THQ reported its first quarter fiscal 2013 earnings today, moving toward profit even among significantly lowered sales. The company generated $38.5 million in net sales this quarter, down more than $100 million compared to last year, but pointed to a lack of new releases as the cause. In the same quarter a year ago, THQ had recently released MX vs. ATV Alive and Red Faction: Armageddon, while this year’s sales were largely from catalog titles including Saint’s Row The Third, WWE ’12 and UFC Undisputed 3.
Despite lowered sales, THQ actually comes out of this quarter with better-than-expected results, with CEO Brian Farrell commenting that the company is “back on the path to profitability and growth.” The company’s expenses are down as it continues to cut costs and reduce headcount in order to become “nimble enough to navigate the complexities and take advantage of” the current state of the market.
Farrell also noted that THQ has recently exited nonperforming businesses and shed underperforming licenses in order to focus on titles with “robust profitability.” A recent example of maximizing profitability comes in shifting Saints Row: Enter the Dominatrix into Saints Row 4, which CFO Paul Pucino noted will significantly increase expected sales.
THQ also canceled its plans to publish Guillermo Del Toro’s InSane, marking its second high-profile cancellation in recent months (joining Devil’s Third). THQ will be publishing Darksiders II this month and WWE 13 in October, followed by a 2013 line-up that includes Company of Heroes 2, Metro: Last Light and South Park: The Stick of Truth.
Pucino said the company’s strategy is to “develop and market high-demand core games with a significant digital component.” On that note, digital earnings for the quarter accounted for $13.4 million, representing 35% of THQ’s total sales. Farrell commented that THQ seeks “to maximize the value of our intellectual properties and evolve our business in the face of our increasingly digital future.”
Meanwhile, recently-minted president Jason Rubin said that he believes THQ’s strength is its “talented studios and strong intellectual properties.” He referenced projects currently in development including Homefront 2 and a new game by Patrice Desilets as well as new titles at Turtle Rock and Volition.
Looking forward, THQ doesn’t expect costs to jump drastically as we approach the next generation. Farrell compared it to previous generations when the move from 2D to 3D represented a “major leap” and the jump from PlayStation 1 to PlayStation 2 caused a “massive change” that made costs rise significantly. “The transition we’re looking at in hardware right now is different,” Farrell said, adding that next generation will include more online play as well as more ability “to track and relate to consumers.”
THQ is optimistic about its upcoming projects, revealing that Darksiders II pre-orders are tracking ahead of the first game and calling South Park “very, very unique” in terms of its sales potential. THQ noted that Company of Heroes 2 has a “hardcore, consistent” audience that’s expected to be “attracted to the sequel to the second highest-rated RTS of all time” and referred to Saints Row 4 as a “complete standalone sequel” that’s expected to have “similar sales if not better than past titles.” Farrell also noted positive changes in that THQ continues to bolster its management team, including the hiring of Ron Moravek as executive vice president of production.
Andrew Goldfarb is IGN’s associate news editor. Keep up with pictures of the latest food he’s been eating by following him on Twitter or IGN.
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