Confirmed: THQ shuts fives studios, makes lay-offs at two more

Gamespot's running a confirmation that THQ has closed five of its studios, as was rumoured last night.

Paradigm Entertainment, Mass Media, Helixe, Locomotive Games, and Sandblast Games were defunct as of yesterday, while Rainbow Studios and Juice Games have suffered redundancies, a THQ rep admitted.

"It's just constantly trying to react dynamically to the market," the spokesman explained, "whether it's because of things happening to our industry or the economic environment as a whole. It's making sure that we're set up over the next three to five years to be profitable and successful."

In a rumoured email published by Kotaku, company boss Brian Farrell apparently blamed "today's difficult economic environment" for the turbulence, and promised to have a more in depth explanation of the moves in the conference call following the publication of Q2 results on Wednesday.

Read the full email after the link.

Good afternoon team,

I want to take this opportunity to update you all on some important actions we are taking to best position THQ for future profitability and growth.

As you know, the past year has been a challenging one for THQ, and the video game industry is changing rapidly. We are responding aggressively to both changing market dynamics within the video game sector and the impact of today's difficult economic environment. Over the past several weeks, we have completed a new strategic plan for THQ and presented it to our board of directors. The plan was initiated by me and developed by the executive committee in close collaboration with senior members of our product development and publishing organizations.

The new plan will result in substantial changes to our product strategy and pipeline. Our goal is to ensure that we have the right resources behind the products and product categories that represent the biggest opportunities for THQ.

As a result of this new plan, we have discontinued a number of projects from external developers, as well as certain projects within our internal THQ studios. In a number of cases, the cancellation of a project means that the THQ studio working on that project will be closed. Specifically, we have closed Helixe, Sandblast Games, Locomotive, Mass Media and Paradigm studios. We have also reduced staffing at Juice Games and Rainbow Studios as a result of our product realignment. Our senior PD and HR teams are on the ground at each of the affected studios today, meeting with the employees to discuss severance packages and outplacement services, as well as potential opportunities on other THQ products.

While the actions we are taking are difficult, we believe they are a necessary step toward returning THQ to profitability. We are confident that the product pipeline we have outlined in our strategic plan positions us to win in the video game marketplace. We also remain very confident in our internal development capabilities, as evidenced by the strong critical and commercial success of Saints Row 2 and de Blob.

I encourage each of you to listen to our Q2 FY 2009 earnings call this Wednesday as I take investors through both the trends that are affecting our business and the manner in which we are realigning our business to best compete.

I thank you for your continued focus during this challenging time, and I look forward to sharing more details about our strategic plan with you in the near future.

Brian