Why do I get the feeling that I've played this game before?

THQ (NASDAQ:THQI) is disposing of studios, is axing titles, and will dismiss 24% of its workforce as a result of a crummy quarter and apparently a hazy future. The news comes on the heels of Electronic Arts' (NASDAQ:ERTS) announcing a wave of staff reductions earlier this week.

If these end bosses look familiar it's because the two video game specialists also whacked away at their payrolls in one-two punch fashion three months ago.

In THQ's case, the new moves should eliminate another $100 million in costs come fiscal 2010, on top of the previously announced $120 million shave.

THQ definitely needs to do something. Revenue fell by 30% to $357.3 million during its fiscal third quarter. On a non-GAAP basis -- before takings hits for things like realignment expenses and goodwill impairment -- THQ posted a loss of $0.14 a share. It has scored a profit of $0.22 a share from continuing operations a year earlier.

The company has scored well with recent releases like Saints Row 2 and its latest World Wrestling Entertainment (NYSE:WWE) licensed game, but it's clearly not enough. Sales may have grown for releases on Nintendo's (OTC BB: NTDOY.PK) Wii and Microsoft's (NASDAQ:MSFT) Xbox 360, but that was more than offset by sharp drops on sales for the Nintendo DS and all of Sony's (NYSE:SNE) platforms.

EA's report on Tuesday was slightly better -- with a modest top-line uptick and at least mustering a non-GAAP profit -- but what has become of this industry?

Video game retailers have reported brisk selling during the holidays. More developers are also embracing digital delivery and its margin-widening promise. Is it all a facade?

Hardly. THQ and EA have company-specific shortcomings. Unless market leader Activision Blizzard (NASDAQ:ATVI) shocks investors next week, when analysts see the Guitar Hero and World of Warcraft giant posting gains in revenue and earnings, I'll stick to my theory.

Other games to play:

Microsoft is a Motley Fool Inside Value recommendation. Nintendo, Electronic Arts, and Activision Blizzard are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz knows that his household can't be blamed for the industry's weakness. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.