Saints Row: The Third publisher THQ says rumors of its demise have been greatly exaggerated.
Speculation on the company’s future spread like wildfire this weekend after a series of tweets from gaming industry veteran Kevin Dent suggested the publisher was cancelling its Game Workshops massively multiplayer online game, Warhammer 40,000: Dark Millennium Online, and its entire 2014 lineup, in order to preserve cash.
Dent later went on to say he thought THQ shutting its doors was a longshot and that he couldn’t see “institutional investors allowing THQ to go down the toilet,” but by then the rumor had gone viral and was reported on by various gaming publications. Now, THQ is in full damage control mode and has issued a statement debunking the rumor.
THQ has not cancelled its 2014 line-up, and has not made any decisions regarding the planned MMO. As part of the ongoing review of our business, we have made decisions to ensure that the company is strategically addressing the most attractive markets. As we have previously announced, we have dramatically reduced our commitment to the kids’ boxed games sector which leads to a significantly more focused release schedule moving forward. Our slate for calendar 2012 and beyond is focused on high-quality core games and continues to build our digital platform and business. We are excited for our pipeline of original and high-quality content along with our relationships with some of the best talent in the industry.
Additionally, we are thrilled with the great performance of Saints Row: The Third, which on a like for like period in North America has tripled in sell-through from Saints Row 2. In addition, WWE ’12’s worldwide sell-through sales are up almost 40 percent year-over-year for the same sales period with fewer platforms. According to NPD, for the month of December and the 2011 year, THQ was the #5 publisher overall, #4 third party, with reported sell through growing over 18 percent in a market that was down almost 6 percent. And coming up next, we have two great titles for the first half of the year including UFC Undisputed 3 and Darksiders 2.
Despite its assurances, THQ is clearly struggling. Shares in its stock were down 6.90 percent on Friday. Since the stock market is closed for Martin Luther King Jr. Day, there’s no way of knowing if this weekend’s rumor will cause a further drop.
For the third fiscal quarter ended Dec. 31, THQ said it expects to report weaker-than-expected results because of poor sales of its uDraw Game Tablet for the Xbox 360 and PlayStation 3. Sales for the third quarter are expected to be 25 percent below its previous guidance of $510 million to $550 million. Results will be released for the third fiscal quarter in early February. In the second fiscal quarter ended Sept. 30, THQ reported a loss of $92.4 million on revenues of $146 million, compared to a year earlier loss of $47 million on revenue of $77.1 million a year earlier. On a non-GAAP basis, the loss for the second fiscal quarter was $46.9 million on revenues of $119.6 million, compared with a non-GAAP loss of $40.6 million on revenue of $70.4 million a year ago.
The launch of the uDraw GameTablet was a big misstep for the company in 2011. Weak sales of the device led to 30 layoffs for developer Play THQ in an effort to reduce costs and re-focus attention on other brands such as Saints Row and WWE.
Despite its lousy year, however, Wedbush Securities analyst Michael Pachter thinks it’s too soon to write THQ off. “They are low on cash, and will likely run out by June or earlier unless they do something,” he told VentureBeat through email. ”‘Something’ includes reducing their overhead, canceling projects, selling assets or raising capital. There are a lot of options before they cancel their 2014 slate, put themselves up for sale, or declare bankruptcy, so I think the rumors of their imminent demise are exaggerated.”
THQ’s upcoming projects include the recently announced South Park role-playing game, Darksiders II, film director Guillermo del Toro’s inSane, Metro: Last Light, and a sequel to Homefront.