THQ lessens loss, talks next-gen

Strong sales of Destroy All Humans!, Juiced, and licensed games boost publisher; Saint's Row, MotoGP 4, S.T.A.L.K.E.R. delayed, next-gen WWE revealed.


As calendar year 2005 heads into the homestretch, the major players in the game industry are issuing their most recent quarterly earnings reports. Next week will see Electronic Arts and Activision tip their financial hand to stockholders. Today, Sony and Microsoft opened up their ledgers, which showed improved earnings for both companies' game divisions.

Following close behind the electronics giant and software colossus was game publisher THQ. After the markets closed, the company revealed a net loss of $1.4 million ($0.02 per share) for its second fiscal quarter, which ended September 30. The loss was lower than analysts had expected, and much lower than the $6.4 million ($0.11 per share) the company lost during the same period in 2004. Overall, the company saw $142.7 million in net revenue (that is, sales) during its fiscal second quarter, versus $96.3 million during the same period in 2004.

"Our second quarter results reflected strong sales of our original properties Tak, Destroy All Humans! and Juiced, as well as our industry leading portfolio of licensed properties, including WWE Day of Reckoning 2 and Scooby Doo! Unmasked," said president and CEO Brian Farrell in a statement. "Our catalog also continues to perform well, with three of our holiday 2004 titles moving to Greatest Hits [for the PlayStation 2] status during the second quarter." The games in question were The Incredibles, The SpongeBob SquarePants Movie, and WWE SmackDown! vs. Raw.

Of greater interest to gamers was a postreport conference call, which revealed much about THQ's plans for next-generation consoles. First up was the announcement that two of the company's highest-profile games for the Xbox 360 had been delayed. MotoGP 2006: Ultimate Racing Technology will now debut on the console in the company's fourth financial quarter, which runs from January to March 2006. The same quarter will also see the release of The Outfit, THQ's first World War II shooter for the next-gen console.

Another THQ 360 game, Saint's Row, saw itself bumped from the January-March 2006 quarter. Now, the third-person crime-action game won't go on sale until the first quarter of the publisher's 2007 financial year, which runs from April to June 2006.

Today's conference call also brought news that one of the most-delayed PC games on THQ's roster, S.T.A.L.K.E.R.: Shadow of Chernobyl, won't be arriving until the second half of THQ's 2007 fiscal year--October 2006 at the earliest.

In more general next-gen news, THQ revealed that it now has 13 games in development for the forthcoming consoles and it expects to release four of them during its current fiscal year. When asked by analysts, Farrell would not confirm how many of the games would be released in FY2007, saying only that the company also had a "substantial pipeline of games for fiscal 2008 and 2009." He said more detailed announcements would be made in either December or January. However, Farrell did reveal that several next-gen WWE wrestling games were in the works, but he would not go into specifics

As far as the bigger next-gen picture is concerned, Farrell and chief financial officer Edward Zinser told analysts that THQ expects both the PlayStation 3 and Revolution to launch "later in the year" of 2006. However, the pair praised Microsoft's Xbox 360. "The big win is win is the ramp-up of the [360's] installed base," lauded Farrell. He also said Microsoft had "aggressive plans" to expand that base in 2006.

The THQ executives said they would divide their 2006 development efforts among all three consoles. When asked to estimate the division of resources, Farrell said the company would roughly allocate 40 percent for the Xbox 360, 40 percent for the PS3, and 20 percent for the Revolution. "We'll focus a little less on Revolution until we see more," he said, saying the company was increasing its initial work on games for Nintendo's new console.

When asked if they had heard anything about Nintendo releasing a new Game Boy next year, the executives gave a resounding "no." "We haven't heard anything," said Zinser. "But between the PSP, DS, and the legacy GBA...that's a pretty robust handheld market."

As for their overall predictions for the industry, the pair painted a predictably rosy picture. "Entertainment and games seem to be somewhat recession-proof," said Zinsner. "Even in bad times, parents keep buying games."

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