THQ has released its Q4 and full-year financial data for its 2012 fiscal year
and conducted a conference call to discuss it and reveal even more information.
Here’s a list of five things that I took from the call:
Third Is In Release Purgatory.
It was announced during the call that THQ was looking to sell off Devil’s
Third to other interested publishers, citing challenges including financial
troubles with the company who created the game’s engine, appreciation of the yen
versus the dollar, and low probability of profitability. It may be a difficult
sell to another publisher so late in this console generation, especially with
Gen4 (the next generation of consoles) not too far down the road. The future of
the game at this time is murky at best, but it seems more likely that the game
may not see release for another year or so.
2. Cartman and
Company Will Miss The Holidays.
THQ revealed before the call via press release and its 8-K financial filing
that South Park was pushed to the 4th quarter of this fiscal year. That
translates to a calendar release of January 2013 at the earliest. While the
delay may seem smart on the surface, avoiding conflicts with Black Ops II, Halo
4, Wii U, and other major releases... the first three months of 2013 present
their own big games. Bioshock Infinite and Tomb Raider are both strong IPs that
will command plenty of attention in a period with more restricted consumer
spending after the holidays. Missing a major release window like the holiday
season is arguably a lost opportunity, but I guess we'll see if the move pays
off from quality and strategy standpoints.
3. WWE Is Big
THQ is relying on this year’s WWE title (yet to be named) to carry its
holiday period. It’s the only release of the October-December period for the
publisher. The earnings press release and Form 8-K praised WWE ‘12 sales, noting
that the title has shipped more than 2.2 million units since its launch back in
November of 2011 and that sell-through of those shipments (units sold) has been
some 20% better than Smackdown vs. RAW 2011 on the PlayStation 3 and Xbox 360
platforms. There’s a lot of confidence in this IP being shown here, based on the
strength of the WWE fanbase. The pressure is on for a big seller.
II Will Hit Stores August 14th.
The decision to move Darksiders II to August was initially met with some
criticism, but it makes sense from a quality standpoint. August was a slow
period for sales last year, but Darksiders II will have to compete against
Square-Enix’s Sleeping Dogs on the same release date this year. It’s possible
that Darksiders II still sells well; pre-orders for the game are more than five
times higher than the original Darksiders, and THQ is promising an aggressive
marketing campaign for it. Sales potential is strong, given the generally
positive reaction to the first game from reviewers and the gaming community at
large. Perhaps the game will have a tail with discounts in time for the
holidays, though THQ would certainly prefer a more front-loaded sales trend.
This will be THQ’s first significant release of its 2013 fiscal year, so
investors and analysts will be watching sales data very closely.
5. What About
THQ CEO Brian Farrell claimed that THQ will have software ready for Gen4
consoles, either at launch or shortly thereafter. He really didn’t elaborate on
what games to expect and danced around questions asking for more detail. THQ CFO
Paul Pucino went on to say that, while it’s premature to talk about Gen4
development costs, he assumed that the cost would be “relatively equal” to this
console generation... but conceded that “it’s tough to comment.” We know now,
based on comments from EA, Activision, and now THQ, that Gen4 development is
ongoing. It’s now a matter of when Sony and Microsoft remove their veils and
show us what’s underneath.
Armchair Analysis - and yours truly - will be covering two more earnings
calls this month before preparing to trek out to E3 in June. GameStop will be
holding its earnings call on May 17th, and then Take Two will be holding its own
call on May 22nd.