THQ Sales Down 11%, Profits Drop $15 Million

[fitbabits]

Once again, Next Generation (http://www.next-gen.biz) has the details (http://www.next-gen.biz/index.php?option=com_content&task=view&id=2190&Itemid=2).

THQ reported today that its sales declined 11 percent for the fiscal 2006 third quarter compared to last year, and profits dropped from $63 million to $48 million.

Net sales came in at $358 million for the quarter, compared to $400 million a year prior. The figures exceeded THQ's previous financial guidance which predicted $320 million in net sales.

For the nine-month period ending December 31, 2005, the publisher reported net sales of $659 million and net income of $42 million, compared to $585 million and $53 million in 2004, respectively.

THQ CEO Brian Farrell said, "In 2005, we gained market share in each of our major markets, especially among the core gamer audience, driving our ranking as the #3 independent video game publisher worldwide, excluding Japan. We continued to diversify our product portfolio, grow our studio system and expand our global sales network, which are key drivers for THQ's long-term profitable growth."

THQ also reaffirmed its financial guidance for the full fiscal year ending March 31, 2006, and offered guidance for fiscal year 2007, when the company expects to make net sales of $900 to $950 million and net income of $0.90 to $1 per diluted share.

The publisher also announced the opening of Kaos Studios, which was founded by members of Trauma Studios, makers of Desert Combat and Battlefield R&D projects. The new studio is working on an original IP for next-generation consoles and Windows PC, due out in 2007. The addition brings the number of THQ studios to 12.
Tough time all round for developers (relatively speaking, of course)...

[IagoTheHunted]

I dunno if I'd call $48 million profit a "tough time all around" exactly... it's not like actual developers see any of the money in that gap anyway (unless my salary is WAY below norm), the rich are just getting richer a little slower... boo hoo.

[fitbabits]

I dunno if I'd call $48 million profit a "tough time all around" exactly... it's not like actual developers see any of the money in that gap anyway (unless my salary is WAY below norm), the rich are just getting richer a little slower... boo hoo.
I guess tough in relative terms would be more appropriate then.

[IagoTheHunted]

Yeah fair enough... sales ARE down across the board but I think that's true everywhere because the economy is screwed (don't quote me).

Personally I just get annoyed when some huge profit margin is quoted as a bad thing like that excuses making cheap-port 360 games cost $60 or somehow prevents publishers from funding original projects and "risky" new ideas. The game industry is already becomeing disturbingly like Holywood, but without the huge salary for talent because they have no public image and thus no power. I think most developers are feeling more and more that way...

[Stormwatcher]

Well, they made a profit and the result was better than the projection, so the result was actually pretty good. Better than any of the MS Xbox division reports ever...

[fitbabits]

Better than any of the MS Xbox division reports ever...
Now was that really necessary?

[jacktion]

... sales ARE down across the board

Didn't Nintendo just say their 3rd quarter earnings are double from last year?

[Abash Alarmist]

Yes...Wait.No...I am not a Sony fanboy...Whats a PS2?! Who is SONY?!!! ESPLOSION!
....

*head blows up*

[agentgray]

Yeah that happens when you release the same game year after year after year.

However, before you flame me, it's what they do well. It's the quickest and easiest way to make bread. Why do anything different?

Also, I have not read the article. I cannot get past their ad. Can someone post the text here?

[fitbabits]

Can someone post the text here?
For you, Sir, it's done.

[joruussuun]

Also apparently discussed via this conference call, Supreme Commander (NoooOoOOOOoo!) and STALKER have been delayed until early 2007.
From GameCloud ('http://www.gamecloud.com/article.php?article_id=3323').

[IagoTheHunted]

Didn't Nintendo just say their 3rd quarter earnings are double from last year?

Well I blamed it on the Economy, so if it doesn't go without saying AMERICAN sales are what's down since it's our economy that's getting screwed. I think Japan is doing better than ever, but maybe it's because they have an actual drive for innovation across the board (well almost, I must admit Nintendo is hardly known for starting new IPs, but in terms of gameplay and graphics both they always allow for innovation and polish, even if it's within an existing IP).

(IP = intellectual property, like Mario, Zelda, Resident Evil etc.)

[Chimpbot]

Well, they made a profit and the result was better than the projection, so the result was actually pretty good. Better than any of the MS Xbox division reports ever...

That's just flamebaiting and you know it.


Considering the only THQ game I've noticed was Smackdown vs Raw 2006, it's no surprise to me that their sales and profits are down. It appeared that their biggest push was the Madden of wrestling games, so they almost deserve to lose some money.

[Citizen Philip]

That's just flamebaiting and you know it.


Considering the only THQ game I've noticed was Smackdown vs Raw 2006, it's no surprise to me that their sales and profits are down. It appeared that their biggest push was the Madden of wrestling games, so they almost deserve to lose some money.

I guess you missed the whole Dawn of War and expansion thing.

http://www.dawnofwargame.com/
http://www.dawnofwargame.com/homepage.php

Planned expansion too, I here.

[Stormwatcher]

I wasn't really flamebaiting... Even if THQ's profit was smaller than the previous year, they still made some profit AND they made more money than they thought they would. That qualifies a good result, for me. I mentioned MS because people act like the Xbox was a huge commercial success (I'm not going into the machine's intrinsic qualities, it is a really good console, I'm talking about financial issues), while it never made a penny. Now I know that sometimes it is good to sell the hardware at loss to make up with games, but MS never had a profit with console gaming, even if you factor in the software... which is, unfortunatelly, bad. But nonetheless, people still insist that it was more successful than the cube, while nintendo made a pretty good sum out of it.

I'm just questiong the weird conclusions people take from very similar information.

BTW, THQ also published Dawn of War's expansion, a very good piece of software.

[Lord Dongkey]

Well, they made a profit and the result was better than the projection, so the result was actually pretty good. Better than any of the MS Xbox division reports ever...

Flamebaiting? On any site other than EA, it's a maybe. On EA, it's a probably...(albeit unintentional, I'm sure) :D

The Truth? Absolutely.

[copasetic]

Well I blamed it on the Economy, so if it doesn't go without saying AMERICAN sales are what's down since it's our economy that's getting screwed. I think Japan is doing better than ever, but maybe it's because they have an actual drive for innovation across the board (well almost, I must admit Nintendo is hardly known for starting new IPs, but in terms of gameplay and graphics both they always allow for innovation and polish, even if it's within an existing IP).

(IP = intellectual property, like Mario, Zelda, Resident Evil etc.)

Actually the economy is doing pretty well. Plus, the dollar is quite a bit stronger than the yen and is pretty much holding the same value as it was in the late '90s (relative to japan). I dont really get why everyone is so doom and gloom in this country. Sure, some things have been fucked up, but quite a bit has been going well. It's almost like a lot of you want the country to fail so your convictions can be upheld.

[EternalGamer]

It looks like it might be time for THQ to start "realigning their resources" (http://www.penny-arcade.com/comic). Christ, that's the most infuriating euphemism and use of PR speech I've heard in a long time. Aligning resources involve putting all your machines in a row. People are not resources to be aligned. If you are going to fire someone, at least have the balls to just say you weren't making as much money as you'd like and you think firing people will help you make more money. It's still insipid, but at least it's honest and not incredibly insulting to the people being fired.

Dan

[Lodin]

Mark my words, this is what they get for trying to publish Psychonauts in Europe. :p

[overdrivechao]

Mark my words, this is what they get for trying to publish Psychonauts in Europe. :p

Wasn't that majesco?

[jwbxx]

Actually the economy is doing pretty well. Plus, the dollar is quite a bit stronger than the yen and is pretty much holding the same value as it was in the late '90s (relative to japan). I dont really get why everyone is so doom and gloom in this country. Sure, some things have been fucked up, but quite a bit has been going well. It's almost like a lot of you want the country to fail so your convictions can be upheld.Remember anyone who is against Bush hates America.

I learned that from Fox news, fair and balanced I might add.

[IagoTheHunted]

Actually the economy is doing pretty well. Plus, the dollar is quite a bit stronger than the yen and is pretty much holding the same value as it was in the late '90s (relative to japan). I dont really get why everyone is so doom and gloom in this country. Sure, some things have been fucked up, but quite a bit has been going well. It's almost like a lot of you want the country to fail so your convictions can be upheld.

I'm not sure when this became a political debate, I certainly didn't mention anything related to my convictions about the country. I'm pretty sure the economy has been down overall the last few years, but I claim no particular expertise on the subject. I think it's safe to say at least the Economy isn't booming. For the record I wouldn't mind a national image that didn't involve an elected theocracy where the rest of the world hates us, or a president capable of pronouncing simple words in his own language, but that's rather besides the point.

What irks me is that even if we're suceeding, we're doing it by letting buisnessmen lead us in a creative industry, and you can see it in the final product. Videogames are rife with advertising now (don't believe me just play NFS: Most Wanted for a few minutes) as our large budget movies have been for years, and to my knowedge this sort of unchecked selling out of artistic ventures is unique to our country. As a creative professional is makes me cringe.

Additionally, I don't see where the money is actually going that would make any publisher feel worried about profits. Game development only costs $5-10 million for a small-average title, and even if you match that for advertising costs (don't get me started on THAT decision) there should still be more than enough to go around according to the budgets being quoted. Remember that $45 Mil is PROFIT. They still have that other $150 Mil or whatever to fund projects. Where the hell is all this money going?? And then they sell out to advertisers on top of all that????

[jwbxx]

But some investors dont understand the industry. They just see a drop in profit so for them that sends out the signal to sell. A smart investor would realize that the industry works in cycles. Once ps3 and revolution come out, those numbers will be up again.

[Stormwatcher]

Lots of people who post here also have no understanding of the industry, and they keep postin... smart posters also know it is a cycle, and that THQ is not doing bad at all. :)