In case you’ve been living under a rock the last few months, then you’d no doubt be aware that THQ is in a bit of a financial mess right now. Actually saying it’s a financial mess is like saying the Hindenburg only had one small leak. Just a few days ago, THQ announced their stock dropped a massive 50%. This of course comes after announcing delays for Metro Last Light, South Park: Stick of Truth, and Company of Heroes 2, as well as admitting Darksiders II didn’t meet projected sales quotas. Maybe you’re living under a rock because you’re a THQ employee?
THQ has become infamous over the last few years for its excessive licensed movie games, often quickly made and pushed out to capitalize on the film; as well as their games aimed at kids. You would think those crappy games were a supplement to their real money makers like Saints Row, Metro, and Red Faction. But the fact of the matter is that THQ has made more money off of its licensed movie, TV, and kid games than its hardcore franchises over the last four years. Their recent announcement that they are no longer making kids games may even hurt them in the long run.
You’re probably thinking that’s a bold statement, which it is, but it’s also a true one. According to VGChartz.com, over the last four years games developed and published by THQ that were aimed at kids, and/or are based off a movie or TV franchise sold almost 19 million copies. The more hardcore games only sold about 13 million.
Take UP for example, it’s based on the Pixar movie of the same name, and was published by THQ in 2009 and sold 2.4 million copies across six platforms. Also published by THQ in 2009 was Cars Race-O-Rama which sold 2.4 million copies. Now compare those numbers to its core games released in 2009. Warhammer 40K: Dawn of War 2 sold 0.41 million and Red Faction Guerilla sold 1.42 million.
These numbers are similar for each year, from 2008 to 2011. While the number of games and units sold vary, the results are all the same. Those ridiculous kid games and crappy movie tie in games have sold more than the Red Faction’s, Homefront’s, and Warhammer’s. Take a look at this chart here:
Back in January, an open letter allegedly written by several current and former anonymously to the THQ Board of Trustee’s, is calling for the firing of executives for stamping out crappy movie games, as well as their mismanagement of the drawing peripheral Udraw. The Udraw itself was a failure and everyone knew it. But the level of failure was something no one really knew about, until now.
The letter was posted on Strategyinformer.com, and it wastes no time in going after CEO Brian Farrell, who was too stubborn to admit his failure: “with a 2011 salary of $1,289,558, for a lack of business intelligence or fiscal accountability… trying to launch a year-old product that received almost no software support in the last 12 months. Instead of listening and having a back-up plan, he went ahead and invested a ridiculous amount of money in the manufacturing and advertising of the product and failed miserably.”
The letter also calls for the firing of four others; Martin Good Executive Vice-President and Head of Kids/Family/Casual Division, Paul Pucino Chief Financial Officer, Ian Curran Executive Vice-President and Head of Global Publishing, and Ed Kauffman Executive Vice-President of Legal and Business Affairs. The writers have a lot to say about Martin Good. Good was laid off in 2011, but they note that he made the second highest salary of 2011 and will float down in a “golden parachute while the rest of the former employees scramble to look for jobs in this challenging environment”. The letter points to mismanagement, poor handling of the Udraw and the kids/licensed games, and high salaries as reason why the company’s stock has plummeted.
THQ has since stated they are leaving the kid’s video game market.
Then in May, Danny Bilson, Executive VP of Core Games, left THQ and was replaced with former Naughty Dog Co-Founder Jason Rubin. A month later on June 4th, literally on the day of E3, THQ closed its San Diego headquarters and fired its entire staff after losing rights to the UFC brand. It’s easy to point a finger and say they were trying to use E3 as cover, and that’s exactly what I’m going to do. While the news did come that they lost UFC, it’s not like they’d shut down an entire studio in a knee jerk reaction. Plus I’m sure if the studio were any good they would have given them some other property to work on, or at least downsize it.
I’m not a financial expert, but it doesn’t take one to realize that a 50% drop in a company’s stock, especially one as troubled as THQ, is a massive sign for concern. But when you look at all this information: bad kid’s and licensed games ruining their reputation, low sales on key titles, delays, huge layoffs and studio closing, an attempted cover up of some of those firings, replacing a VP, and flat out lies for marketing purposes, it’s not so hard to believe that THQ just might very well be closing its doors in the next year or two if Metro Last Light and South Park don’t sell like crack infused Iphones.
Sources: http://www.reuters.com/article/2012/11/06/us-thq-shares-idUSBRE8A50YT20121106 – THQ shares collapse from Reuters http://www.joystiq.com/2012/01/25/alleged-former-thq-staffer-sends-furious-note-to-board-press/ – Angry letter from Joystiq http://www.gamasutra.com/view/feature/173660/kaos_descends_how_homefronts_.php?page=3 – Milius didn’t write the script from Gamasutra http://kotaku.com/5915701/thq-chooses-today-of-all-days-to-fire-employees-close-studio THQ fires employees on E3 from Kotaku