THQ: Who Needs A Diverse Portfolio

@MPSai:

How long did it take them to actually buy a "Western" developer? Sure their recent purchase of Eidos will help them deversify in the future, but it will most likely pale in comparison to their JRPGs in terms of revenue generated.

Draco Basileus

@Nick Mangiaracina: THQ is neither good nor bad to me. They've had amazing games and atrocioucus ones.

cfive3

@svenhoek: Still Happy Pitt Won!: Not gonna lie, I'm pretty averse to originality. Game Party is originality. If it's a good game, I really don't care how "original" it is. The Wii is "original", but it still just doesn't do it for me. I want games that I can enjoy and understand. What I'm saying is: Focus on one thing, and that's enjoyment. Eventually, there will be no innovative new things that make sense (Wii Vitality Sensor: Seriously?), so how about another great Modern Warfare? Why is Modern Warfare selling? Not because it's original, but because it's FUN. And that is all that matters.

njd09

@False: They're -becoming- a good company. Read the interview.

njd09

Wow...I guess i'm just really confused as to what THQ even makes??! Last I knew, they bought companies, turned them into a train wreck, and then laid a bunch of employees off. But I'm sure that's just disillusionment on my part.

MasterOmega

@MPSai: Hear hear. The more de Blob I get the better.

ClaudioIphigenia

Isn't THQ making Warhammer 40k MMO? For the past how many years now? Or is that more vaporware?

tarrantm

@Taz: "...the goal is to generate as much profit as possible with the resources you have. "

I agree with that, but I'd argue the rest.

When those resources grow then you keep branching out to systematically attack the rest of the market. At this point for THQ that isn't possible as they don't have EA's resources. If this strategy succeeds, though, you'll see them branch out as the opportunities warrant.

Nintendo is semi-special case because as a platform owner they have to concentrate on the Wii to succeed. They are way more focused genre-wise than Microsoft or Sony, but they are still attacking their entire audience within the confines of the Wii and DS defined market. Note that the games they do put out still attempt to track the entire spectrum. They have Wii Resort on end and the new Metroid on the other, with loads of other genres covered in the middle.

Sega would be a great example of how this strategy can change. They were a platform owner at one point and so they had to focus on just the Genesis market. Once their consoles went away, though, they immediately branched out and started launching across multiple platforms in order to try to gain traction across the entire industry. Their lack of success is irrelevant (nothing says these strategies *have* to work) because they still tried to broaden.

@MoeB: I think it was slightly less

@Yossarian:

Not really, the goal is to generate as much profit as possible with the resources you have. Smart companies realise the futility of attempting to dominate every aspect of an industry. Not even Nintendo tries to be in every segment of the market.

Taz

@j_k_redtail: OMFG YES WANT.

I'm still playing 2 and 1 and cataclysm.. My CD's are starting to break and it's damned hard to find a copy!

Want homeworld 3 relic!

Jaredu

@Archaotic: You're missing out. RFG and DoW2 are excellent gmaes. UFC isn't my thing but a few of my friends are gaga over it.

@MoeB: Better question: Who the hell cares about 989 Studios?

@Taz: Because the eventual goal of a company is to dominate all markets in a given industry. Conceding the racing genre to M$, Sony, and EA means that you have not tapped all potential markets for your industry (video games). If you aren't tapping all markets then you are putting a cap on how much money you can potentially make.

Plenty of companies pick their niche and are happy serving that market sub-set and serving it well. That doesn't usually work for public companies, though, as growth drives the business. Share holders are never happy to hear something like "We're good with what we've got."

"Q: So THQ doesn't feel like it has to compete in each genre"

Bilson is right. Why would one want to compete in each genre? If you were running a publisher, and didn't have a racing sim, would you start developing one so you could compete with Forza, Gran Turismo, Dirt, Grid, etc? That sounds like risk to me.

Taz

@Zonrith: I think you hit it right on the head, and I wrote something similar up above as a reply to a risky comment.

A lot of these strategies just come down to what the company can afford. Wide diversification can be less risky overall, but you have to have the deep pockets to afford it. EA has those pockets, so they attack the market in video games like M$ does with anything computer related. Dip your toes in everywhere and the big winners will cover the long list of small losers.

THQ has to attack the market more like Apple. Find your niche and hope you do it really really well. If you do, the company grows and you keep branching out and tackling other niches to spread your risk around.

@Nick Mangiaracina: Actually, I'm pretty sure that making good games while making a lot of money so that you don't have to lay off 550 people is what makes a good company.

False

@Draco Basileus:

Which is why they've bought up a Western company and are now making a WW2 RTS?

If the result is more games like de Blob, I am for it.

I'm trying to remember the last THQ game I bought. Uhm...Saints Row 2? Was that THQ? I traded it in after a month though. :[

Diversity really does help, THQ, but it only works when you have the content to fill the gaps.

@Nick Mangiaracina: To clarify my last sentence:

Risk by EA is mitigated by having a huge portfolio so that individual game losses get swallowed up by big hits. EA has been in the game long enough that they can predict baseline sales amounts and budget out for that portfolio accordingly.

Reducing risk for THQ is different because they don't have the pockets or reach to mitigate losses as effectively. So they have to reduce risk by concentrating on what they know best, and hoping that they can continue generating hits and extract themselves quickly from misses.

No risk, no reward.

I think Bilson comes across as undervaluing the advantages of a diverse portfolio, but then again he was responding to a question about competing in "each" genre.

To me, it's a question of extremes.

A portfolio can be too diverse. Any elements (genres) THQ may underperform in would drag down the company's bottom line. Such diversification would serve no real purpose. A very large company might find a huge portfolio to work best, but a smaller entity may not be able to sustain a cross-spectrum product offering unless they are all successful. If they can't guarantee that, then the risk may outweigh the potential reward.

On the flip side, over-specialization can be risky as well. Should the quality of THQ's games in the niche decline, or should the genre itself suffer a decline in popularity, then THQ could run into financial trouble due to a lack of any other options in the portfolio. It reminds me of the Southern U.S. when it relied on good ol' King Cotton, but when cotton collapsed as a profitable boon the entire economy of the South fell along with it, due to everyone relying on it for their financial future.

THQ may feel they are diverse enough. I'm not qualified to evaluate if that is or isn't the case for them. I'd personally be nervous to rely exclusively on one genre alone if I was a sizable entity, but I wouldn't feel a need to play in every single genre, either. Just a healthy selection of fruits and veggies. :)

You only need diversity if you want to focus on games that are complete fads like extreme sports 5 years ago or how rhythm games are dying now. Focus on shooters and you are fine. There will always be a market for shooters. Even mediocre shooters sell millions.

FriedConsole

@Nick Mangiaracina: I'm not sure this has anything to do with risk. Sounds more like they just realize they don't have the cash to compete so they are focusing on core competencies.

Smart either way, but I'm sure that deep down inside they wish they were EA. EA diversifies because companies want desperately to reduce risk. They aren't out looking for more of it.

Wharton drills it into all of these guy's heads that once you've solidified a brand you concentrate on milking it, because a brand is safe. If THQ can concentrate their focus on a few key brands, and succeed, they will perform more predictably over the next few years and be able to plan growth and budgeting, etc.

Risk is throwing a $1 billion around that you aren't sure you're going to have next year. This sounds almost like the opposite.

"Last week THQ announced that they were dividing up the company into three divisions, core, online, kids and famiily and casual games.

The decision seems to put an end to what some viewed as THQ's attempt at breaking into the mega-publishing business with the like of EA, Activision and Ubisoft."

EA currently operate a very similar set up don't they?

EA's Sims/Play = THQ's Casual
EA Games = THQ's Core
EA just merged Mythic/Bioware in to Online = THQ online

The only thing that THQ seem to be missing is a dedicated sports group (but then what's the point when EA own all the sports) and a dedicated mobile group (though that may be covered by "casual").

They may not be a "Mega-Publisher" but they're operating a similar model to EA and even with their limited resources seem to have as broad a range of IP as Activision (not saying much I know).

If I've missed something here then please shoot me down.

ThursdayNext

when i saw the word "diversification" i totally pictured don king talking. that reminds me, i need to go pick up fight night and ufc.

I understand the logic, but thats the attitude thats killing originality in the games market.

svenhoek: Fuck Fireworks. Ghostbusting.

Did THQ buy 989 Studios?

MoeB

Umm, Square-Enix says "hello." They've been surviving, and profiting, for years off of a single genre.

Draco Basileus

@Nick Mangiaracina: Especially in this age of "Activision only wants games it can whore out every year". Good on THQ.

Sean MacLean

@j_k_redtail: If you build it (the hope and expectation), they will come (not necessarily but something will the worst case being destruction of all hope).

Still since relic's finally got the Homeworld license again, we'll hopefully hear something of this by 2010 (esp since they're coy talking about it).

Alright, if a Niche dies out they can just drop that studio!

....and also hurt the Niche.

This seems like backwards thinking. If you focus on one specific genre/type and that genre/type fails to spark interest of the common consumer you won't get that many sales. Yet if you focus an entire division onto making games for that niche, that doesn't necessarily mean that new people will prop up in support of that game.

What is more likely to happen is that the areas that are less profitable for THQ will be greatly downsized or cut-off entirely, further hurting whatever genre that they may be a part of.

THQ is all about risk, and that's what makes them a good company.

Nick Mangiaracina

I can haz Homeworld 3? Please?

j_k_redtail