The Agoura Hills, Calif.-based publisher has encountered its share of difficulties lately, recently announcing a headcount reduction of 600 workers, or 24 percent of its global workforce. The company currently employs over 1,000 people.
Now the company is eyeing profitability in the next year.
“We are one of the few companies that believes in the need to innovate," Farrell told analysts. He said THQ has "very few" franchises that are planned as annual products, such as the UFC and WWE fighting games. "We have an every other year strategy on all of our big franchises so we don’t wear them out.”
Despite the slashing of the workforce, Farrell assured that the company still has the capacity to make an appropriate volume of games. “We have some terrific studios, the idea now is to focus our resources on profitability potential and franchise-ability," the exec said.
Farrell described weak core and kids' businesses that had been sucking the profits from the successful areas within the company, a trend that he hopes to halt.
He explained that the core gamer business was spread too thin across too many products. "All the profit that we made on Saints Row [2] went out the back door on these other titles." THQ said earlier this month that Saints Row 2 has shipped 2.6 million copies.
For upcoming core games, THQ will try to concentrate on fewer games, such as Red Faction: Guerilla and Darksiders. "It's making sure with the key releases of the year ... that we absolutely nail the quality, the timing, the marketing buzz, the presence at retail. If you do those things right, you win. We know that, we've done it, we just have to do it consistently on a more select number of titles."
With the kids' market, one that THQ in the past has taken great advantage of with releases such as the multi-million selling Cars, has since become a burden on the publisher. “The problem there is that the revenue opportunity is beginning to erode” due to increased competition.
On the brighter side, the casual and fighting game business are firing on "all cylinders," according to Farrell, with the upcoming release of UFC and WWE titles.
“I won’t say there won’t be any cannibalization” between UFC and WWE brands, he said, but insisted that the two games will attract different respective groups of consumers. The releases of the games are also several months apart.
THQ also is a PC supporter, and owner of Company of Heroes and Warhammer 40K: Dawn of War developer Relic Entertainment. Dawn of War II launched this month. Its predecessor has sold over 4 million units globally across the original, special edition and expansion packs.
Online and the Warhammer 40K MMO
THQ is actively exploring opportunities in the online arena, as an MMO based on the Warhammer 40K universe is still on the way. "We have a full MMO in developmnent in our Austin studio,” Farrell said. “Warhammer 40K has all the things an MMO player would like. … It’s a play pattern the player understands, but in a totally new universe. We're very, very optimistic about this, but it's still early."
He continued, "We're building it in such a way that we think even on fairly modest subscriber levels, we can make good money."
Farrell isn't counting that the game will outdo the 11.5 million subscriber-strong World of Warcraft from Blizzard, but wants to capture a "reasonable subscriber base."
THQ also has its toes dipped in the Asia online gaming pool, where the free-to-play Company of Heroes Online is in closed beta. Another THQ Asian game is WWE Online.
"The only business model that works in Asia is the free-to-play online business model," he said.