknight5422

This probably explains why they're having to put extra sleaze in SR2.

residentzombie2
residentzombie2

These quarter reports are so full of it! Why you may ask? Well it takes about 1 1/2 years to develop a game (at least a full quality one) and a quarter is 3 months. All this means is that THQ did not release any NEW bug retail games in Q1 and took a loss because they spent millions to develop the games that are still in development. Simple

akiwak
akiwak

UFC on hold till 2010? Crap I hope that they don't give up on this game at the last moment or don't put too much time into making the game. I might get SR2, I really liked Red Faction but RF2 was a big disappointment so RF3 is iffy for me. I hope THQ gives lots of love and attention to UFC because that sport is currently growing and is quickly rising to be the number one most watched sport.

smitherean
smitherean

arc_salvo, I have to partially disagree with your opinion on next-gen consoles. I own a Wii, and it is an excellent concept, but in fact it has less quality games than the other two consoles, because developing for it is even riskier, more expensive, and difficult due to the unconventional control scheme and relatively low power. The Wii is an anomaly, and if the next generation of consoles were all 'innovative' and 'revolutionary', cross-platform development would cease to exist, increasing risk and strangling sales for all games, bad news for developers and consumers alike.

WarPrime
WarPrime

What are you talking about? They Published Saints Row which was awesome and Warhammer: Dawn of War. So what kind of crack are you smoking?

Karmacodelc18
Karmacodelc18

THQ will continue to suffer as long as they make these dumb kiddie games.

DJCUEBALL
DJCUEBALL

THQ has never made a good game which explains the financial problems.

arc_salvo
arc_salvo

Well, I'm not shocked that THQ is losing money due to development costs. The price of making games as graphics intensive as they are nowadays for the 360 and PS3 at least is phenomenal. I hope that costs go down in the short and long run, and that this generation of consoles lasts a long LONG time. I don't want to see another round of "next-gen" consoles being released anytime soon, especially if they're overly focused on graphics and cost around $500 or more and make games jump to $70, and force Game Designers to take even longer to make increasingly riskier to develop games, and then go bankrupt if they're not popular. That'd kill all the innovation and make gaming a nightmare for consumers and developers alike. I'd really rather see this generation of consoles milked for all its worth, and see the next gen have more Wii-ish consoles. Revolutionary concept and innovation wise, evolutionary in terms of technology and costs.

jtthegame316
jtthegame316

thq games are awesome apart from smackdown vs raw 2008. let hope they put it right in 2009 cause the 2008 version was annoying there was no control over who your wrestler was facing where as in 2007 you had full control over that making 2007 a much better game. oh well tna game coming soon and tna is better than wwe anyway.

Amir29
Amir29

It's unfortunate that THQ doesn't take more advantage of their WWE exclusive license. WWE caters events that repeatedly sell out and even break attendance records in many arenas. It's weekly programs are some of the highest rated as well. Watching videos of Red Faction and Saints Row 2, we can all plainly see the capability for THQ to create fresh concepts and great looking games. Why not apply that to the Smackdown franchise? I understand their outlook on it. "If a consumer wants to play as his/her favorite superstar he will have to buy our software to do it anyway. So, let's work on refining and balancing existing gameplay, up the polygon count a bit, and let's market our product as something fresh and new by focusing on the weapons system". If that's what they are thinking, they're right. Wretsling fans WILL buy it anyway. But my point is, they may not buy it every year, and there friends (who may not be wrestling fans) may not see the fun in a wrestling video game and buy a copy for themselves. There's a market outside of wrestling fans for wrestling games because wrestling makes a great and fun transition into games. I haven't watched wrestling since the 90s. Three out of the four people who regularly play with me HATE wrestling. So HEY, THQ!!! Instead of wasting ten of millions on getting exclusivity for a franchise you're slowly killing. Why don't you put your talents into EVERYTHING you do. I personally thnk that THQ has the talent and capability to profit if they truly focus on product quality. You can't make a game for a fan, if you're not a fan of games.

mexi339
mexi339

saints row 2 comes out an thq will be ok

gangsterjc
gangsterjc

THQ is a good company Kudo's for Red faction greatests game ever! ok maybe not but its great 4 the time it was out

Taegre
Taegre

As long as they have Volition, THQ isn't going away for a loooong time.

The-Croix-Man
The-Croix-Man

So all I read in this article was that they made a lot of money off of a movie game, losing a lot of money by making games, but during the next few months/years this will be all history. Which is good since I kinda like THQ.

kos1085
kos1085

Can't wait to get my hands on Saints Row 2 and WWE SvR 2009.

pinball69
pinball69

This sucks. Im a big fan of THQ RTS games for the PC. The Warhammer 40K Dawn of War series and Company of heroes are both excellent strategy games wich recieved top reviews. Much better than that C & C III piece of ****. Sadly PC gaming appears to be at a decline...

pinball69
pinball69

Please don't go bankrupt before Dawn Of War II !

captainfork
captainfork

I hope that Deadly Creatures is a hit on the Wii. That'll help, too.

jackrocks123
jackrocks123

stop making medicore movie games and medicore games.

otanikun
otanikun

Ouch THQ, big ouch; at this rate, if you guys don't step up to the plate and create a few knockout games in the coming years, I'm not seeing this company staying afloat or being bought out by none other than EA Games. Don't feed the monopoly! Loved THQ as a kid, don't wanna see it burn out now!

V-r0cK
V-r0cK

IMO, THQ hasnt made a stand out wrestling game since WWF No Mercy for N64. That game to me was THQ's peak . I find their new wrestling games to be repetitive and bland, like EA's sports games, needing to make one for every year. Thats not how it was when THQ first started wresting games since WCW vs NWO.

theone86
theone86

Just looking through my game collection even going back to my PS2/GC days, the only THQ games I ever bought were wrestling games and Saint's Row. Thier wrestling games have become stale, IMO, and if THQ really does go under I'm sure someone will at least consider buying the rights to the SR IP.

raverrozza
raverrozza

out of all the upcoming titles red factions the only one im interested n. and maybe saints row if they can bring something new to the table.

Leo_Colt
Leo_Colt

Hopefully this will stop them making crap games.

SpartonGhost
SpartonGhost

Only game I can remember buying from THQ is Saints Row1. In all honesty that's pretty much the only thing worth buying besides Saints2.

Ussop
Ussop

THQ has published some good strategy games in the past like COH and Warhammer 40k. I enjoyed those and still play them. I just hope that they will do better when Warhammer 40K: DOW II is released.

franwex
franwex

When was the last time THQ made a good game? Make a good game THQ, we know you have the resources! Toy Head Quarters, lol!

BassMan
BassMan

Poedon, you are confusing Saints Row with Crackdown. There was no Halo 3 beta key with SR.

Viral-venom13
Viral-venom13

They will come up with the release of Saint's Row 2 and Smackdown but the game that i'm seeing that could really put them on the top charts is the release of Darksiders, they better ensure that all these games are huge hits at the time of their respective release!!

Poedon
Poedon

i hope saints row 2 will do ok for them. I assumed the first iteration sold well because of the Halo 3 Beta key...

VenomRitual
VenomRitual

well when you make crap games you're going to lose money. make your own creative games. i really don't like these movie games they come out with

Civfan333
Civfan333

this is really old news, all the way back from...........DECEMBER 31, 1969.

CVM_123
CVM_123

i hope they make them better

lostboy85
lostboy85

Just a thought THQ... pour your efforts into creating your own franchise, maybe youll do better. or hell, make a good game.