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THQ changes focus to quality over quantity

Saints Row publisher realigns priorities in wake of studio closures, layoffs of 250 confirmed; Red Faction: Guerrilla and Darksiders delayed.

Drastic times call for drastic measures. Having already completed the "drastic measures" with the closure of five owned studios as well as layoffs at two others this week, THQ today shed light on the "drastic times" that necessitated the move.

In the publisher's quarterly report for the three months ended September 30, THQ posted a net loss of $115.3 million, significantly worse than the $7 million net loss it posted over the same period last year. Sales for the company were also down sharply, as THQ reported quarterly revenues of $164.8 million, down more than 28 percent year over year from $229.3 million.

THQ pointed to a lighter release schedule that included de Blob and international launches of Wall-E as a culprit in the lowered sales. For the same period the previous year, the publisher's lineup was spearheaded by Ratatouille, Stuntman Ignition, and Juiced 2: Hot Import Nights. The latter two of those games both underperformed at retail, leading THQ to shelve the franchises.

Relating to the aforementioned studio closures and layoffs, THQ said it let go roughly 250 product development personnel, or 17 percent of its developers. The publisher lowered its projected product development costs for fiscal 2010 by $100 million. In a conference call with investors, THQ CEO Brian Farrell said cost reductions including layoffs are on the way for the company's corporate structure as well.

"Several titles" were canceled in connection with the closures, but THQ said none of the axed projects had been publicly announced. The closures, cancellations, and job cuts were part of "a significant business realignment," the publisher said.

"As part of this realignment, THQ plans to focus on fewer, higher quality titles, and to align its organization and cost structure accordingly," the publisher said. CEO Brian Farrell added in a statement that the moves are part of an attempt "to be more competitive in key consumer segments and address the current business environment."

That new focus can be seen in a pair of delays the publisher also announced today. Two games previously expected by the March 31 end of THQ's current fiscal year--Red Faction: Guerrilla on Xbox 360, PlayStation 3, and PC, and Darksiders: Wrath of War--have been pushed back. THQ expects the move to cost it $125 million in sales this year. Red Faction will arrive in the April-June quarter next year, with Darksiders is now expected to hit between July and September.

Farrell said other focal points for the publisher include growing its presence in the fighting category, which includes its WWE wrestling titles and the UFC games. The publisher also wants to reduce the number of core games in its pipeline, but increase their production budgets "where appropriate." The company plans to release fewer--but bigger--titles for the core market. The casual market is also being targeted by THQ, although the publisher said it was going to "rationalize" product lines in its children's gaming business, reducing costs by outsourcing development.

Investor reaction to the news has been swift. As of this writing, THQ stock has lost nearly 22 percent of its value in after-hours trading, down $1.44 to $5.11 after ending the day at $6.55.

157 Comments

  • Kharn_Fellblade

    Posted Nov 19, 2008 2:54 pm GMT

    As far as Relic remains unschatched and keep patching DoW and CoH, while putting out DoW 2, i'm happy. The only cool titles THQ has comes from Relic.

  • Unabomber256

    Posted Nov 13, 2008 10:24 pm GMT

    I'm sure THQ won't be the only big publisher to cut internal dev teams. I'm not going to say that the teams that were cut were low quality or deserved it, but if you look at the games they were making you can see that it was a good financial decision. I'm glad Volition and Relic have been unscathed.... so far....

  • Humorguy_basic

    Posted Nov 13, 2008 5:52 am GMT

    Problem is - I am such a jaded PC gamer now, I see 'quality' to mean 'better graphics and more powerful PC needed'!

    Agree about 1983 clear out - but don't forget the 1993 clearout too! One could argue that 2003, while not being a clearout was the year 'corporate' took over from 'organic' when it came to gaming!

    The vast sales/interest in the Wii and DS, the continuing sales of PS2, the announcement of the five millionth DOSBox download and the success of GOG.com -selling retro PC games, are all indictments on modern AAA 'hardcore' gaming of the 360, PS3 and PC that in comparison are struggling.

  • GeigerdolylWodd

    Posted Nov 12, 2008 6:01 pm GMT

    acsam12304 Posted Nov 7, 2008 9:28 am CT to me Midway and THQ has been one for those game companys that just throw games our everyday trying to make a quick money. and now it is costing them more. i dont know why but THQ EA and Midway should just not make games based oh little kids movies at all. because all those games WITH IN weeks goes to the "$15 or less" bin.

    they should just take their time like everyone else and make a good game not some crapy one with in weeks that is going to get a very low rating. they dont get what is the problem. it is like they love to see their games get very low ratings

    The head honcho may be bullying them or intimidating them into agreeing with them even if they dont. You cant use fear to encourage quality.

  • GeigerdolylWodd

    Posted Nov 12, 2008 5:52 pm GMT

    marc5477 Posted Nov 10, 2008 11:41 pm CT If it took them this long to figure out the "quality over quantity" theory then they should just die and be done with it. I will never understand how these moronic CEO's and their lackeys get their jobs.

    I know right? This is basicly Nintendo 101. Sorry I'm moody today...

  • SimuLord

    Posted Nov 11, 2008 7:54 pm GMT

    And we get one step closer to 1983 revisited. The industry's overdue for a massive shakeout.

  • rotnem

    Posted Nov 11, 2008 3:18 am GMT

    Hehehe, Uh-Oh. Talk about bad timing to say that I'm learning in college how to make games here in Ireland. The American economy must get better in five years or I'll have a hard time finding a job in the industry!

  • marc5477

    Posted Nov 10, 2008 9:41 pm GMT

    If it took them this long to figure out the "quality over quantity" theory then they should just die and be done with it. I will never understand how these moronic CEO's and their lackeys get their jobs.

  • Chief_Kuuni

    Posted Nov 10, 2008 1:57 pm GMT

    sounds good to me, other then the loss of lots of workers. I think this is a good move

  • ctg867

    Posted Nov 8, 2008 8:32 pm GMT

    Ugh, I hope THQ can turn things around since they do actually have come quality stuff.

  • hattorihanzo32

    Posted Nov 8, 2008 8:35 am GMT

    de blob was a good game

  • enix165

    Posted Nov 8, 2008 8:33 am GMT

    Hm, THQ talking about quality? I only played a few THQ games, but all of them were craptacular. XD

  • tudyniuz

    Posted Nov 7, 2008 11:57 pm GMT

    Wall-e was terrible

  • 2ndWonder Site Greeter

    Posted Nov 7, 2008 3:24 pm GMT

    Wall-E is a movie based game, where they actually expecting it to sell well? Not to be wrong here, but movie games never sell very well.

  • silva112

    Posted Nov 7, 2008 3:23 pm GMT

    No, only unannounced titles have been cancelled, unfortunately Blood In The Sand is still being released.

  • Skrilla_XS

    Posted Nov 7, 2008 2:25 pm GMT

    Quality over quantity huh? Understandable, I guess this means 50 Cents "Blood in the Sand" is getting cancelled right?

  • magiroux

    Posted Nov 7, 2008 12:33 pm GMT

    Autolycus said: "good thing sooooo many people bought the game used.... we have you to thank for putting those people out of work. good job."

    Well. If at least we could think you figured that for yourself... but you're just repeating what is being said everywhere. It's possible a lot of their games changed hands on the used market but it happens a lot when you get average reviews. People are not ready to pay $60 for games with uncertain value. Some of those games gave me a great time (Stuntman and Conan) but all were bought new under $20. When what you have to sell loses 2/3 of it's value in 6 months, it's not exactly a healthy business proposition...

  • ZEPH1ZEN

    Posted Nov 7, 2008 12:24 pm GMT

    I dont want to wish ill fortune on any games developer, but I think this is for the best. As has been previously said, THQ are one of the main culprits of sending s**t movie tie ins for little kids in the direction of gamers, and now they are paying the price. Let this be a message to all games developers, make s**t games, and we wont f**king buy em. You will lose money, and go out of business quickly. So go home, develop a good game with EFFORT put into it, and then come back and sell it to us.

  • acsam12304

    Posted Nov 7, 2008 7:37 am GMT

    This is what i will do if i worked for THQ and got fired.

    I will go and look for anyone look to hire is not. then ill go home sit in front of my computer open up Source SDK Hammer Orange Box. or some other game making program and start making my own game. it will be hard, but you can also add that game you are making to you portfolio and go to a gaming comapny and show them what you have done. Also if you make the game good. you can start your own company. all you need is a DBA that cost less then $100 to get or a Corporation that that is a little b it of money to spend but you will be legit. or you can call Steam up tell them what you did and see if they can try to sell it off Steam.

  • acsam12304

    Posted Nov 7, 2008 7:28 am GMT

    to me Midway and THQ has been one for those game companys that just throw games our everyday trying to make a quick money. and now it is costing them more. i dont know why but THQ EA and Midway should just not make games based oh little kids movies at all. because all those games WITH IN weeks goes to the "$15 or less" bin.

    they should just take their time like everyone else and make a good game not some crapy one with in weeks that is going to get a very low rating. they dont get what is the problem. it is like they love to see their games get very low ratings

  • The_New_Blueguy

    Posted Nov 7, 2008 6:05 am GMT

    You know, I know we say that all studios should follow the same model of quality over quantity. But in wanting to have something for everyone and in the interest of keeping your business growing and going, I realize it's hard to pass up on key licenses like Disney and Nickelodeon. Where you know these companies don't see the potential of the gaming industry to turn out worthwhile projects in the long term, they just want a quick buck on a movie release or to capitalize on high ratings while the TV show is hot.

    The key difference between THQ taking their now previous direction and someone like EA doing the same as they have been known to do, is money. EA didn't start churning out crap on a yearly basis until they could seemingly back it up financially. As soon as that happened they started that practice. Problem is, THQ doesn't have EA money.

  • Richard7666

    Posted Nov 6, 2008 7:37 pm GMT

    When you look at the studios they have closed, it almost makes sense. They're culling the visionless crap-spammers who make all the movie spin-offs and derivitaves. I think we can all rest assured that this won't affect their CORE studios, such as Relic. I think the only way those studios would be at risk would be if THQ itself went under.

  • Extreme124

    Posted Nov 6, 2008 7:33 pm GMT

    Weren't the last 2 WWE games 07-08 the same game, only SVR 07 was better than the latest installment 2008.

    I guess it goes to show you how much money they actually have to spend on there titles, And not make the same game 2yrs In a row only worse the 2nd time around

  • Phantsy16

    Posted Nov 6, 2008 3:29 pm GMT

    to little to late indeed.

  • no_cultureicons

    Posted Nov 6, 2008 3:20 pm GMT

    As long as Legends of Wrestlemania still happens I don't care.

    Both Worms Open Warfare games were great for the PSP, but that's down to Andy Davidson's brilliant idea rather than THQ.

  • unknown2007

    Posted Nov 6, 2008 3:17 pm GMT

    explains why the WWE games have been crappy these past couple of years. with the exception of SvsR06. which btw was a great game overall. unfortunately ever since then the quality in video games for the WWE franchise along with others have been declining. i think it's probably because of THQ budget issues. but i could be wrong.

  • Sillygostly

    Posted Nov 6, 2008 3:11 pm GMT

    Too little, too late. I'm happy to say that I don't have a single THQ game in my collection; and the only ones I've ever played have been AWFUL.

  • robtheguru

    Posted Nov 6, 2008 3:11 pm GMT

    They should focus on their RTS line. Dawn of War and Company of Heroes are 2 of, if not, the best RTS games ever. As for Wrestling Games, they should take more time developing each one. Rather than 1 a year, they should have 1 each every 2 years. If they focused more on creating non-linear, fully interactive stories then the games would much more replayable. It's rather annoying playing the same season mode over and over again with very little choice in what you can do. Anyway, thats it pretty much. They should focus on what they know sells rather than trying to grind out new franchises.

  • umbrae

    Posted Nov 6, 2008 2:56 pm GMT

    "THQ plans to focus on fewer, higher quality titles"

    I think few believe THQ is possible of this based on history. Maybe they should have thought about that 10 years ago.

  • football_legend

    Posted Nov 6, 2008 2:45 pm GMT

    Good idea.

  • JJpenguin

    Posted Nov 6, 2008 2:18 pm GMT

    So lemme get this straight, they had to consciously decide and announce that their games are going to be quality from now on? Sheesh...

  • Labouskie

    Posted Nov 6, 2008 2:06 pm GMT

    I hope who ever gets the WWE licence after THQ they bring on Syn Sophia (previously AKI, same company different name) to take on the wresteling genera. This way I believe that wrestling games will not feel as though they have been rehashed and rushed to completion. Syn Sophia (AKI) has always made the best wresteling games and with their track record for brilliant wrestling games they deserve another shot.

  • samir192

    Posted Nov 6, 2008 1:26 pm GMT

    THQ need to make WWE their top priority. I have recently downloaded the WWE 2009 demo and it's below par from what i can interpret; the graphics are comparable to WWE 2007 on the PS2 and the physics engine seems dated. Also, there is still the notorious 'air-hug' effect during grapples.

  • Viral-venom13

    Posted Nov 6, 2008 1:22 pm GMT

    Games for the casual market is a good idea to generate more revenue but they must also remember to make games for the hardcore audience that will be heavy hitters even if they won't be releasing a lot of them!! It's sad though to see so many developers losing their jobs.

  • supermariomelee

    Posted Nov 6, 2008 12:47 pm GMT

    I guess THQ is trying to milk the WWE license while they still have it. Because WWE has been trying to dissolve their contract with THQ for awhile(on fraud charges). From the sounds of it, THQ will not getting it back when their deal ends next year. That explains why there will be 2 WWE games within 6 months.

  • Autolycus

    Posted Nov 6, 2008 12:34 pm GMT

    good thing sooooo many people bought the game used.... we have you to thank for putting those people out of work. good job.

  • Chico_Azteca

    Posted Nov 6, 2008 12:33 pm GMT

    Hey Nintendo check this out it may interest you

  • DJCUEBALL

    Posted Nov 6, 2008 12:00 pm GMT

    Has THQ ever made a good game? Hope they step it up with the quality then.

  • Mandalore_15

    Posted Nov 6, 2008 11:37 am GMT

    Got to wait even longer for Darksiders... Will there be enough games between now and next July/September to keep me entertained?

  • bassmaniac20005

    Posted Nov 6, 2008 11:23 am GMT

    Let's hope this becomes a trend and game companies catch on. I want fewer, better games--not an onslaught of terrible games. I'd rather have more 8's and 9's than a bunch of 7's and 6.5's.

  • resident_rozza

    Posted Nov 6, 2008 10:33 am GMT

    Shouldn't this have been the priority from the start!?!?

  • james007_14

    Posted Nov 6, 2008 10:31 am GMT

    I am glad to hear that a company wants to put quality over quantity. I wish them the best in this effort.

  • sieg6529

    Posted Nov 6, 2008 10:28 am GMT

    Wow, if that stock dips to $4 or less, I'll buy a few shares.

  • Alizerothree

    Posted Nov 6, 2008 10:24 am GMT

    It's about time. THQ was relying too much on quantity and getting their Disney and Nickelodeon games out that they have forgotten about quality in general. Sure, they had some really good titles like Dawn of War, and Company of Heroes, but it always seemed they were focused on amount.

    When I worked there, that's what the atmosphere felt like. Do a ton of OT and get all the projects out the door. KS all the B and C bugs to meet the deadline. I am pleased they are thinking of making this change finally, and I wish them the best.

  • Mj-Healy

    Posted Nov 6, 2008 9:57 am GMT

    aka hal: Why would you deliberately make a lower quality game? What happened to taking pride in your work?

    Well they don't set out to make poor games. Every deveploer wants to make the best game possible. Games like Wall.E are poor as they are made quickly and for kids. All the luck to THQ. WWE games may be getting repitive but they are still good games

  • ecs33

    Posted Nov 6, 2008 9:55 am GMT

    I think in the past the industry was dominated by children begging their parents for a game. Now those same children are grown up and many are still playing video games. They make their own money and want quality. I wonder if this is really the case with the market...interesting.

  • ecs33

    Posted Nov 6, 2008 9:54 am GMT

    These guys have to realize that we do research before we shell out $60. Not all of us are the younger age group who beg Mom and Dad for a certain game. To succeed in this industry you HAVE to make something that stands out and you HAVE to make it known. Advertising is key in many industries and that fact is no different here.

  • MuffintopX

    Posted Nov 6, 2008 9:39 am GMT

    Agreed. This industry is all about quality over quantity, especially in the age we live in. Us gamers are picky when it comes to throwing $60 into a title, and I know I want some bang for my buck. But hey, let the best man win.

  • JesusFreak1990

    Posted Nov 6, 2008 9:33 am GMT

    Sandrock323 wrote: "Other devs need to do the same. The reputation of the market is being destroyed by all these low-quality titles that devs keep spitting out."

    Agreed.

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