Staff Cuts at THQ Reflect Change in Business Strategy

Video game publisher THQ Inc., based in Agoura Hills, will close two development studios and eliminate a game design team as it restructures itself to create more content for digital distribution. The closure of two studios in Australia and a development team at the company’s Phoenix location results in the loss of 200 jobs. Those employees can apply for openings elsewhere at THQ, the company said. The move is a response to a shift in play patterns as consumers turn to mobile devices and tablet computers. THQ executives declined to comment on the restructuring. CEO Brian Farrell said, in a prepared statement, the realignment narrows the company’s focus on game titles it owns that can be played on both consoles and portable digital devices. “By right-sizing our internal development capacities for our console portfolio, our five internal studios are focused on delivering high-quality games with talented teams driving the execution of those titles to market,” Farrell said. Scaling back on employees is connected with THQ making changes to its game portfolio. Specifically, the company said it will no longer make games for its MX vs. ATV motocross racing franchise. It also will be more selective with the platforms for its licensed children’s and movie-related games. The restructuring follows by two weeks the release of the company’s disappointing first quarter earnings. Games sales fell below expectations and widened the net loss to $38.4 million, compared to the net loss of $30.1 million in the first quarter of 2010. THQ executives anticipate the financial performance to improve in the second half of the year with the release of the latest installments of its proven franchise, “Saint’s Row,” “WWE” and the uDraw game tablet. “We will continue to evaluate our capital and resources to concentrate on fast-growing digital business initiatives such as social games, mobile and tablet-based digital entertainment,” Farrell said, in his statement. External economic conditions and sluggish sales also have contributed to past layoffs and strategy shifts at the game maker. In November 2008, THQ laid off 17 percent of its workforce and closed five studios. A few months later in February 2009, the company eliminated positions in a restructuring of its wireless division to focus on high-end handheld devices.