How THQ Went From Bad To Very Bad

In 2007, shares in publisher THQ were going for over $US30 a piece. Today, in 2012, they're going for around $US0.70. Studios are rumoured to be on the chopping block. Over 200 employees are being let go. And the company's boss has taken a 50 per cent pay cut.

How'd it all go so wrong?

Easy. THQ has been one of the most poorly managed publishers in recent memory. What was once a troubled second-tier publisher (in 2008 it closed five studios and sold a few more off) got it in its head a few years ago that it wanted/needed to compete with the big boys, the EAs and Activisions of the world, and figured the best way to do that would be to spend money. A lot of money. Blockbuster money, the kind of money it couldn't back up with blockbuster games.

So, naturally, things went wrong.

Things like this:

Blood Sports. THQ has a lot of money tied up in the licensing and development of games based on professional wrestling and UFC mixed martial arts. So much so that the licenses for both the WWE and UFC cost almost as much (with the UFC deal's dollar terms unknown, maybe more) than THQ is currently worth.The former games are... OK, the latter pretty damn good. But they've over-invested in a market that's always going to be a niche one, meaning the chances to make a ton of money, ala EA Sports, were always slim.

No Kids Allowed. THQ were once masters of the licensed kids games, thanks to their deal with Disney. And THQ used to make a lot of money from kids games. THQ doesn't make Disney games any more, though, and in fact doesn't make kids games at all, having closed down its last remaining family developers last year. It's a black hole in the company's finances it's been unable to fill.

Red Faction. A few years ago, THQ brought back the Red Faction franchise with Guerilla, an open world game with a robust physics engine. It had its problems, but it sold well, reviewed well and had a lot of promise for a sequel. That sequel, Armageddon, proceeded to improve nothing, and indeed in many ways removed the best bits of Guerilla. It was so poorly received that it contributed to the premature shelving of the entire franchise, only a couple of years after it had seemed on the cusp of bigger things.

Red Faction, Part Deux. Oh, but it wasn't just the games world where THQ blew it with Red Faction. It also thought it would be a good idea to make a TV show about it. Not one based on the awesome Guerilla, though. It made one based on the awful Armageddon. The show was equally awful, which is why you probably never saw it, or had even remembered it existed until now. Sorry. Way to blow a franchise's chances at multimedia cross-over, THQ!

Homefront. A disaster. THQ marketed this game as a serious contender to the military shooters coming out of Activision and EA. The thing is, Activision's shooters are made by Infinity Ward and Treyarch. EA's are made by studios like DICE. THQ's shooter was made by...the guys behind Frontlines, a pretty average... strategy game. Homefront did a few neat things, especially in multiplayer, but it was a short, linear, boring and occasionally stupid/insulting game. The gulf between the amount of marketing behind the game and its eventual quality perhaps best sums up THQ's problems of late; namely, you can't just throw money at bad games and hope that'll make them better.

uDraw. A bizarre, and if accounts are to be believed, devastating business decision. Nobody ever asked for a tablet drawing device on modern consoles. And nobody ever bought one. The fact this thing even made it off the drawing board, let alone got to the stage where it was costing millions of dollars, is baffling.

Warhammer. Another example of THQ not really understanding a licence, or its market potential. Warhammer 40K is a storied franchise, one that's very popular in Europe, but it's not so big in the US, limiting its global appeal. To have stuck Relic -- one of the world's premier developers -- on the licence for so long is like grinding metal. The Dawn of War games, and even the latest Space Marine title, were always going to hit a glass ceiling because of that licence.

Because of these and other missteps, the recent history of THQ reads like a stab victim slowly bleeding to death. Since recording massive earnings in 2006-07 on the back of licensed kids games, THQ has closed five internal studios (2008), sold another (Big Huge Games, 2009), sacked developers in both the US and UK (2010), cancelled an online WWE game and closed its Korean outpost (2010), sold its mobile business (2011), closed two more studios (Homefront developers Kaos and THQ Warrington), killed the Red Faction franchise (2011), closing two more internal studios (Blue Tongue and THQ Australia, 2011) and killed its MX vs ATV franchise (2011). This year, its sacked 240 employees and been threatened with expulsion from the Nasdaq stock exchange, and also faced accusations it cancelled its entire 2014 lineup, along with the cancellation of the long-in-development Warhammer 40K MMO.

So, what's the problem? Why all the closures? It keeps coming back to the argument that it's all management's fault. Many of the studios above made good games that sold pretty well! Yet there's a delusion on the part of THQ, and you see it everywhere from its marketing spend to the size of its booths at trade shows to the licenses it spends millions on, that its games are awesome, and that they sell millions. Which they don't.

In other words, THQ's management is writing cheques its games can't cash.

On the bright side, it's not all doom and gloom for the company. Saints Row the Third was well-received last year. Relic's games continue to be excellent, even if they're not selling as well as they could be. The hiring of Prince of Persia and Assassin's Creed mastermind Patrice Desilets was a coup (though, again, giving him his own giant studio must have cost a mint), as was inking a deal with iconic developer Tomonobu Itagaki to develop his action title Devil's Third. And getting a developer with a proven track record in first-person games, Crytek, to develop a Homefront sequel was the kind of idea THQ needed to have for the first game.

But is that stuff too little? Or, in the case of Desilets and Devil's Third, too late? You could argue that we should all hope it isn't, but then, with the way THQ has been managed (and the way it's been wasting money) in recent years you could also say it might be better for developers like Relic, Volition and Desilet's new Canadian team to be working under someone else's banners.


Comments

    Don't think I've ever played a Relic game I outright hated.

    Sure, Soulstorm and Retribution were lousey, but not 'hate worthy'.

    Red faction: Arma' on the otherhand...

    I'm just putting this out there: Red Faction: Armageddon wasn't that bad and a metarating of 71 isn't poorly received. 7 out of 10 is above average even.

      This is 100% true, it is a great game. But the problem is people wanted Guerilla 2

        Agreed. But for the record I didn't really like Guerilla; I never even finished. I did finish Armageddon, however.

          Armageddon's problem is that we've been swamped with 3rd person shooters this gen so to stand out you need some sort of hook, Guerilla had it with open-world destruction, Armageddon looked like Quantum Theory with glow in the dark enemies by contrast.

      To publishers like these a rating below 80 is a critical failure. Not that games with low ratings never sell (they often do) but should you have that risk? Wouldn't you rather GAME OF THE YEAR plastered over every one of your titles?

      Oh and I'm not justifying it, you're right it's bloody stupid.

    Man, I hope they survive. Too many good memories of THQ games to see them crash and burn like this.

    This was a very interesting article that answered some questions I had about the whole thing. Thanks.

    What stuck with me is the summary: spending more on advertising and licensing than could be justified. If you do that, not even the world's greatest games can save you from bleeding out.

    Ahh Relic - They made one of my favourite games on PC... Homeworld. Full 3D RTS with a a persistence through the missions that forced me to replay each mission until I finished it with the best possible result before moving on.

    "THQ’s shooter was made by…the guys behind Frontlines, a pretty average… strategy game." - Did you people ever play Frontlines? It was pretty much the first game to take advantage of massive scale multiplayer matches and Homefront did the same thing. Homefront 2 will be developed by Crytek and I think that you had better go back and rethink what you have said as Frontlines was a game that made a point that larger-scale multiplayer environments do work. Sure the Singleplayer lacked in both games but the gameplay and multiplayer were fantastic.

    This article almost makes a point that both EA and Activision have paid you to down THQ.

      Battlefield 2 had huge multiplayer around 3-4 years before Frontlines.

      The 64 player maps were fun.

      The 128 ones were mental :D

      Um, given wher THQ's stock price is, no-one needs to pay anyone to down THQ. They're already on the floor.

      Homefront didn't sell and didn't get good reviews but had gigantic marketing spend. You say it had some good ideas that Crytek might be able to make something from? That's kind of the article's point... that THQ had a lot of good stuff which it could have profited from but mismanaged...

    if they go its is sad but then we will see some games get much better smackdown vs raw made by EA yes please

    So which publisher is going to buy THQ? Activision or EA? They're sitting on a goldmine of licenses and franchises and own several very solid development studios. It seems like they'd be pretty interesting for an acquisition, especially if that acquisition also included all their licensing deals.

    Many moons ago when at university I was a beta tester for a THQ studio. I tested a game with a lot of potential that first got buggered by:

    * THQ's insistence mid-development that something it had licensed be shoehorned into the game (apparently the license agreement was about to run out, but under the terms of the agreement they could release anything that was already in development when the license expired, and I assume some executive wanted to demonstrate the license wasn't a waste of money by using it on more stuff)

    * THQ commissioning this developer to make a second, terrible licensed game that nobody bought. Something pretty close to movie tie-in shovelware.

    Anyway, the losses from the second game plus the delays in the first game caused by THQ attaching that license to it = studio runs out of money and THQ shutting them down instead of completing development on that first game which as far as I know was never released in any form.

    It doesn't surprise me to hear that mine was not an isolated experience.

      Er, QA tester not beta tester. Obviously it wasn't far enough along to be in beta. *facepalm*

    I hope they don't go under or at least pass the licenses to people who will take good care of them. I LIKED DOW 1, I want a DOW 3...

    Relic did a great job on Warhammer 40K I wonder who would even make Warhammer games if they were not around.....

      THIS!! Considering the fact that other than the actual table top, there have been no warhammer 40k games that come close to being as great and well recieved by the die hard fans of WH40k than what relic has put out.

    Frontlines would be a very average strategy game, given it was a FPS.

    Based on personal experience at THQ Australia, the shockingly bad management extended down to studio level. It came to feel like we were living in an episode of 'The Office'.

    I'm confused... i recall EU as being one of THE biggest markets in the world.

    So a hugely popular franchise in EU is a "money sink" because its not "popular" in US? Oh wait thats right its a US article.. because you know the market is controled through US lenses only <.<

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