Volition parent reports loss despite downsizing

CHAMPAIGN — Volition's parent company, THQ Inc., reduced the number of its video-game development studios from 11 to five and eliminated 370 jobs in a restructuring earlier this year, the company said in its annual report this week.

That reduced THQ's workforce, as of March 31, to 1,088 employees, with at least 402 of those employed outside the United States, the report said.

The Agoura Hills, Calif.-based company has suffered operating losses the last five fiscal years and has restructured itself to concentrate on games such as Volition's popular "Saints Row: The Third."

THQ's stock price has taken a hit, dropping from $6.53 a share to 86 cents a share during the fiscal year that ended March 31.

As of Friday, the stock was trading in the 60-cent-a-share range. The company is seeking approval from shareholders later this month for a reverse stock split in order to keep THQ shares listed on the Nasdaq exchange.

On June 1, THQ had about 284 common stockholders of record, the company said in the report. That was about the same number as a year ago.

For the fiscal year that ended March 31, THQ had a net loss of $242.5 million, compared with a net loss of $136.1 million the previous fiscal year.

That equated to a loss of $3.55 per share, up from a loss of $2 per share the previous year.

THQ said "Saints Row: The Third" was one of two products that generated 10 percent or more of its net sales during the most recent year. The other was "WWE '12."

During that year, THQ shipped 4.2 million units of "Saint Row: The Third." The company said the game "generated the highest digital revenue of any title" in THQ history. A franchise extension, subtitled "Enter The Dominatrix," is scheduled for release in September.

However, several games — including Volition's "Red Faction: Armageddon" — performed "significantly below our expectations and have generated significant losses," the company said.

Other games in that category — not from Volition — included "Warhammer 40,000," "Space Marine," "uDraw" and "MX vs. ATV Alive."

THQ said those losses "resulted in the discontinuance of future products based on these intellectual properties" and "the reassessment of our continuing portfolio of games."

As for future products, THQ said it is collaborating with South Park Digital Studios to develop "South Park: The Stick of Truth," due in the coming year.

The company also arranged with Crytek to develop the next installment of the "Homefront" franchise, scheduled for release in fiscal 2014.

Outlining strategy going forward, THQ said, "Our focus is on building franchises based primarily on our owned intellectual properties such as Saints Row and Homefront."

Among other things disclosed in the report:

— North America accounted for 61.7 percent of THQ's sales last fiscal year, down slightly from the previous year. Europe provided 29.6 percent and the Asia Pacific region accounted for 8.7 percent — both up from a year earlier.

— Walmart and GameStop each accounted for more than 10 percent of THQ's gross sales in the most recent fiscal year. In addition to those two, the company's largest customers worldwide included Best Buy, Target and COKeM International, a distribution company based in Minnesota.

— The average video game player is 37 years old and has been playing for 12 years, and 42 percent of all players are women, the company said, citing statistics from the Entertainment Software Association.

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