THQ on Friday forecast a larger loss than expected in its first quarter as video game publishers continued to report a painful transition to next-generation consoles.

Earlier this week, Electronic Arts predicted it could swing to a loss in the current financial year and Activision said revenues could fall 30 per cent.

THQ said its first quarter to the end of June should show sales of $125m and a loss of around 21 cents a share, excluding equity-based compensation. Market expectations were for a profit of 2 cents and sales of $199.5m, according to Thomson First Call.

THQ’s biggest release of the quarter will be Cars, a game version of the new Pixar animated movie due to be released in US cinemas on June 9. But executives said its effect on revenues would not be strong initially, with sales expected to be spread out as the movie opens in other territories and versions of the game for next-generation consoles are released later in the year.

Video game publishers are suffering from falling prices and interest in games for current generation consoles, while they are unable to sell games in large numbers for next-generation ones as the market is still small. Microsoft released its Xbox 360 only last November and Sony’s PlayStation 3 and the Nintendo Wii are expected to launch in November this year.

THQ warned two weeks ago that its fourth quarter ending in March would show a loss of around 13 cents on revenues of $150m due to the poor performance of its current-generation Full Spectrum Warrior: Ten Hammers game and a change in strategy for its wrestling franchise.

On Friday, it reported the loss was 12 cents a share on revenues of $148.1m. Its shares were up 3.5 per cent at $25.21 in midday trading in New York.

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