Cost cutting helped THQ Inc. report a smaller than expected loss in its third quarter as the video game industry continues to face strong economic headwinds.

After Wednesday’s market close, the Agoura Hills publisher of the "Saints Row" and "Red Faction" game series reported a net loss of $5.6 million (-8 cents a share), compared with a loss of more than $115 million (-$1.73) a year ago. Revenue fell 39 percent to $101 million.

Excluding one-time items, the loss was 37 cents a share with adjusted revenue of $100 million. Analysts surveyed by Thomson Reuters were expecting an adjusted loss of 48 cents per share on revenue of $92 million.

Deutsche Securities on Thursday downgraded the stock from “buy” to “hold.” Analysts had low expectations for the quarter because no major game releases were planned. THQ restructured operations earlier this year, laying off workers and canceling some games in production because the recession had significantly slowed sales.

“THQ is now operating as a more focused, more efficient company,” Chief Executive Brian Farrell said in a statement. “We believe we are well positioned this holiday with our strong mass-market line-up (and) we have positioned THQ to take a leading role in emerging online platforms in Asia and the U.S."

Shares were up 14 cents, or less than 3 percent, to $5.16 in midday trading on the Nasdaq.