THQ Keeps Eye on Prize

THQ's(THQI) decision to scrap a version of its popular Saints Row game for Sony's(SNE) PlayStation 3 console didn't go down well with investors -- but it's the right long-term move.

During its fourth-quarter results reported Thursday, THQ said it would cancel the PS3 version of Saints Row to be released in the current fiscal first quarter, and would instead make a sequel to the game for both the PS3 and Microsoft's(MSFT) Xbox 360 -- but wouldn't release that game until 2008.

The move contributed to THQ's dim guidance for the coming quarter and took nearly 4% off the stock. On Monday, THQ shares were recently off 18 cents, or 0.5%, to $33.32 -- near six-week lows.

But tough as it may be, THQ's decision makes sense.

With sales of the high-priced PS3 consoles yet to take off -- and without the kind of resources that its much larger rival Electronic Arts(ERTS) has -- THQ is better off concentrating on consoles with a sufficiently large installed base to recover game development costs.

Saints Row is an important franchise for THQ. Since the company owns the title, sales of the game translate into higher margins for the company compared with its other best-sellers such as Disney(DIS) Pixar's Cars.

THQ launched Saints Row in August as an Xbox 360 exclusive, and the game has been a hit, with more than 1.4 million units sold worldwide.