THQ Loses $430 Million, Says Core Game Development is Hard
THQ [http://www.thq.com/] boss Brian Farrell said last night that it's harder than ever to make money on core game development - and he should know, because his company managed to lose over $430 million in its previous fiscal year.
It was a rough one for THQ, culminating in a total loss of $431 million in the fiscal year that ended in March, a significant worsening of the $35.3 million it dropped the year before. Sales were also down, dipping to $830 million compared to $1.03 billion the previous year. Despite the ugliness, THQ CEO Brian Farrell said the company had "substantially completed a significant realignment" and was in a good position to return to profitability and positive cash flow in 2010.
"We have taken decisive actions to achieve our cost saving objectives, eliminating $220 million in cash expenditures while at the same time implementing a focused product strategy," he said. "We are investing in the brands and products with the highest potential to drive THQ's long-term profitable growth."
In an earnings call to investors last night, Farrell said one of the difficulties facing THQ is the rising break-even point of core game development. "On the core titles, yeah, 700,000, 800,000 units, those days unfortunately we think are over," he said. Conversely, he noted that break-even points in the "kids segment" are very low. "Depending on the title, how many SKUs you do, per SKU your break-evens are, depending on the platform, could be somewhere between even 100 and 400,000 units," he added.
His comments reflected a decision announced in February to 50/50 chance [http://www.escapistmagazine.com/news/view/89204-THQ-Cutting-Core-Game-Development] of going bankrupt, saying it had "mediocre product and [was] running out of cash."
Source: VG247 [http://www.vg247.com/2009/05/07/thq-full-year-results-everything-in-one-place/]
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THQ [http://www.thq.com/] boss Brian Farrell said last night that it's harder than ever to make money on core game development - and he should know, because his company managed to lose over $430 million in its previous fiscal year.
It was a rough one for THQ, culminating in a total loss of $431 million in the fiscal year that ended in March, a significant worsening of the $35.3 million it dropped the year before. Sales were also down, dipping to $830 million compared to $1.03 billion the previous year. Despite the ugliness, THQ CEO Brian Farrell said the company had "substantially completed a significant realignment" and was in a good position to return to profitability and positive cash flow in 2010.
"We have taken decisive actions to achieve our cost saving objectives, eliminating $220 million in cash expenditures while at the same time implementing a focused product strategy," he said. "We are investing in the brands and products with the highest potential to drive THQ's long-term profitable growth."
In an earnings call to investors last night, Farrell said one of the difficulties facing THQ is the rising break-even point of core game development. "On the core titles, yeah, 700,000, 800,000 units, those days unfortunately we think are over," he said. Conversely, he noted that break-even points in the "kids segment" are very low. "Depending on the title, how many SKUs you do, per SKU your break-evens are, depending on the platform, could be somewhere between even 100 and 400,000 units," he added.
His comments reflected a decision announced in February to 50/50 chance [http://www.escapistmagazine.com/news/view/89204-THQ-Cutting-Core-Game-Development] of going bankrupt, saying it had "mediocre product and [was] running out of cash."
Source: VG247 [http://www.vg247.com/2009/05/07/thq-full-year-results-everything-in-one-place/]
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