THQ holiday sales spike, profits plunge

By Brendan Sinclair, GameSpotPosted Feb 5, 2008 3:58 pm PT

Publisher recaps quarter, explains decision to shelve Stuntman and Juiced franchises, confirms Drawn to Life for Wii.

The new year is barely a month old, but THQ has already seen its share of ups and downs. Things started well enough for the publisher, with the announcement of the expected games based on Pixar's Wall-E and the acquisition of Big Huge Games. January turned south for THQ before long, as the company announced the downgrading of its financial projections, closure of a studio, cancellation of two games, and the abandonment of two owned franchises over the course of a single investor conference call.

The THQ news continued to flow today, as the company released its financial results for the final three months of 2007. In a conference call following the release, THQ updated investors on a number of projects currently in the works, including Red Faction III, and further explained the cancellation of Frontlines: Fuel of War on the PlayStation 3 and what went wrong with the Stuntman and Juiced franchises.

During the holiday sales quarter, THQ raked in sales of more than $509 million, 7 percent more than it managed in the final three months of 2006. Despite that jump, the publisher's net profits were down more than 75 percent, to less than $16 million from more than $62 million in the prior year's holiday quarter.

In the conference call, THQ CEO and president Brian Farrell mentioned that the publisher was pleased with the performance of Drawn to Life on the DS and said that the franchise would be coming to the Wii. He also touted that WWE Smackdown vs. RAW 2008 set a record for the franchise by shipping more than 5 million units in the holiday quarter, bringing the franchise revenue total above $1 billion.

However, it wasn't all sunshine from Farrell. The THQ head answered a number of questions regarding the publisher's recent cancellations. When asked why the PS3 edition of Frontlines: Fuel of War got the axe, Farrell bluntly blamed the problem on Epic's Unreal Engine, saying it "just didn't perform as well in the open world as we would have expected," and would have resulted in the PS3 edition arriving two or three months behind its Xbox 360 and PC counterparts.

THQ isn't the first company to run into problems with the latest version of Epic Games' Unreal Engine. Midway blamed problems getting the technology running on Sony's console as a reason for delays to the PS3 editions of Stranglehold and BlackSite: Area 51, while Too Human developer Silicon Knights has gone as far as to sue Epic over its problems with the engine.

As for giving up on Stuntman and Juiced, Farrell shed more light on those decisions as well. With respect to Stuntman, Farrell said the problem was not so much with the quality of the game, but with its focus on what he called "old generation gameplay."

"It's a very highly scripted game," Farrell said, "whereas now the best-selling games are generally more open [and offer] more player choice, so we think that game mechanic didn't translate."

In the case of Juiced, Farrell just thought the publisher had the developer biting off more than it could chew.

"We were way too ambitious with that studio," Farrell said, "giving them six different platforms to support, everything from new PlayStation 3 development all the way down to DS. I think that was a bad decision, and we don't have any studios working on more than three SKUs simultaneously now."

When asked about the company's Warhammer 40,000 massively multiplayer online role-playing game, Farrell stressed that it was "still very early in development" but that it was coming along well.

Finally, Farrell answered an analyst's question about how Saints Row 2 will be able to compete in the market in light of the April 29 release of Grand Theft Auto IV. The CEO replied that THQ will give Rockstar's signature franchise a "fair amount of running room in the open market" before the launch of Saints Row 2, adding that the sequel to the original Xbox 360 open-world thug game will include a number of features to distinguish it, such as online cooperative play, character customization, and more.

43 Comments

  • halomonkey1_3_5

    Posted May 5, 2008 1:10 pm PT

    As long as Red Faction: Guerrilla still comes out before 09 i will be good

  • king_bobo

    Posted Mar 21, 2008 3:20 am PT

    I hope that THQ stays a float, because it pumps out some good quality games - on all of the platforms. To be honest I hope that Saints Row 2 and GTA IV do equally well this year...

  • evilzin

    Posted Mar 1, 2008 2:33 pm PT

    saints row 2 has so great things running for it and so dose GTA but over all i like saints row better because it has x box live on it and well from what i heard they have scraped that idea for the new GTA game but it still will be cool to play them both

  • SilverKnight006

    Posted Feb 27, 2008 3:17 pm PT

    Yeah man i gotta agree with u on that. Saints Row will NEVER be able to match up to the sheer quantity of things to do in GTA. Not to mention the ending of the original Saint 's Row really sucked a**.

  • churchwood

    Posted Feb 23, 2008 7:56 pm PT

    hold up das sum **** saints row will neva be betta dan gtaIV am not sayin dat saints eent a gud game but gta is da bomb and its da creator of free roaming games anyways if saints row 2 coms out on ps3 am gettin IV and saints row

  • BlOOD_HOUNDD

    Posted Feb 19, 2008 8:47 pm PT

    saints row is the **** when it come out GTA SUCKS!! comebared to SAINTS ROW!!!!!

  • BlOOD_HOUNDD

    Posted Feb 19, 2008 8:45 pm PT

    i cant wait till saints row 2 comes out but when dose it come out that game makes GTA look like a kiddy game

  • stump161

    Posted Feb 8, 2008 7:14 am PT

    so what if frontlines fuel of war launch for the ps3 is 2-3 months after the pc's and xbox's. why cancel when it was practically finished. i was lookin foward to this. they could have turned a good profit with this in my opion. i am also tired of people sayin the xbox is better and the ps3 is better. i work hard for my money and own both systems they have there up's and down's, and i enjoy both.

  • Webswinger-93

    Posted Feb 7, 2008 12:16 pm PT

    "January turned south for THQ before long,..."

    That means it didn't go to well for THQ in January.

  • YukoAsho

    Posted Feb 6, 2008 8:21 pm PT

    OK... So they sold more games but made 75% less money? Big Huge Games can't have cost that much.

  • SHACKR

    Posted Feb 6, 2008 6:36 pm PT

    Okay, Drawn To Life is a good game, but how would you play on the Wii?

  • funnysplay

    Posted Feb 6, 2008 6:27 pm PT

    I agree with gamer xxl. GTA lV is off my list.

  • boots555

    Posted Feb 6, 2008 4:18 pm PT

    EA better snatch up the Stuntman license.

  • G-Legend

    Posted Feb 6, 2008 3:50 pm PT

    Damn I wanted this to be a PS3 exclusive so they could utilize the Cell and have even more destructible environments, crazy physics and better bot AI. Oh well still some good news

  • Gamer_XXL

    Posted Feb 6, 2008 2:14 pm PT

    Saint's Row was a good game and I have to agree the driving was horrible tell me how the fastest car in the game get's hawked by police vehicle better yet FBI cars even with NOS. They need to actually have levels to where it's possible for you to actually get away in a vehicle. A better combat system would be very nice. The story should also unfold the mystery of the last game like who was the cop and why we had to "Actually Die" at the end. They should make their fence junmping more like Assassin's creed type stuff that Le Parkour stuff that would be ballin haha most of the other stuff isn't too bad if even bad so I just can't wait because to me GTA IV doesn't seem like's it's going to make my cut this year just doesn't look as good as it use to be (Not talking graphic wise talking game wise)

  • Z3R0B4NG

    Posted Feb 6, 2008 10:57 am PT

    "January turned south for THQ before long,..."

    What kind of Language is this supposed to be?
    Some sort of business Slang or what?
    I'm German btw. so nevermind i just dont get it...

    "Januar bewegte sich südlich für THQ vor langem..." hä?

  • jknight5422

    Posted Feb 6, 2008 9:41 am PT

    Saint's Row was horrible when it came to the driving features. I doubt the sequel when any more playable. I hope they are committed to WH40k MMO, but with losses like these, they could ditch it down the road.

  • bobnice

    Posted Feb 6, 2008 7:58 am PT

    RIGHT ON KEYBOARDER20! these unfortunate happenings that occur for the PS3 must go right up Sony Fanboys rear-ends. they talk so much crap saying "ps3 this, ps3 that. it is soooooooo much better than 360," and then we hear news of PS3 exlusive titles jumping ship (Ace Combat) or getting canned all together (Frontlines) or titles performing worse than the 360 version (Madden, Turok....etc)!

  • bardkieran

    Posted Feb 6, 2008 7:20 am PT

    I think with the release of their upcoming titles they'll turn around fine. They invested a lot of money, so profits being down is normal, based on the balance of expenditures vs. income. I'm curious to see what the new titles that are soon to be released are.

  • msdd9

    Posted Feb 6, 2008 5:18 am PT

    Things always get worse before they get better.

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