THQ Lowers Sales Predictions After UFC 2010 Underperforms

Publisher THQ revised its guidance for the current quarter (ending June 30th) and fiscal year due to lower than expected UFC Undisputed 2010 sales, now expecting its Q1 2011 numbers to reach $155-165 million instead of $190-200 million. With its revised outlook for UFC Undisputed 2010 and the strengthening U.S. dollar, the company now predicts its sales for the full fiscal year will total to around $845 million to $865 million, down from its previous forecast of $905 million to $920 million. Wedbush Morgan analyst Michael Pachter says the guidance revision was inevitable as the publisher's performance became increasingly dependent on a smaller lineup of big games like UFC Undisputed 2010: "THQ’s competitors have smaller lineups, but have a greater number of AAA games on average, providing a greater cushion should one title perform poorly." THQ has so far shipped 2.6 million copies of UFC Undisputed 2010 to stores, influenced by a high volume of preorders (up 50 percent over last year's popular UFC 2009 Undisputed), as well as favorable review scores. Several analysts believe the publisher might have released a UFC Undisputed sequel too soon, though. "We previously expected gamer fatigue to negatively impact sales for UFC Undisputed 2010," adds Pachter. "Unlike other sports titles with players who change teams, gamers may not have viewed the need to purchase this year’s version, given that the major stars tend to return each year." Todd Greenwald of investment firm Signal Hill Capital Group argues that the title also faced a lot of competition: "We believe that UFC faced an unexpectedly crowded release slate (namely Red Dead Redemption), but also feel that it is not necessarily a typical sports title that needs to be annualized on a yearly basis." THQ says that despite less than anticipated sales for the game, it will "continue to drive demand" for UFC Undisputed 2010 through a marketing campaign and working with its partners at UFC. "we expect THQ to maintain a steady advertising campaign for the game over the coming weeks," says LCM analyst Colin Sebastien. Sebastien foresees THQ presenting a solid lineup at E3, too: "We also expect management to reaffirm its goal for growth in F2012 and F2013 on a larger game portfolio. We believe that visibility is relatively good for next year, with sequels to Saints Row, Darksiders, WWE, UFC, and new titles Space Marine 2, Marvel Super Hero Squad, and Dreamworks licenses." "While we are disappointed with this financial update, we continue to execute on our plan of bringing quality games to market," says THQ president and CEO Brian Farrell. "... Our primary goal in fiscal 2011 was to position THQ for growth in fiscal 2012 and beyond. We have a strong pipeline scheduled for release over the next three years and we encourage everyone to visit our booth at E3 to see our impressive line-up."