THQ Fights to Strong First Quarter

THQ earnsTHQ is a company still at work turning itself around but the waypoints along the trail show its clearly making progress and moving in the right direction.   A day after winning an arbitration ruling over Jakks Pacific, the Agoura Hills game developer reported a record setting first quarter.

For the three months ended June 30th, revenue soared 77% to $243.5m.   Net income was $6.4m, or 9 cents a share, compared to a loss of $27.2m, or 41 cents a share, last year.  Less one time charges for restructuring and stock compensation, THQ earned $6.9m, or 10 cents a share (compared to a loss of 38 cents last year).

Analysts were expecting a loss of 8 cents a share on revenue of $203.5.

The consensus-topping result directly contrasts weak earnings at some rivals and also appears to temper questions about the interactive gaming industry’s current health.    In this climate, the message seems to be: consumers are buying but they’re buying selectively.  Quality content is essential. 

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Ubisoft Q1 Misses the Mark

game earnsAmidst solid annual earnings last April, French game publisher Ubisoft waved a caution flag and warned its year over year sales results would likely slip for the quarter ended June 30th .   Maybe they should have grabbed a megaphone to broadcast the revenue warning too.

Today, the company reported first quarter sales 12.6% below guidance. (release (PDF))

For Q1 2009-10, Ubisoft’s sales came in at EUR 83m, down 50.6%.

The company blamed a combination of market conditions and surprise sales trends for the result. Casual games for the DS were among those singled out

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World of Warcraft the Movie?

Electronic Arts has an agent, movie project and deals with Steven Spielberg and Zack Snyder.  MTV Games is tied up with Jerry Bruckheimer.   James Cameron is working with Ubisoft.  Activision Blizzard now has Sam Raimi, well, sort of.  Activision announced Wednesday the Spiderman director signed on to produce and direct a film based on the company’s hugely popular World of Warcraft online fantasy games.

Raimi’s deal is not a game development deal like some of the other Hollywood heavies have, it’s a traditionally movie contract.  Still,  the agreement is another demonstration of the increasingly frequent crossover between film and interactive games.

Legendary Pictures, which produced Batman Begins, 300 and Watchmen, will co produce the movie along with Charles Roven’s Atlas Entertainment (Batman Begins, The Dark Knight and The International).

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NPD June Results Up Close (Updated)

Analysts predicted June would turn out weak gaming sales compared to last year. They got what they predicted and then some.  According to NPD data released Thursday, the sector returned its fourth consecutive month of year over year sales declines with total revenue dropping 31% to $1.17b.

The reversal of fortune has provoked some to proclaim the recession has finally caught up with the industry so often deemed “recession resistant.”    Other’s are taking a more measured view. 

The truth probably lies somewhere in between: the industry results reflect the combination of slowing purchases (the economy) and also, a comparatively weaker product slate.  Product shortcomings are particularly evident in the software segment where recurrent top ten hits (e.g. Nintendo’s “ever-green” titles) are getting stale, and new releases haven’t yet matched the same high bar.  A similar phenomenon was apparent last month in May’s result.

Referencing the difficult comparisons year over year, NPD’s analyst Anita Frazier attributed part of the fall in June to trouble in matching this year’s offerings to last year’s record setting results.  (June 2008 sales were up 61% over June 2007).  She also commented that June was one of the first months where she thinks “the impact of the economy is clearly reflected in the sales numbers.”

A comparative look at the numbers does seem to support Frazier’s remarks. The data, paints a picture that’s more tempered than steep revenue declines indicate on first glance but it also indicates areas of concern. 

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Stats Survey: Nielsen Takes New Look at Game Sector

Monthly NPD sales data paints one picture of how the video game industry is faring in this economy.  Tracking firm Nielsen has crafted an alternate perspective.  In a new study, Nielsen turned the lens on the recession’s impact by  measuring how much time is being spent playing and how many used games gamers are buying.  Not surprisingly, the survey found both game engagement and used game purchasing have been trending up.

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THQ Reorganizes Units, Looks to Future

thq repair metueIn the hit or miss world of video games, the last fiscal year was an unequivocal miss for Agoura Hills based THQ.  The company came up $431.1m short on a GAAP basis (or lost $101.8m in Non-GAAP terms) when it reported its full year results in May (release).  It was a “challenging” year as CEO Brian Farrell called it, to say the least.

The current fiscal year may be shaping up to be a little more positive.   In November 2008, the company announced a multifaceted plan to refocus on a narrower slate of premium titles and reorganize its business structure to allow more efficient operations.  24% of the company’s workforce (600 jobs) was cut in the following months and approximately $220m in expenses were pared off.   The company also added a new credit facility in May to provide a safety net for any working capital issues.

Today, in what likely completes one of the final steps left in the business realignment, THQ announced it will reorganize its development units into a new structure. Click to Read More

Kotick Nudges Sony on PS3 Pricing (Updated 2)

For a top game publisher to abandon a console platform before the midway point in the hardware’s lifecycle is extremely unlikely.  Hardware makers and software publishers have a sometimes conflicted but always mutual need for each other’s services.  It’s symbiotic; especially once they’re both invested.  Even so, the two aren’t above venting frustrations.    

That happened Friday.  In an interview with the UK Times, Activision’s CEO Bobby Kotick went to the press for leverage.  Like a diplomat threatening war (with no real intention of starting one) he fired a shot at Sony to let the company know in no uncertain terms there’s concern about the PS3 platform’s anemic sales.

According to Kotick, Activision paid Sony in the neighborhood of $500m last year in fees and he wants a better, make that much better, return on investment.  He wants Sony to cut the price on the console to help stimulate demand.  He thinks it’s too expensive to develop for and too expensive for consumers. He wants change.

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