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THQ Reports $30M Loss, 2.7M UFC Units Shipped
by Kris Graft
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August 9, 2010
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Agoura Hills, CA-based game publisher THQ reported a slide in revenues and a net loss for the company's fiscal Q1, ended June 30, as major release UFC 2010 Undisputed underperformed against expectations.
Sales were down 38 percent to $149.4 million for the quarter compared to the same period a year prior. Losses hit $30.1 million compared to profits of $6.4 million for Q1 last year.
THQ said that sales are in line with estimates, adjusted down on June 14 due to lower-than-anticipated sales of UFC Undisputed 2010, which received high review scores. The company also cited a strengthening U.S. dollar, which also negatively impacted financials.
UFC Undisputed 2010 shipped 2.7 million units during the quarter, THQ said. The game released at the end of May this year in North American and PAL territories. The publisher noted that the same quarter a year ago saw strong sales of UFC Undisputed 2009, plus sales of action game Red Faction: Guerrilla -- this most recent quarter did not have a strong action game release.
On the company's results call to analysts, THQ president Brian Farrell chalked up the weaker UFC performance to the competitive release window and the length of time in between releases, suggesting fans were still enjoying the prior edition when the follow-up emerged. "Our view is that we captured the hardcore UFC fans, but did not capture as many of the hardcore gaming population as [last year]," Farrell said.
For the fiscal year ending March 2011, the company expects non-GAAP fiscal 2011 revenues of between $845 million to $865 million, and roughly break-even full-year earnings. THQ has no new major titles due to release in fiscal Q2, and expects quarterly non-GAAP sales between $60 million and $70 million, and a loss of between 60 and 65 cents per share.
Major upcoming titles expected by the end of the current fiscal year include Kaos Studios' shooter Homefront and Volition's Red Faction: Armageddon -- both studios are wholly-owned by THQ.
In a statement, THQ CEO Brian Farrell continued to keep his sights set on long-term growth as the company establishes its franchises. "We ... delivered our most critically acclaimed E3 showing ever with a strong line-up of games in development, several of which are based on proven long-term franchises. Our goal this fiscal year continues to be to position THQ for growth in fiscal 2012 and beyond."
He added, "We are excited about the opportunity for industry growth provided by rapidly expanding online markets and new gaming platforms such as Kinect, Move and Nintendo 3DS. We are developing franchises on these new gaming platforms and we are increasing our investment in online and digital gaming to benefit from these emerging markets."
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However, having seen the marketing for a few of their properties, I can speak to it's poor implementation.
That, more than anything, is probably the reason for their poor showings.