THQ Defaults On Line Of Credit With Wells Fargo

It seems as though THQ, in filing a late SEC Form 10-Q, has revealed that it has defaulted in its revolving line of credit with Wells Fargo Capital Finance.

According to the filing THQ is "currently in discussions with Wells Fargo regarding the asserted defaults" and hopes to reach some sort of agreement in the near future.

Wells Fargo is currently continuing to fund requests from THQ while the two companies attempt to reach an agreement.

THQ posted a $21 million net loss recently, and addressed concerns with its business in the filing, stating that "Increasing Shift to Online Content and Digital Downloads", the "focus on selling used video games" and "demand for 'hit' titles" were some of the reasons why THQ was having difficulties.

Essentially, THQ must reach some form of agreement with Well Fargo or risk bankruptcy. But in a statement sent to Polygon, THQ claimed it was "in discussions with Wells Fargo and believe we will reach an agreement with them to resolve these issues".


Comments

    People have sold used games since games existed, the trend in recent years of blaming the practice for declining sales is ludicrous.

      I do think the emphasis (by retailers) on used games has definitely increased in more recent times, though. You go somewhere like EB and look at the shelf space allocated to new vs used games, and the used section is 2-3 times bigger. Unless they've got one of their big sales on, you can't really get anything new at all unless it's a brand new release. When there's so little shelf space allocated to new games, then it's the big games from the heavy hitters like EA, Activision, Ubisoft, Sony, MS etc that get what little space is available. Those small-to-mid sized publishers like THQ have a much harder time getting space and visibility than the bigger guys do.

        Then they need to supply better value new titles. They cant complain when they helped create the environment they have to trade within.

      Agreed, considering most of the THQ games that have failed of late have not been because of used sales but because of higher quality products being produced by the competition.

      It would probably be more expensive to buy Homefront used then new these days.

      Having said that it will be sad if they do fail, quite a few of their IP's are really starting to mature and could be something special if they had a bit more time to refine them.

        it's not even because of higher quality products. Some of THQ's games are high quality and have good sales numbers. The problem is that they set unrealistic expectations on themselves. They expect their games to sell CoD numbers, when they really should've been expecting something more like 1 mil sales(which is a good number)

          ^ This!!

          I read the other day that Darksiders II may have sold over 1 million copies (this is speculation from analysts) yet they needed 2 million sales to break even!

          Game development (at least in major studios) is obviously fundamentally broken if their overheads are so high that even blockbuster sales aren't enough.

      You fail to understand the problem caused by current retail practice...

      Selling second hand games is fine, and perfectly legit.

      The problem comes when retailers are selling used copies of games that publishers are still actively trying to sell. Any new game has a finite window after launch where it will sell. This is when the demand for that game is highest. Retailers have realised that if they can pursuade a quick trade-ins of the current titles they can get the second hand copies out on the shelf while that demand for the game is still there, which they then sell for less than an otherwise identical brand new copy. A punter goes in to the store wanting game x and sees two copies one at full price and o e for £10 less, they are gonna pick up the cheaper one denying the publisher an otherwise guaranteed sale. In their shortsightedness the retailers think this is fine because they make more money off second hand games, with out realising that this practice is going to drive all game sales digital killing their own future for the sake of a quick return..

      So yes people have been selling secondhand games since games have been around but traditionally those sales happen long after the game has gone out of print. The recent practice of encouraging high trade-in turnover to get second hand copies out on the shelf while those games are still in print (still actively being sold by the publisher) does rob publishers of legitimate sales. To say otherwise is simply nieave.

    THQ has been hanging on and hanging on since this whole fiasco but I think this may finally be the beginning of the end for them. Which is a shame, particularly for their first party developers like Relic and Volition that do high quality work.

      The also own the Homeworld IP...

        Which was created by Relic, so that was covered in my comment when I mentioned Relic...

    Whilst I'd like to see Microsoft pick up THQ, if it was going to happen it would have been before now.

    Someone suggested Square Enix buying them, which in addition to Eidos would give them a great 'western' foothold.

      Microsoft would have little interest in THQ in my mind.

      There best stuff comes out of Relic which is mostly RTS themed which is useless to MS since they want console gamers not PC.

      Which leaves them with Saints row, metro and darksiders 2. Metro is too SP focused to be a long term cash cow on Xbox live.

      Darksiders make what you will.

      Saints Row is probably the best license there if GTA keeps going straight and SR stays in the realm of the absurd.

      ----

      South park is dependent on how the rights have been done. Obsidian arent owned by THQ and from memory it's in conjunction with south park digital, who probably hold the license. Also unknown if it has series potential

    The writing seems to be on the wall with THQ.

    They have some great IP's and development teams within their stable, so hopefully some of the 'nicer' publishers pick them up.

    I hope THQ can somehow recover. :/

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