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THQ tumbles hard in wake of failed uDraw tablet

American game publisher and developer THQ posted a $55.9-million loss for the typically lucrative holiday quarter this week.

During an investor call Thursday company CFO Paul Pucino placed the blame squarely on the poor-selling – and recently discontinued – uDraw tablet peripheral for Wii, PlayStation 3, and Xbox 360. More than a million of the devices – representing a potential $80-million in losses – are still sitting in warehouses. Reduced pricing of those tablets that did sell accounted for an additional $20-million in unrealized expected sales, bringing the total shortfall attributed uDraw to a whopping $100-million.

THQ also announced that it would cut about 240 administrative jobs. None of its studios will be affected, but the publisher already closed or spun off several of its development houses – including Kaos, THQ Studio Australia, Blue Tongue, THQ Digital Warrington, and THQ Digital Phoenix – in 2011.

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Add to these woes the embarrassment of having recently been notified by NASDAQ that if it doesn't get its share price trading above a dollar it will be delisted in July, and its sad faces all around at the publisher's Augora Hills, California headquarters.

THQ has never been able to compete on quite the same level as Western rivals Activision, Electronic Arts, and, more recently, Ubisoft. Franchises such as Red Faction and MX vs. ATV – both recently mothballed – simply haven't been able to match the success of similar series. But THQ's game making teams aren't without talent.

Its stable of American subsidiaries includes Vigil Games – makers of 2010's modest hit actioner Darksiders – and Volition, the company behind the oft-maligned-but-usually-successful Saints Row games, the most recent iteration of which has sold nearly four million copies in less than three months.

It also owns a pair of Canadian shops: Vancouver's Relic Entertainment (the folks behind the profitable Warhammer 40,000 and Company of Heroes franchises) and a large studio in Montreal that it built from scratch in 2010. Plus, it publishes the small but money-making WWE franchise, made by Osaka, Japan-based Yuke's.

What's more, THQ has several noteworthy titles on the horizon for this year and next, including a role-playing game based on the television show South Park, a sequel to Darksiders, a follow up to the modest sci-fi hit Metro 2034, and a new massively multiplayer online role-playing game set in the always popular Warhammer 40,000 universe.

But while these games will attract loyal and excited hardcore audiences, the likelihood of any of them becoming a runaway success is low. This speaks to THQ's biggest problem: It has no legitimately heavyweight franchises. Each of its publishing rivals posseses multiple iconic video game properties guaranteed to draw big numbers on an annual or semi-annual basis and help draw attention away from failed ventures. By contrast, THQ hasn't a single sure-fire monster hit brand. Consequently, the company seems in a perpetual state of trepidation concerning the future.

Of course, blockbuster series don't just grow on trees. They take inspired designers, producers, programmers, and artists. And the longer THQ's fortunes languish, the less likely it becomes that the publisher or its subsidiaries will be able to attract the industry's top talent or afford the sort of large and lengthy development efforts necessary to produce truly top-tier games.

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THQ's not dead, but it's going to take more than just a stimpack to get it back into fighting shape.

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About the Author
Game and Gadget Reporter

Chad Sapieha has been writing about video games and consumer gadgets for the Globe and Mail since 2003. His work has been published in magazines, newspapers, and Web sites across North America, and he has appeared as an expert on television and radio newscasts. More

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