The newest video game released by THQ Inc. shows how tough a turnaround has been for the long-struggling game maker.

The game, “Darksiders II,” was the top seller in the country last month, moving nearly 250,000 units – but analysts say it will hardly boost the company’s fight just to stay alive.

Some stockholders and analysts had pinned their hopes on the apocalyptic action-adventure game as a breakout hit that could lead THQ out of a brutal year of reorganization. But many analysts now expect sales to top out near 2 million units, barely enough for the Agoura Hills company to make back its production costs, estimated to be well into the tens of millions.

“‘Darksiders’ just kind of shows you where THQ is – one of their better brands might not even be big enough to justify making,” said Michael Pachter, an analyst at Wedbush Securities Inc. in downtown Los Angeles. “It’s sad. The turnaround is harder and harder and harder.”

THQ has been undergoing a reorganization after years of losses stemming from an emphasis on kids’ games, such as one based on Disney’s movie “Wall-E,” while customers have moved to lower-price mobile and social media games. That was worsened by the $100 million flop of uDraw, a tablet that gamers draw on to make images on their TV screens, last holiday season.

In order to cut costs, the company has shuttered its kids’ game business and discontinued underperforming games such as a mixed martial-arts franchise licensed from Ultimate Fighting Championship. This year it has announced layoffs of about 375, a quarter of its already shrunken work force.

Now, a lean operation short on cash and with a pared-back release schedule, the company is in a situation where each game can either provide a badly needed cash infusion or send it spiraling dangerously into the red.

Sales fell 31 percent to $134 million in the quarter ended June 29, but resulted in a slight $15.4 million profit due to the cost-cutting – enough to keep the company going. But that hasn’t enthused investors, who have driven down shares 50 percent this year. In July, with its stock under $1 and in danger of delisting from Nasdaq, the company executed a reverse 1-to-10 stock split. (See related story on page 8.) Shares closed at $4.01 on Sept. 12.

What’s more, THQ is facing a wave of lawsuits from shareholders angry over last year’s drawing tablet disaster. The company said in a statement that the lawsuits were without merit and would be vigorously defended, but declined to comment on its business.

But during an Aug. 6 earnings call, Chief Executive Brian Farrell touted the reorganization over the previous eight months and the hiring of President Jason Rubin, an industry veteran who co-founded Santa Monica video game company Naughty Dog.

“Following all of these recent actions, we believe THQ is well positioned to return to profitability and to create shareholder value,” he said.

Tough times

Layoffs and dropping revenue are nothing new to THQ, which has been hit hard since the downturn even as rivals such as Activision Blizzard Inc. have found success with sales of blockbuster games such as its “Call of Duty” franchise, which has sold more than 100 million copies.

In addition to the decline of one of its core businesses – making console games for kids using licensing arrangements and tie-ins with TV shows and movies – some of its other big-budget games, such as racing game “Juiced 2” and “Stuntman: Ignition,” fared poorly during the downturn and were discontinued.

Since 2008, the company has steadily laid off workers, with the employee count dropping from 2,400 in March 2008 to 1,088 in March of this year. Revenue has fallen from more than $1 billion in the fiscal year ended March 31, 2008, to $831 million in the most recent fiscal year, during which it also reported a loss of $243 million. The company’s annual losses have totaled $854 million during that time.

The company bet on a rebound with the uDraw tablet, which was initially successful in 2010 as an accessory to Nintendo’s Wii system. Some games were built around the tablet, while it also could be used to simply create art.

Last year, as executives prepared to launch versions for the PlayStation 3 and Xbox 360, they boldly predicted that it would be the biggest holiday season quarter, “both in revenue and earnings per share, in our company’s history.”

Instead, the product flopped. Sales were sluggish and many sold at a reduced price. Some 1.4 million units were unsold. The company missed sales projections by $100 million, contributing to about $30 million in operating losses in last year’s fiscal third quarter.

The flop led to class-action shareholder lawsuits, recently filed in Los Angeles Superior Court and in federal court in the Central District of California, which allege the company misled investors about the prospects of the tablet.

Now, the company is scaling back further and refocusing on a handful of core titles. In addition to layoffs and ending the UFC licensing agreement, it dropped publication of an action game, “Devil’s Third,” as well as a trilogy of games created by celebrated Mexican film director Guillermo del Toro.

The cuts have left the company with only two proven franchises, action-adventure series “Saints Row,” in which the player navigates an underworld of street gangs, and its games based on a license from pro wrestling league WWE Inc.

The previous “Saints Row” game sold more than 4 million units, while last year’s WWE title had sold about 2.2 million as of late March. The break-even point for most of THQ’s games is about 2 million units sold.

Some had hoped “Darksiders II” would be the breakout hit that the company is desperate for. The game, which allows players to assume the role of one of the Four Horsemen of the Apocalypse, garnered positive reviews. But with 250,000 units shipped last month, it looks like the game will only slightly break even at best.

Still, the cash from “Darksiders II” and “WWE ’13,” which will release in late October, is expected to carry the company through early next year, when it releases three more titles, including a game based on the TV show “South Park.”

The company’s viability is no guarantee. It has about $20 million in cash on hand and $100 million in long-term debt due in 2014.

“If every game they announce comes out on time and does about what it needs to do to break even, they will last for another year before they run out of cash again,” Pachter said. “If ‘South Park’ sells 5 million units, they’re going to be fine. If it sells 1 million units, I don’t know if they’re going to make it to September.”

Looking for hit

So the race is on to find another big hit at THQ, where the knock has long been a lack of quality titles. To that end, the company is counting on Rubin, whose former company developed such hit series as “Crash Bandicoot” and “Uncharted.”

In its August earnings call, executives announced the company had new titles in development but declined to give more information about them. Rubin also mentioned the company was looking into diversifying its pricing and product types in order to adapt to the success of nonconsole games, though the company also said it will not be pursuing Facebook or casual mobile games similar to Zynga Inc.’s FarmVille.

“Jason Rubin has a sterling reputation as someone with a lot of vision,” said Bradley Safalow, founder of PAA Research in New York. “People want to know, where does that take the company outside of releasing games on the console? What else will the company be doing?”

Safalow is higher on the company’s prospects than most analysts, but acknowledged the company has little room for more mistakes.

“The company is incredibly streamlined now both operationally and financially,” he said. “But their wiggle room in terms of failure is not anything close to what it once was.”