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DWA to end Activision deal in 2010

THQ to publish studio's 'Master Mind' game

DreamWorks Animation’s exclusive six-year relationship with Activision will be coming to an end in 2010.

Toon studio announced that a game based on its fall 2010 release, currently titled “Master Mind,” will be published by THQ.

Activision has published games based on all of DreamWorks Animation’s internally produced pics since 2004’s “Shrek 2.” The two companies’ current long-term deal, signed in 2005, ends with spring 2010’s “Shrek Goes Fourth.”

DreamWorks Animation head of consumer products and worldwide marketing Anne Globe said the expiration of the Activision deal was the studio’s first chance in a long time to go back out to the market.

“We found we had interest from a number of the top publishers,” she told Daily Variety. “THQ was the most enthusiastic and came in with the most competitive bid.”

Deal with THQ is a one-off, and it’s not clear whether the two companies will work together after “Master Mind.” Activision will continue to have the rights to make games based on sequels to films it has already adapted.

News came as Westlake Village-based THQ reported weak earnings for the fiscal year ended March 31. Revenue was virtually flat at $1.03 billion even as overall videogame sales rose 34% in the U.S. in 2007, according to the NPD Group. Publisher swung from a $68 million profit in the previous fiscal year to a $35.3 million loss.

In a statement, CEO Brian Farrell said THQ’s earnings fell short and that a stronger slate, more focus on quality and reduced costs including, reportedly, layoffs should improve performance in the current fiscal year.

Company previously admitted that numerous 2007 releases underperformed, including games based on Pixar’s “Ratatouille” and Nickelodeon properties. Its biggest seller last year was “WWE Smackdown vs. Raw 2008,” which shipped 6 million units. Titles that THQ is betting will do well this year include “Saints Row 2” and “Wall-E.”

THQ is expecting an improvement in its fortunes in the current fiscal year, as it provided guidance calling for $1.175 billion-$1.2 billion in revenue and a return to profitability.

Meanwhile, its competitor Midway announced soft earnings Monday, as it lost $34 million on $30 million in revenue in the first quarter. Sumner Redstone-owned publisher recently shook up its management team and is looking to boost its fortunes with a slew of new releases in the fall.

As many industryites have been predicting continued consolidation of midsize publishers in the past year following the Activision-Vivendi merger and Electronic Arts’ bid for Take-Two, both THQ and Midway have been frequently named as potential targets.

THQ shares were up 6% to $31.04 Tuesday before earnings were announced. Midway stock closed up 1% at $2.37 the day after its earnings report.

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