Saints Row: The ThirdVideo game publisher THQ today announced it is officially shifting its focus from traditional kids’ licensed games to “core” franchises such as Saints Row, UFC, and Darksiders in order to become a more streamlined organization. The announcement comes after recent layoffs at its family division, Play THQ, and rumors that the struggling company was looking to cancel its 2014 lineup of titles.

The company is in the midst of juggling priorities as the game industry changes. The core console market is flat or shrinking with more intense competition. Certain areas, like the kids console or handheld game markets, aren’t as strong as they used to be as more children flock to digital games — mobile, social and web-based. And within the console market, THQ has to choose where its priorities are going to be because it has some fierce, well-heeled competition among the likes of Take-Two, Electronic Arts and Activision Blizzard. Every big game publisher has had to prioritize what it wants to focus on in the in new age of gaming that combines traditional and digital strategies.

THQ says it is in the process of ending its relationships with kids’ licensed entertainment companies like Disney/Pixar and Nickelodeon, but will continue to sell certain previously released titles. President and CEO Brian Farrell says the company will now focus on its strongest franchises.

“The success of Saints Row: The Third is an example of what our revised strategy and focus can achieve,” he said. “We have now shipped 3.8 million units globally and are currently expecting to ship between five and six million units lifetime on this title. Additionally, our robust digital content offerings for this game have resulted in the highest digital revenue of any console title in our history.”

Wedbush Securities analyst Michael Pachter says the number of units THQ has shipped of Saints Row: The Third is in line with most expectations. “I had 3 million in the December quarter and 1 million this quarter, so [that’s] pretty much in line with my model.” He also says the move away from kids’ content makes sense. “They lose money. That means that some of their business lines lose a lot. Kids’ is one of those lines, so it makes sense to cut losses by getting out of the business.”

THQ says its five internal studios will now work on games for several key franchises, including UFC Undisputed, Darksiders, Company of Heroes, inSANE, Saints Row, and Warhammer 40,000. A new title from former Assassin’s Creed creative director Patrice Désilets and his team is also in development.

There is no word yet on what the company’s restructuring means for Play THQ or its remaining employees. A company spokesman says more information will be given during its Q3 fiscal year 2012 earnings call on February 2nd.