Game Over for This Diehard Gamer?


THQ may be the next casualty of the three-year lull in the video game industry.

THQ revealed last night that its CFO was leaving the company as it steps up talks with a financial sponsor to explore potential funding alternatives.

The publisher best known for its Saints Row franchise, wrestling games, and the once-popular uDraw platform of drawing diversions has obviously felt the pinch of gamers gravitating to casual and social gaming.

If you think that Take-Two Interactive has it bad between Grand Theft Auto releases -- or that Activision Blizzard and Electronic Arts have been frustrating investments as industry leaders -- they've got nothing on THQ on the way down.

THQ executed a 1-for-10 reverse split this summer just to keep its stock in compliance with Nasdaq listing requirements. Now it may need to go back to that well again, especially since any financing solution in these desperate times will surely be highly dilutive to today's shareholders as it brings the share price lower.

It isn't easy being a video game developer or publisher these days.

Activision Blizzard is still the top dog, fueled earlier this year by the surprising success of its Skylanders franchise. Last week's release of Call of Duty: Black Ops II will clearly only help. EA has several trusty EA Sports properties that provide steady annual repurchase rates, but the company has also been a major player mobile and social diversions. Take-Two Interactive has new life now that we finally have a springtime release slated next year for Grand Theft Auto V.

THQ and lesser gaming companies don't have it that easy.

Even diehard gamers have sworn off all but the marquee properties, and that's bad news for THQ. It was doing well when its licensed wrestling games were all the rave and Wii owners were warming up to its uDraw drawing tablet, but these days gamers are only saving up for the big games that have a longer-than-usual playing life thanks to online gaming enhancements.

Buying into THQ at this very vulnerable moment is risky. Despite the compelling opportunity that is suggested by a stock with recognizable properties that has shed more than 90% of its value over the past year, it's getting harder and harder to fathom THQ making it out of this intact.

Digital future
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The article Game Over for This Diehard Gamer? originally appeared on

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard, Electronic Arts, and Take-Two Interactive . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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