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THQ Shakes Up Mobile Game Unit

In an effort to combat the sluggish economy, the company will shift its focus toward smartphones and eliminate 100 positions to cut costs.
THQ will eliminate about 100 employees and shift the focus of its mobile gaming division toward high-end devices, according to a memo leaked Monday from CEO Brian Farrell.

Like many companies, the video game developer is facing some tough business months because of the global economic slowdown. With hits like "Star Wars," the wireless division has been a relative bright spot and it reported a 29% growth in revenue to $6.2 million. But this unit only represents a small percentage of the company's overall revenue, and the downsizing will affect employees in the United States, the United Kingdom, and Germany.

"As part of our goal of aligning our business to focus on our most competitive product categories, we have decided to streamline our THQ Wireless operations to focus only on games for high-end handheld devices," Farrell wrote. "Given today's market environment, we believe our focus on the high-end handset market is critical to strengthening our market position and achieving profitability."

THQ's decision to focus its gaming division on high-end phones coincides with a recent ComScore report that said smartphones will drive mobile gaming growth.

"Last year, not one smartphone appeared in the top 10 devices used for mobile downloads," said ComScore analyst Mark Donovan. "This year six out of 10 are smartphones, excluding devices with smartphone-like functionality, such as the Instinct and Voyager, which also make appearances."

Farrell specifically singled out Apple's iPhone in his memo as a platform that the company wants to target. With a robust processor, 3-D graphics, and a touch-screen interface, the iPhone has been a hit with mobile gamers, and it has also drawn the attention of other high-profile game developers like Electronic Arts and Sega.