THQ has reported a USD 28.5 million drop in profits for the fiscal year ending March 31 2006, despite recording sales growth for the 11th consecutive year.
Profit for the publisher fell from USD 62.8 million to USD 34.3 million in fiscal 2006, while sales soared from USD 756.7 million to USD 806.6 million year-on-year.
In line with other major industry players such as Electronic Arts, THQ pointed to heavily increased research and development in the run-up to next generation hardware launches later this year as a contributing factor for reduced profit.
Squad-based WWII shooter The Outfit and WWE Smackdown Vs Raw 2006 were the company's main hitters for the period. The publisher admitted that poor sales of Full Spectrum Warrior: Ten Hammers, the PS2 version of the vaunted Xbox action title, and ongoing costs associated with Japanese WWE developer Yukes had impacted on overall performance.
Sales are expected to rise to between USD 900 million and USD 950 million in fiscal 2007, the company said.
THQ's E3 line-up includes a PS3 version of WWE Smackdown Vs Raw; third-person action title Saint's Row, MotoGP '06 and racer GTR for Xbox 360; and Company of Heroes, historic RPG Titan Quest and Warhammer 40,000 Dawn of War — Dark Crusade for PC. Supreme Commander, the spiritual successor to legendary RTS Total Annihilation, will also be shown.
"With strong licenses secured for the long term, 1,200 people in our internal studio system, a growing direct international business and more than USD 370 million in cash and short-term investments, we are well positioned to expand our leadership in the video game industry," said THQ's president and CEO, Brian Farrell.