THQ To Make Core, Casual Games for Nintendo 3DS

THQ continues to plan strong support for the coming Nintendo 3DS handheld game system, and will make both core and casual titles, including licensed games, for it, THQ CEO Brian Farrell said in an earnings call. The 3DS, which Nintendo plans to ship by March 31, achieves stereoscopic 3D effects without the need for any special glasses.

Aside from the 3DS, however, THQ -- despite its historically strong support for Nintendo’s platforms -- plans to focus on the PS3 and Xbox 360 for the time being. The Sony and Microsoft consoles offer “the best opportunity now” as they are “selling very well” in the U.S. and Europe. Wii sales, on the other hand, have tumbled significantly this year. But Farrell said it “would not surprise us” if, like last year, there is a surge in Wii demand around the holiday season, similar to what traditionally happens in the toy industry.

Also planned is a stronger focus on digital content, Farrell said. ThQ will launch several PlayStation Network, Xbox Live Arcade and Facebook games this fiscal year, along with about 15 iPad and iPhone games and its first Android titles, he said.

THQ swung to a $30.1 million loss, 44 cents per share, in Q1 ended June 30 from a $6.4 million profit, 9 cents, in Q1 last year (CED Aug 10 p7). Revenue tumbled to $149.4 million from $243.5 million. But the results were in line with the forecast that THQ provided in June, THQ said. “No title comparable to” last year’s hit game Red Faction: Guerrilla was released by THQ in Q1 this time, it said.

Q1 sales were driven primarily by the new release UFC Undisputed 2010, of which the company said it shipped about 2.7 million copies. That’s a large amount for any game to ship in one quarter, and THQ still believes there’s “a lot of growth to be had with the UFC franchise over the next several years,” Farrell said. But he said sellthrough was “below our expectations” and weaker than the first entry in the mixed martial arts game series last year. THQ “captured the hardcore UFC fans, but did not capture as many of the broader gaming population that bought” last year’s entry in the series, he said. There were two main reasons for the dropoff in sales: “The competitive window” at launch and the relatively short amount of time between the releases of the first two games in the series, he said. THQ is “considering a longer development cycle” for UFC games -- maybe 15-21 months between releases rather than 12 months, he said. The publisher is “looking at all of our options,” and intends to ship the next UFC game at some time in THQ’s fiscal 2012 that ends March 31, 2012 -- about 18 months after the 2010 entry in the game series, he said.

There is still “a kids market” on current-generation consoles and certain legacy platforms based on initial sales of Disney’s game Toy Story 3, Farrell said. THQ was “pleased with what we've seen” on that title’s initial sales, he said. But he said games targeted at hardcore gamers are tending to fare better now.

The retail environment “feels similar to last year,” Farrell said. Retailers “will get behind big titles” and will continue to be “cautious with opening inventory” on games, he predicted. Christmas “seems to be coming later and later every year,” he said, referring to demand only seeming to significantly pick up right before the holiday. “A late holiday this year would not surprise us,” he said. Farrell also predicted that $60 pricing on AAA console games will continue to hold. That’s “still the right price point, we believe, for premium content,” he said.

A grand opening is planned for THQ’s new Montreal studio, which is opening next month, Farrell said. The company will ramp staffing there to 300-400 people over the next five years, he said.