Homefront a home run, at least for THQ's bottom line
The sales pushed the title well past the company's break-even mark at 2 million copies, said Brian Farrell, chief executive of the Calabasas video game publisher during a conference call with analysts to announce the firm's fiscal fourth quarter financial results.
For each copy it sells beyond the 2 million mark, THQ sees a profit margin of approximately 60%, which according to THQ Chief Financial Officer Paul Pucino is "extremely, extremely high."
Homefront's rosy sales picture stands in stark contrast to the negative reviews of the title, which scored 70 out of a possible 100 points on Metacritic, a site that aggregates game reviews. The score was considered low for a game in the highly competitive shooter genre to be considered commercially viable.
Although Homefront was one of the most expensive games THQ has ever developed at more than $30 million, the company set the mark relatively low for achieving profitability, mainly because the franchise was new for THQ and unproven.
Homefront takes place in a dystopian future in which the United States is occupied by North Korean forces after being attacked by nuclear bombs. Players have the option of playing through the game by themselves or playing online with up to 31 other people. Though critics panned the single-player portion of Homefront, many actually praised its multi-player mode.
Farrell acknowledged that the game's single-player campaign "left us vulnerable," but said the company is planning to capitalize on the multi-player aspect in the next six months by releasing a free online demo and selling additional downloadable content for the title.
THQ also reported a 37.2% decline in revenue for its fourth quarter ended March 31 to $124.2 million, down from $197.7 million a year earlier. Its net loss more than doubled to $44.1 million, or 65 cents a share, up from a $10.4 million loss, or 15 cents a share, a year ago.
Because of the way THQ books its revenue, the results don't include revenue from sales of Homefront, which will appear in the following two quarters. Including Homefront, THQ saw a 26% bump in sales to $248.6 million in the quarter, up from $197.4 million a year earlier. Net income would have been $10.5 million, or 15 cents a share, up from $4.4 million, or 6 cents a share.
THQ also announced an upcoming title for Facebook called Margaritaville, a licensed game based on Jimmy Buffett's iconic song. The game would be the second social game THQ has on Facebook, with the first being UFC Undisputed Fight Nation, based on the mixed martial arts franchise.
Shares of the company gained 11 cents to close at $4.12, but fell 37 cents to $3.75 following the earnings release.
-- Alex Pham