THQ's Losses Widen In Q2 As 250 Layoffs Confirmed, Titles Delayed
THQ confirmed its recent closure
of five of its studios with staff reductions at two more, revealing 250 layoffs in total -- 17% of its development staff -- and calling the moves part of a "strategic plan and business realignment."
The company also pointed to the larger current macro-economic climate as primary reasoning for the move, and says it plans to focus on "focus on fewer, higher quality titles" going forward.
The comments came as part of the company's second fiscal quarter results announcement, during which THQ revealed its losses widened to $115.3 million on $164.8 million in revenues. In the same quarter last year, the company had $7 million in losses against $229 million in revenue.
The firm confirmed "the closure of five studios" in its results announcement, a list that apparently includes Helixe, Sandblast Games, Locomotive, Mass Media and Paradigm, with reduced staffing at Juice Games and Rainbow Studios -- reducing THQ's development studios from 16 to 11.
THQ is looking to shave costs considerably to cope with its worsening financials. "Over the next several weeks, we plan to reduce both costs and head counts," said CEO Brian Farrell during a conference call that followed the quarterly results announcement.
In line with the "fewer, higher quality titles" goal, development spending for fiscal year 2010, which begins in April 2009, the company has lowered its development expenditure forecast by $100 million, which brings the new projection to about $30 million lower than fiscal year 2009 development costs.
Despite the somber news, THQ did point to some recent highlights, such as strong critical reception of De Blob
and Saints Row 2
, with the latter achieving sales in excess of 2 million units in its first two weeks at retail.
Farrell hopes to bring that positive reception to more THQ titles, noting in the conference call that he is "now working directly with our product development team" to ensure "establishment of higher creative standards, including gameplay, story, and production values."
As part of that effort, the company has pushed high-profile titles Darksiders: Wrath of War
and Red Faction: Guerrilla
into the next fiscal year, which starts in April 2009 and ends in March 2010.