UPDATE 2-THQ's sales fall on light game lineup

* Sales fall 24 percent year-over-year

* Forecasts EPS of 20 cents to 30 cents in third quarter

* Raises full-year sales forecast on new hardware product

* Shares fall 2 percent after earnings report

By Liana B. Baker

NEW YORK, Nov 3 Video game publisher THQ Inc THQI.O widened its losses in the second quarter as a lack of new game releases hurt its sales.

"This year we had no new releases," THQ's Chief Executive Brian Farrell told Reuters. "It was our rebuilding year and we didn't ship anything."

The publisher's next two quarters look more promising. It raised its sales forecast for the year because it now expects its upcoming holiday product, the uDraw tablet, to perform better than anticipated.

The uDraw tablet, which is used for art and games and is exclusive to Nintendo's Wii, is a new direction for the company best known for franchises like "WWE SmackDown vs Raw" and "Saints Row." It will hit shelves on Nov. 14.

"We've raised our expectation on uDraw based on the reception we got from retailers," Farrell said. "We think it's going to be strong all through the holiday."

The company also said it increased production from 1 million to 1.3 million units.

The company forecast full-year sales to be in the range of $825 million to $855 this year, up from $800 million to $825 million. Analysts were looking for sales of $808 million for the year.

THQ's sales in the second quarter were $77.1 million, down 24 percent from a year earlier.

Shares fell in extended trading after THQ released its results. Sterne Agee analyst Arvind Bhatia said this was because of the uncertainty around sales of the Udraw tablet, as well as upcoming titles like Homefront, a shooter game due out in March 2011.

"A lot still needs to be proven," Bhatia said. "The success relies in upcoming titles."

THQ posted a loss of 60 cents a share, which narrowly beat analysts' expectations of a loss of 61 cents, according to Thomson Reuters I/B/E/S.

The company had a net loss of about $47 million, compared with a net loss of $5.6 million a year earlier.

But the company is facing the same challenges as other video game publishers, which rely on sales of their console games for revenue.

Momentum is shifting away from packaged titles played on home consoles to games on mobile phones and on Facebook. Industry retail sales of video games in the United States are down 8 percent this year, according to industry tracker NPD.

The company's bigger rival, Electronic Arts ERTS.O, fared worse on Wednesday, closing 4.3 percent lower after its holiday profit forecast from a day earlier spooked investors still nervous about its turnaround plan.

Some brighter industry news came from Microsoft (MSFT.O), which announced on Wednesday that its new motion sensor device, the Kinect, would sell 5 million units in the holiday season, higher than the 3 million it had previously forecast.

THQ has three games for Kinect, including a fitness game based on the Biggest Loser TV show.

"We're well positioned if Microsoft achieves the success they are planning on," Farrell added.

THQ shares were 2 percent lower in extended trading after closing at $4.04 on the Nasdaq on Wednesday. (Reporting by Liana B. Baker; editing by Andre Grenon, Gary Hill)