UPDATE 1-THQ delays key game by nearly two months

Wed May 28, 2008 6:02pm EDT

* Delays "Saints Row 2" to Oct. 14 from Aug. 26

* No impact on fiscal 2009 outlook

* Delay due to product quality, marketing issues

SAN FRANCISCO, May 28 (Reuters) - THQ Inc THQI.O said on Wednesday it will delay release of a key video game, "Saints Row 2", by nearly two months due to product quality and marketing concerns.

The delay to Oct. 14 means the game will be released in THQ's fiscal third quarter instead of the second quarter, but will not affect its financial outlook for the 2009 fiscal year, Bob Aniello, senior vice president of worldwide marketing, told Reuters.

"Product quality is a huge driver of a game's success and this move allows us to polish the game. The game is done, it's about polish," Aniello said in an interview.

THQ has forecast a fiscal 2009 profit of 95 cents to $1.05 per share, on revenue of $1.18 billion to $1.2 billion.

The delay also would let THQ bolster its marketing effort for "Saints Row 2", which is a key part of THQ's bid to turn around its business, hit last year by sluggish sales of other titles.

"There is a bigger trend within the industry to build big marketing events within a bigger time window. This allows us to lead up to the holiday timeframe," Aniello said.

A criminal action game featuring street gangsters vying for urban territory, "Saints Row 2" is similar to the blockbuster "Grand Theft Auto 4" from rival Take-Two Interactive Software Inc (TTWO.O) that launched in April.

While "Saints Row 2" is not expected to match "Grand Theft Auto 4's" $500 million in first-week sales, THQ is counting on its highly customizable characters and ability to play online with friends to drum up interest.

THQ has been heavily reliant on games based on licensed properties, particularly Disney/Pixar (DIS.N) animated movies such as "Cars", "Ratatouille", and next month's "Wall-E".

The company has been trying to develop wholly-owned game franchises like "Saints Row", which carry higher profit margins due to not having to pay licensing fees.

"We are introducing a stronger product slate in fiscal year 2009, we are focused on improved product quality, and we are realigning our cost structure to create operating leverage," Aniello said.

THQ shares fell 3.8 percent to close at $20.48 on the Nasdaq. The stock has fallen 37 percent over the past year, compared to a rise of 75 percent in Activision Inc (ATVI.O) and of 2.5 percent in Electronic Arts Inc ERTS.O. (Reporting by Scott Hillis; editing by Carol Bishopric)

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