Red Faction & UFC Propel THQ's Q1 09/10 News

Strong sales of Red Faction: Guerrilla and UFC 2009 Undisputed fuelled record financial results for THQ during the fiscal first quarter ended June 30th 2009.

THQ's net sales for the period rose by 77% to $243.5 million compared with $137.6 million in the previous year.  As a result, net income for the period stood at $6.4 million compared with a net loss of $27.2 million for the same period in the prior year.

The reports highlight THQ's successful efforts to streamline its business and recent reorganisation under the three pillars of Core Games; Kids, Family and Casual Games; and Online Games.

Figures released during the earnings call indicate that UFC 2009 Undisputed passed more than 2.9 million units shipped, while Volition's Red Faction: Guerrilla shipped more than one million units.  The success of UFC in particularly helped THQ to become the third biggest independent publisher in the US and UK for the June quarter.

As a result, THQ made it clear that they plan to extend the lifetime of Red Faction: Guerrilla with DLC and intends to release future UFC titles on an annual basis and to extend the franchise onto other formats such as the Nintendo Wii and handhelds.  THQ also indicated their intention to leverage the destruction technology beneath Red Faction: Guerrilla in future titles.

During an earnings call, Brian Farrell THQ President and CEO indicated that he expects to see price cuts from at least two of the hardware manufacturers later in the year.

"... hardware has been slowing down on a couple of the major platforms and our expectation is for a price reduction potentially on a couple of platforms on holiday season"

Responding to a question specifying whether a PS3 price cut would be nearer to $50 or $100, Farrell responded:

"I'll leave it to the hardware guys to announce the magnitude and timing of their price cuts, but something on the higher end of the range certainly wouldn't surprise us."

Moreover, Farrell provided an insight into the significance of DLC, claiming that while the revenue generated from DLC isn't "great", it helps to keep consumers engaged and prevent second-hand sales.

"Downloadable content is a pretty broad issue. We are just releasing or about to release more DLC for Saints Row so that is still very much alive. There has been and will be more DLC for Red Faction Guerrilla. We look at it as a revenue opportunity, but more importantly what we've learned with DLC is customer retention and customer engagement, primarily to prevent trade in and used games and to keep that brand active with the consumer.

So when we look at DLC, the revenue, it's not that great. It's good, but we also like the fact that it keeps the customers engaged with our games for a long period of time."

Transcription courtesy of SeekingAlpha.