Since THQ said it would have to drop Heavy Iron Studios, general manager Lyle Hall has remained upbeat, able to look on the bright side of being on the wrong side of a corporation-wide workforce reduction.

Instead of choosing to shut down, Hall and Heavy Iron are working with THQ to spin off into an independent studio. The developer is best known for its kids’ licensed games: Wall-E, Ratatouille, The Incredibles and SpongeBob Squarepants, for instance. But with increased competition in the kid movie genre, the business has changed, and Heavy Iron is now eyeing the development of new IP, and establishing new partners as an independent.

Hall says the studio is ready for the challenge.

Let’s clear the air about the direction that Heavy Iron is going right now. What are the next steps for the studio?

The next steps really are to finish up the work that we have been doing with THQ that we’ve got coming out at the end of May [Heavy Iron is working on Disney Pixar's Up for THQ]. We’re in the final throes of finishing that project, and we’ve got an exciting SpongeBob game that we are working on that has yet to be announced officially. It’s a project we’re really excited about.

We did a couple games back in the early parts of 2001 and 2003 and one in 2004 that were pretty huge sellers for the studio and for THQ. We’re looking to continue that tradition. And there’s the current strategy for the studio, which has totally been to own the big hit movie license projects.

But obviously things have changed a little bit over the last few years. The goal, for THQ, has been to do more [original] IP, and so that’s something that Heavy Iron was set up to be able to [create]. It’s something that we’re going to get the opportunity to do, certainly in a much more direct way, being independent. [Now we're] able to shop both our talents, our projects and our ideas to different publishers.

So you’re talking about actually developing new IP?

That would be one of the things that we would like to do. I think we want to leverage our track record, we want to leverage our expertise and the talents that we have in shipping these big huge licensed games on time. We’ve operated in the kids space primarily, mostly because it’s something that we certainly have been quite good at. It has also been a core part of the business that we’ve been in for the last seven years.

But looking ahead, we’ve heard the challenges in the kids marketplace, specifically in these tough economic times. We’d like to be doing other things as well, so we want to leverage our strengths, we want to leverage our core competency, we want to do more of what we’ve done before. We’d also like to do some new things and this is going to give us an opportunity to do that.