It’s not good times over at THQ headquarters, which expected to spend today’s quarterly earnings all pumping its fists about the great sales of WWE 12 and Saints Row: The Third, and instead had to explain how uDraw turned into a monstrously bad bet for it.

THQ is sitting on no less than 1.4 million unsold uDraw tablets. The success of uDraw on Wii convinced THQ it could see similar results on Xbox 360 and PlayStation 3. That wasn’t the case.

“Unfortunately, we were wrong,” said THQ CEO Brian Farrell.

That’s an understatement.

Here are the most interesting bits I jotted down from today’s call:

• THQ lost roughly $30 million on their high-definition uDraw bet.
• Confidence was misplaced on uDraw, but it was a catalyst to “evaluate our business from top to bottom.”
• THQ has ceased production of uDraw hardware, has a plan to move the rest of the units through retail channels, but has no further plans for uDraw.
• The plan is to now “transform THQ into a smaller, more agile entertainment company.”
• Looking toward the future, it “intends to launch new franchises as future platforms are introduced.”
• Saints Row: The Third represents largest “owned IP” launch in THQ history.
• uDraw was approximately $100M below expectations.
• THQ’s quarterly earnings would have doubled without uDraw in the mix.
• THQ is going “to be a smaller company,” and next year, net sales should be “roughly half.”
• Darksiders was not marketed aggressively enough, but Darksiders 2 will “build on the quality of the experience,” and THQ hopes to elevate the brand into a “mass market event” by doubling marketing.
• Characterized Metro: Last Light as a sequel to a game that was a “high quality title that had very limited marketing,” and delaying the sequel to “fully realize the value of this hidden gem to enhance and polish the gameplay.” Also, way more marketing.
• Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.
• THQ said Homefront’s online consumer experience “suffered from technical issues.”
• The upcoming Warhammer 40,000: Dark Millenium Online is a game where THQ has to be “realistic about [their] resources” and is seeking a partner to work on the game with.
• uDraw was meant to be a bridge to “core to digital future” and turned to be a “plank.”
• THQ now has “very realistic expectations” (read: lower) for future sales of games.
• As for Patrice Désilets next game, he’s still in “early pre-production on his project,” and there will be more detail on that “at the right time, but he’s “pleased with progress at building the team.”
• In addition to collaborating on the MMO, Relic is “highly focused on RTS.”
• As for the future of Saints Row, Volition is “dedicated to the Saints Row franchise.”

It’s not good times over at THQ headquarters, which expected to spend today’s quarterly earnings all pumping its fists about the great sales of WWE 12 and Saints Row: The Third, and instead had to explain how uDraw turned into a monstrously bad bet for it.

THQ is sitting on no less than 1.4 million unsold uDraw tablets. The success of uDraw on Wii convinced THQ it could see similar results on Xbox 360 and PlayStation 3. That wasn’t the case.

“Unfortunately, we were wrong,” said THQ CEO Brian Farrell.

That’s an understatement.

Here are the most interesting bits I jotted down from today’s call:

• THQ lost roughly $30 million on their high-definition uDraw bet.
• Confidence was misplaced on uDraw, but it was a catalyst to “evaluate our business from top to bottom.”
• THQ has ceased production of uDraw hardware, has a plan to move the rest of the units through retail channels, but has no further plans for uDraw.
• The plan is to now “transform THQ into a smaller, more agile entertainment company.”
• Looking toward the future, it “intends to launch new franchises as future platforms are introduced.”
• Saints Row: The Third represents largest “owned IP” launch in THQ history.
• uDraw was approximately $100M below expectations.
• THQ’s quarterly earnings would have doubled without uDraw in the mix.
• THQ is going “to be a smaller company,” and next year, net sales should be “roughly half.”
• Darksiders was not marketed aggressively enough, but Darksiders 2 will “build on the quality of the experience,” and THQ hopes to elevate the brand into a “mass market event” by doubling marketing.
• Characterized Metro: Last Light as a sequel to a game that was a “high quality title that had very limited marketing,” and delaying the sequel to “fully realize the value of this hidden gem to enhance and polish the gameplay.” Also, way more marketing.
• Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.
• THQ said Homefront’s online consumer experience “suffered from technical issues.”
• The upcoming Warhammer 40,000: Dark Millenium Online is a game where THQ has to be “realistic about [their] resources” and is seeking a partner to work on the game with.
• uDraw was meant to be a bridge to “core to digital future” and turned to be a “plank.”
• THQ now has “very realistic expectations” (read: lower) for future sales of games.
• As for Patrice Désilets next game, he’s still in “early pre-production on his project,” and there will be more detail on that “at the right time, but he’s “pleased with progress at building the team.”
• In addition to collaborating on the MMO, Relic is “highly focused on RTS.”
• As for the future of Saints Row, Volition is “dedicated to the Saints Row franchise.”

Peripherals CAN kill.

At least this article doesn't involve Hara-Kiri.

Wow, not sure if at the end this will effect us much cause i fully expect the core franchise to be picked up by other intersted parties and that violition and relic probably won't be split...

Man, that's a lot of fuckin' uDraws. I'm amazed it was even successful on Wii!

No mention of Devil's Third?

Hopefully they can recover from this, always sad to see any company doing badly.

I had a feeling their trouble was coming from one of the many ridiculous side projects they undergo. Who seriously thought UDraw would be worth the initial investment, let alone how much they put into it apparently. Hell, I never even heard of the stupid thing until just now, and upon doing so, could only think "what the hell would you want this for?"

THQ lost money for the last 3 or 4 earnings calls, udraw didn't kill it, it just helped.

I'm still holding out hope for Warhammer 40K. They are looking for a partner to help finish it. I hope they have something decent to show, or it will be tough finding anyone. But doesn't Gamesworkshop own the franchise and could they give the game to some else to finish?

so no new freespace for the forseeable future, huh.

I feel bad for all the people who work there, and especially those they had to let go. best of luck to them in the future.

I just really want my Metro: Last Light.

I honestly hadn't even heard of the uDraw until this article and that's a lot of money to waste on something people aren't even aware exists.

@p00rdevil said:

I'm still holding out hope for Warhammer 40K. They are looking for a partner to help finish it. I hope they have something decent to show, or it will be tough finding anyone. But doesn't Gamesworkshop own the franchise and could they give the game to some else to finish?

Games Workshop doesn't own the rights to THQ's games.

As bad as THQ is doing, I personally am happy about it because it's resulted in a bigger focus on Darksiders 2 & Metro 2. I'm sure that sounds horrible to some, but with genocide in third world countries, polar bears drowning and a thousand other things, I just can't make myself care about a couple hundred people being laid off. I do care about the Darksiders & Metro franchises though <3

Feel bad for them but it seems like they're trying hard to redeem themselves. I disagree with "realistic" being "low" but I guess it is what it is. One bad investment and things go wrong. Really hope THQ doesn't go bankrupt. DARKSIDERS 2!!!!!!!

I listened in on the call, because I was interested in what direction the company was going to take. I am still quite a bit shocked that they are going cold turkey with kid's software, something that used to make up 40% of their revenues.

It seems like they made that decision based solely on the successes of WWE 12 and Saint's Row the Third. It seems like they will be jumping the gun yet again. They are using one small sample of sales to dictate the future of the company, and that doesn't seem like a sound strategy.

If I was an investor in THQ, I would not feel any better after listening to that call.

They may want to consider lauching all those uDraw tablets into the Sun.

You can buy UDraw and use it on the wii because hey, there is not much else and different to do on the console. Being on 360 or PS3 there is plenty of awesome games and things to be getting on with. Of course no one is going to bother with them. I would have thought that was obvious?

Can't say I'm happy about THQ like this. However I'm glad its a wakeup call for how they should handle their resources now, no more shit like Udraw, no more fucking up good franchises (Bye Red Faction, I'll miss you) and thank god for MORE MARKETING! That's the real killer on a lot of awesome games, a few magazine ads and internet ads wont do crap.

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

It's crazy that anyone would buy uDraw, you can get an actual drawing tablet for half the price and use it with Adobe Illustrator, Pixelmator, etc. etc.

@alternate: A million people. It came out during a light time of year for releases, was marketed to high hell, and had a lot of "Red Dawn" undertones that appealed to a lot of people. A quality marketing campaign can make an average title into a million seller, we see that time, and time again.

Can't wait for Relic's next game :)

uDraw was approximately $100M below expectations.

Christ, what a bomb.

uDraw was a good bet that burned the company. It sold well on the Wii, and it was looking to catch a similar reception while at the same time hedging bets to dodge a shrinking Wii audience. They were trying to ride the wave of family gaming on core consoles (Kinect, Move). With better marketing it might have gone the other way and could have been a Leapfrog competitor. If I was CEO of THQ I don't think I would have done things any different, I might have double-downed on uDraw even more with more software and marketing out of the gate.

It would suck if uDraw was the thing that sank the company. I really want THQ to make it through this time, and release inSane and the Patrice Desilets game.

@ParamedicFoetus said:

No mention of Devil's Third?

Given the type of lackluster marketing that went behind Shadows of the Damned which led to crap sales (for a quality game, mind you), I'll bet that THQ is looking at that and saying "yeah, Western markets won't give a shit" and thinking twice about it.

When all is said and done, though, I just really hope that more people aren't going to be losing jobs. It's the worst thing that can happen in this economy.

Well, that and not seeing Darksiders II get released. I'd fucking murder someone for that game at this point.

@alternate said:

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

The multiplayer was good and very lag-free. The rest of the game was...meh.

@DrDarkStryfe said:

I listened in on the call, because I was interested in what direction the company was going to take. I am still quite a bit shocked that they are going cold turkey with kid's software, something that used to make up 40% of their revenues.

They're hardly going cold turkey. They have another Nickelodeon game in the works for this year and are allegedly publishing the game based on Pixar's latest, Brave (I guess Disney done doing their own games or something?). And I'm sure by the time the next Dreamworks animated film comes out, there'll be a Kinect-exclusive game to go with that as well, among others.

Here's hoping this bullshit uDraw thing doesn't kill off: Saints Row, Dawn of War, Darksiders franchises.

Wouldn't that be a bummer.

uDraw == E.T. Revisited? Anyone? Bueller? http://en.wikipedia.org/wiki/Atari_video_game_burial

@iAmJohn: It is only because they did not negotiate out of the contracts. They talked about negotiating out of two licenced game deals over the call, and were working on getting out of two more. Those projects could be axed within the next couple months.

They are going full force with core software and digital titles that offer "always on" experiences.

The hell is uDraw?

@jakob187 said:

@ParamedicFoetus said:

No mention of Devil's Third?

Given the type of lackluster marketing that went behind Shadows of the Damned which led to crap sales (for a quality game, mind you), I'll bet that THQ is looking at that and saying "yeah, Western markets won't give a shit" and thinking twice about it.

These are two really different scenarios, though. For one, Shadows of the Damned had a pretty tortured development and a number or restarts in addition to having to contend with the general apathy EA has given almost everything in the Partners program since Brutal Legend (which was probably the last Partner game they actually put advertising muscle behind; but of course, all the ads were terrible), whereas we've always known Devil's Third was going to be a 2013 game. Also, and I think this is pretty critical, Itagaki and his games are far more marketable than anything Suda's ever done.

@DrDarkStryfe: Didn't know that. Thanks for the intel!

Hopefully they'll pull through. God speed gentlemen!

@alternate said:

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

People who were knocked senseless by the massive advertising budget. I wonder if this isn't one of those cases where a sequel sells significantly less.

"The plan is to now “transform THQ into a smaller, more agile entertainment company.”

Equals to..."We Fired a bunch of people."

Cancel the WH40k MMO. Make Space Marine 2. PLS.

I had never even heard of the uDraw until I heard that it bombed, that thing was invisible. How will anything be successful if you dont even know it exists? Granted, not too many people buy drawing tablets.

Darksiders 2 is not going to be the 'main event' they want it to be. If they're pinning their hopes on that they're just making the same mistakes all over again (expecting 'quite good' AAA games to sell gangbusters). It's gonna be stuck in the ~1-2 million bracket like Dead Space, hamstrung by the fact that the first game in the franchise just didn't sell well enough. Not that 1-2 million sales would be bad of course, but it's not 'turn the company around' good either.

Franchise baggage is a bitch to deal with once you have it - which is why every Mass Effect 3 video mentions about 8 times that "Mass Effect 3 is a great place to jump into the trilogy! No, really! Honest!"

@Mumrik said:

@alternate said:

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

People who were knocked senseless by the massive advertising budget. I wonder if this isn't one of those cases where a sequel sells significantly less.

To be fair it was quite an appealing premise in theory. It wasn't until word got out that it was kinda shitty that everybody lose interest.

@Mumrik said:

@alternate said:

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

People who were knocked senseless by the massive advertising budget. I wonder if this isn't one of those cases where a sequel sells significantly less.

@DrDarkStryfe said:

@alternate: A million people. It came out during a light time of year for releases, was marketed to high hell, and had a lot of "Red Dawn" undertones that appealed to a lot of people. A quality marketing campaign can make an average title into a million seller, we see that time, and time again.

Did they go all out? I didn't see much in the UK, a TV spot maybe. Mostly I remember ppl sneering at that balloon publicity stunt in the bay area.

Anyone with eyes could see the uDraw was stupid. I still can't believe it was successful on Wii, but then again, Wii owners are generally morons. Gamers have long since abandoned it, with the exception of Mario and Zelda titles. So the kind of people buying stuff for it are the Just Dance crowd - morons. There are morons on Xbox 360 too - anyone who plays COD online - but they're different kinds. I am always in disbelief whenever execs make calls like this - like how NBC thought a tv show based on the Firm would be good. No one cares about that movie; just because it's a known brand they decided that it's worth pursuing? Corporate suits can be fucking retarded sometimes.

You'd figure they would've learned a thing or two from their shenanigans last year, partnering with SyFy to promote Red Faction and De Blob. Their betting on audiences hunger for a sequel to De Blob was way, WAY off as well.

I hope THQ rebounds though. I like the company besides their decisions like this shit. I mean, Red Faction, Saint's Row, Darksiders, Insane, Metro Last Light, Homefront, WWE/UFC, Devil's Third, Warhammer - they definitely have some of the best, or most promising, brands in gaming today. This situation sucks...but they have no one to blame but themselves.

uDraw....what a joke.

Wish they would've talked about this year's WWE Arcade game though. Whether it's All Stars 2 or WWE Brawl or whatever. Guess we'll have to wait for e3. I hope they announce a UFC Arcadey fighting game too - gotta expand that brand as well!

THQ stocksrebounded a little bit over the last couple days to close today at 0.76 (up from 0.67 on Tuesday afternoon when we were discussing that NASDAQ warning letter business). At this rate, I'd say there's a faint hope that they get back above $1 and manage to not get de-listed. It ain't over yet!!!

Edit: Oh wait, I missed this part: After Hours: 0.570.19(25.00%)

Oh crap!

It’s not good times over at THQ headquarters, which expected to spend today’s quarterly earnings all pumping its fists about the great sales of WWE 12 and Saints Row: The Third, and instead had to explain how uDraw turned into a monstrously bad bet for it.

Can you hire me as a proofreader? Please?

so its only in when there in dire finacial straits that they begin to focus on what they should have to begin with

marketing critically acclaimed game more so they'll sale more and build customer loyalty, marekting and successful hits and making them even better and letting the teams at voilition and relic have there say

-__- am i the only one who sees the irony in this ??? if they had done this to begin with they might be as big as activision or EA

Things I didn't know about Brian Farrell:

• Before joining THQ, he was CFO of Hotel Investors Trust, a hotel ownership company.
• Brian is known to like games but not be a "hardcore gamer".
• Brian has his MBA degree from UCLA.

How did they survive even this long?? </snark>

@alternate said:

Homefront ultimately shipped nearly 3 million copies, and sold 1 million in its first week.

What? How? Why? Who was running out and buying this day one?

"North Korean" taco trucks. Banners at bus stations and everywhere else. PR events. People are dumb, and unfortunately, advertising works.

I don't care who publishes The Warhammer 40,000 mmo. As long as it gets developed I'm happy.

I had never even heard of uDraw before this.