[November 11, 2009]

Volition's parent posts small operating loss in 3rd quarter [The News-Gazette, Champaign-Urbana, Ill.]

(News-Gazette (Champaign-Urbana, IL) Via Acquire Media NewsEdge) Nov. 10--THQ Inc., the parent company of Champaign-based video game designer Volition, reported a $5.57 million loss for the quarter that ended Sept. 30.

That was much smaller than the $115.3 million loss the company had during the same quarter a year earlier.

The company is in the midst of a key quarter now, with video game sales strongly tied to the Christmas shopping season.

In THQ's most recent quarterly report to the Securities & Exchange Commission, the company said sales for the video game industry were down 16 percent in the most recent quarter, compared with the same quarter a year ago.

For the first nine months of the year, industry sales were down 12 percent, compared with the same period last year.

THQ attributed the drop in industry sales to more "blockbuster product" launches last year and a weaker economy this year. However, THQ said it has picked up market share in both the United States and Europe this year.

Though THQ's quarterly loss was smaller this year, net sales for the three-month period were down 39 percent from a year ago. One reason: The company released fewer game titles during the most recent quarter.

But the company said it enjoyed an increase in its average selling price, due to higher-priced games such as "UFC 2009 Undisputed." That is THQ's first game based on the United Fighting Championship franchise.

THQ also released a game based on Disney-Pixar's "Up," but so far it hasn't proved as popular as the game based on "Wall-E" released last year.

Two products developed by the Volition studio were mentioned in the report: "Red Faction: Guerrilla," which was released in the quarter that ended June 30; and "Saints Row 2," which was released earlier and is considered a "catalog title" rather than a new release.

The report said "Red Faction: Guerrilla" had higher capitalized development costs in relation to total projected gross revenues than most games released during the same period a year earlier.

THQ said it has begun providing more products through direct electronic download, rather than simply selling them as packaged goods.

The Agoura Hills, Calif.-based company said its sales are affected by the changing popularity of video game hardware systems. THQ makes games for the Microsoft Xbox 360, Nintendo Wii and Sony PlayStation 2 and 3, as well as versions for personal computers and handheld devices.

THQ said it believes the video game market is becoming more segmented as a result of the life cycles of the various consoles. It's no longer "viable" to produce titles for every type of console, the company said.

"We need to make decisions about which games to bring to which consoles, well in advance of when the games will be sold to the end users," the report said.

The popularity of a particular console could change between the time development of a game begins and the time it is released.

For example, Wii has been the best-selling platform, but year-to-date sales of Wii consoles are down more than 20 percent in the United States and Europe, THQ said. Nintendo recently reduced the price, stimulating sales.

Volition employs about 250 at its offices in One Main Plaza in downtown Champaign.

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Copyright (c) 2009, The News-Gazette, Champaign-Urbana, Ill.

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