Is that title dramatic or what? I thought about using ‘The Final Death Spasms of THQ’ but I thought that seemed a little like I was rubbing it in. Before I go into this I want to make it clear that I’m a fan of a lot of THQ published games. Saint’s Row, Darksiders, Red Faction: Guerrilla, 50 Cent: Blood on the Sand (yeah really), Metro 2033, UFC and even Destroy All Humans! (as sort of broken as the last effort was). I appreciate the fact that if not for THQ, I might have never had the chance to play any of these titles. However it is because they have been one of my favorite publishers that the internal mismanagement of the company makes pisses me off so much.

Since many people might not know the background of the company, let’s take a look at where they started and how they got to the point where they’re being threatened to be delisted by NASDAQ.

If you do not learn from past mistakes....

THQ was initially founded by Jack Friedman as Toy Headquarters in 1990. Jack had worked for many years in the toy industry, previously having been a salesman for a toy company before founding LJN toys. I think it is important to note the previous connection to the toy industry, an industry in which licensing is critical. THQ (as Toy HeadQuarters) initially started making board games and action figures.

In 1991 Toy Headquarters merged with venture capital firm Trinity Acquisition Corporation, and became the publicly traded company THQ, Inc. This was done in order to raise money to fund new license acquisitions, such as licensing video games, and at the time the company acted as sort of a middle man. They acquired licensing from Nintendo to market games on the Nintendo Entertainment System, and acquired the licensing to popular Intellectual Properties (which I’ll just refer to as IPs). They would set up a contract with an outside developer to make the actual game, and then sell it. This worked well for them right away, with great sales for the titles Home Alone and Where’s Waldo.


This is the face that THQ investors have been making

With such immediate success the company went out to try to acquire other popular titles, started an agreement with SEGA, purchased Black Pearl Software, and split their stock to fund all of this in addition to rising costs of development and marketing with the rise of a new generation of consoles.

This did not work out well.

The dollar wasn’t doing so hot globally, and they paid for licenses that were not panning out in a market that was flooded with (terrible) licensed games. If you’re old enough to remember that time period than you know that while it might seem odd for Burger King to have licensed games now, nearly every company mascot had a licensed game back then. The 7-Up Dot had video game. Yo Noid was an actual video game. The costs of development and licensing were to the point that even though they were still selling games they were losing money, until they were selling stock at 50 cents a share.

Anyone else feeling deja vu? (Current stock price for THQI is .62 cents a share. Last week it was .45 cents)

The downturn of the company led Friedman to hand the reigns over to the Chief Financial Officer Brian Farrell. Jack Friedman left video games and went on to start a new toy company called Jakks Pacific, you may have heard of them if you are a wrestling or action figure fan, which he ran successfully till he passed away in 2010.

Farrell turned the company around with an aggressive change in how they did business. He eliminated half the staff, and with the rising cost of newer generation console games with little return on the investment, he met with the license holders and cut new, better, deals that allowed them to switch to making budget games for older consoles. Cheaper licensing and cheaper development meant that even selling these games at $10 - $15 they turned a profit right away. So they cranked up the amount of cheaper licensed games and churned those out.

In retrospect, while this was a great short term strategy it was something that would unlikely work for them long term. THQ had a lucky break however. In the midst of the popular era in wrestling referred to as the Monday Night Wars, THQ acquired the licensing rights to WCW. Wrestling game sales in 1997 made up a significant portion of their profits. Later WCW would sell the license to publisher EA, a move that caused THQ stock to plummet in the wake of the announcement since WCW made up a significant portion of their success at that time.

It did not take long for THQ to bounce back. They still had rights to the WCW license through 1999 and managed to publish five WCW games in a span of 3 years, milking it for every penny they could. Shortly after they gained the license to WCW rival WWF, along with a license to publish games based off of Nickelodeon cartoon Rugrats. The company was saved!


THQ's saviors

At least for awhile.

-It is interesting to note that years later in 2004 they would be wrapped up in a lawsuit with the WWE in which THQ was accused of bribery and racketeering. While I do not know the details of the lawsuit, part of the deal to get the WWE license was through a negotiation with Jakks Pacific, who received 10% of the cut of all WWE video game sales and had a credit in the games as well. Obviously THQ had ties with Jakks Pacific, and Jack Friedman has WWE ties going back to his time at LJN, which published some WWE games. Given the charges of racketeering and bribery, along with the toy company oddly getting a percentage of game sales, I don’t think it’s unreasonable to assume that the connections between the companies had something to do with how they obtained the WWE license and were ultimately bailed out by it.

Thank to WWE having terrible lawyers, and a restructuring of the agreement on profit distribution between Jakks, THQ and WWE, they were able to settle out of court and continue to hold the license for WWE games. Which is great since without the license they would already be out of business.

Anyway, back to when THQ was initially saved by the original agreement.

The company was by this time no longer developing for older consoles and was making progress into the 64-bit market. In what was likely standard operating procedure for them at this point they went out and acquired new licenses to publish games for, obtaining the rights to publish games for Lucasarts, Disney/Pixar, and other Nickelodeon properties. They purchased Volition, the developers of Descent and Freespace, to be an internal studio to work on new IPs.

Things went well for a few years. They were able to rest comfortably knowing that they could release a WWF/E game every year and that it would sell. Their licensed games weren’t very expensive to make at the time (comparatively) and with well known IPs to work with such as Spongebob and Pixar movies it meant that they were assured enough titles would sell to break a profit. This allowed them to take risks with some new IPs and make arrangements with third party developers to publish their games, which in turn lead to successful titles such as Destroy All Humans!, Red Faction, the MX vs ATV series, and Full Spectrum Warrior. There were some games that may have under performed, however it was easy to absorb with a couple of high selling titles and a bunch of cheap to make licensed products.

So what happened?

First problem was their Studio System. Studio System was their blanket name for all of the studios they acquired to do in house development, and towards the end of the previous console generation they managed to pick up 14 studios, including studios like Vigil. In theory such a system sounds like a good idea. Owning studios as a publisher can be cheaper than contracting with an outside developer for a certain percentage of profits, but the publisher also incurs the continual cost of paying salaries, health benefits and so on. This is not so bad when you pick one studio or two as you increase revenue over time.

They added 14 studios, and even a couple more after that. In the span of 2 fiscal years they went from having 460 employees to 1200, nearly tripling how many people were working for them which substantially increased their operational costs. This was during a time when another generation of consoles were getting ready to be released and just after release, a time when development costs were, at the very least, doubling. Many third party developers were being folded into larger publishers. I have no idea why THQ would continue to add studios during this time aside from the fact that EA and Activision were doing it as well, and maybe they were concerned that if they didn’t pick up these studios there wouldn’t be anyone left to publish games for.

What I do know is that within the last 5 years they’ve closed down over ten developers, sold off others, and of the studios they’ve held onto they’ve made cuts to the staff (in many cases large cuts) over the last couple of years.


Good thing they got rid of this company, right?

Licensing has always been one of the strong areas for the company. Not in terms of quality, but in terms of being able to turn a profit on it. This is why it is odd that they currently have so many expensive long term licensing agreements such Disney/Pixar, American Girl, Dreamworks, Bratz, etc. Though they hold these licenses they haven’t really used much over the last couple of years, which makes you wonder who exactly is in charge of securing these licenses, setting the terms and then managing them.

Recently, a letter from an ex-employee blasted several members of THQ management including Ed Kauffman, the Executive Vice President of Business and Legal Affairs as being responsible for these bad licensing deals. Kaufman joined THQ in 2009 however, and these deals were set up long before then.

They split their company into three fronts, Core video games, PlayTHQ for casual games, and one for focusing on their online market. When making a split like this, you would think that there would be someone at least overseeing the decisions of the divisions so that they would not separately each take risks that could put the company into a bad spot. Yet somehow the communication wasn’t there, or if it was no one was paying attention.

The Core group decided to take on the FPS market, dominated by Call of Duty, Battlefield, and Halo. In house development group Kaos worked on the game, which incurred development costs high enough that according to THQ would require the game to sell at least 2 million copies in order to turn a profit, with an estimated 35-50 million dollars to develop (not including the millions spent on advertising) according to the LA Times in their interview with Danny Bilson, the VP of the Core Games division. Even though the FPS was already flooded with titles, and new IPs on average had difficulty breaking a million in sales, they released Homefront.


Even this guy could see that this game was a mistake

Poor reviews of the product caused THQ stock to tank, which had already been sliding downwards for some time. Don’t doubt the power of the Metacritic average, more than just consumers take a look at that score. Sales were good for a new IP, it even broke a million sales, but with the amount they invested in the game it needed more than just good sales, it needed amazing sales numbers. Unless you have World of Warcraft money to fall back on, I cannot understand who that was a good risk to take.

Not the only risk they were taking. The THQ Play division were seeing strong numbers of their uDraw device on the Nintendo Wii with over a million of the devices selling on Nintendo’s system, and they thought that similar sales could be had on the PS3 and Xbox 360. While that is a rational idea, for some reason they released the uDraw during a time when other well marketed titles were coming out on the two systems. I’d like to see the market research they did that informed them that releasing an expensive peripheral with little in the way of software during one of the busiest release schedules of the year was a good idea. If that wasn’t bad enough, I guess they were worried they would not have enough uDraw units to match what they felt would be a high demand and made 2 million of the things, a large portion of which are still likely gathering dust in a warehouse or landfill. At a cost to them of $54 per unit to produce, well, you can do the math.


Keeping Atari's ET company in a landfill

Even well managed companies would have a hard time absorbing that kind of loss. A company like THQ where the right hand didn’t know what the left hand was doing it was nearly a fatal blow. In fact might still be a fatal blow. The stock was already sliding to under a $1 a share by that point, with the news of the uDraw losses it has stayed at around .55 cents a share. In January they were warned if they could not get the stock above $1 a share by July 23rd they would be delisted from the NASDAQ exchange.

So here THQ is again in a position where they have overspent and over-reached. The last time it happened the CEO stepped down, they made a huge shift in the direction of their company and they managed to acquire a hot new license.

This time there is no hot new license to acquire. The CEO and Board of Directors have taken a pay cut, but Brian Farrell remains the CEO of the company. Maybe he feels that he needs stick around like the captain of a sinking ship, given that most of the other executives were promoted or hired to their positions in 2007-2009 when the prior executives of those positions left the company. While they have made changes, like laying off hundreds of staff, canceling projects, completely eliminating the THQ Play division, and readjusting their financial expectations, as long as the people who lead them into this situation are in charge I have a hard time believing that they will be able to recover from the mistakes of the last few years.

So while I’m a fan of many of their properties, I’m bitter about THQ as a company because of the horrendous examples of mismanagement over the years. They own development studios I enjoy the products of, like Volition and Vigil, but as long as the current management is in place I have no faith that they will not continue to drive the company into the ground while laying off more employees from these studios.
[i][/i]

This is in response to Jim Sterling's FFVII Is Not Over-rated article. If you haven't already read it, please take a moment to do so.

I don't blog here regularly, and I think the last time I did so was actually in defense of Jim (who I am not personally familiar with but I'll use his first name as Mr. Sterling sounds a bit formal when discussing a video game), who had received a lot of negative feedback after not giving FFXIII the positive review some felt it deserved. Today I'm writing against his argument, which also happens to be about a Final Fantasy game.

I felt the need to respond not because it is another Final Fantasy game though. I have an issue with the article. I think Jim Sterling is a good writer, though I personally think he sometimes writes to be confrontational in a way that occasionally works against the point he is trying to deliver. In his recent article he makes the statement 'over-rated' is used as a means of intellectual cowardice. Sure, some people do use the term instead of an objective argument because they know they're running low on brain cells and want to spare as many as they can. Just because some morons use the term to deflect doesn't mean that everyone who uses the term also does not have a point.

In Jim's article he mentions that it seems that people are bitter that FFVII is more fondly remembered than FFVI, that FFVII was his and many others first FF game and helped spread concepts like a well developed story to more people. Yet here is also the reason you'll find that many people who had exposure to JRPGs prior to FFVII seem bitter about the popularity of the game, many of the things that were new and exciting for people who played FFVII were things that were done before, and better, in other games before FFVII.

I was lucky as a kid and ended up receiving a SNES and some JRPGs as payment for helping out a family. It included with it Chrono Trigger, Earthbound and FFIII (VI). I would've never played these games otherwise, but they were amazing. The characters, music, storyline, and so on were awesome. When I later played FFVII, it sure looked pretty, but I didn't think the characters were as compelling, and the Materia system that Jim loved to me made the characters feel less individual and more generic, and sure, Cloud was meant to be kind of a jackass at first but I couldn't connect with him. The story was filled with odd soap opera style twists, with people revealed to be related or knew each other previously but forgot, and so on. There are many valid criticisms that could be leveled at the game.

FFVII was however the first RPG game for a lot of people, and was the game that introduced them to such games. That's great. But it was rated as one of the best role playing games ever at the time and people continue to moan about getting it remade, and articles are still written about how great it was. That would be like if Transformers was called the best action movie ever because for some people it was their first action movie.

I'm not saying FFVII is a bad game or that people should not like it. FFVII is a good game; to call it shit is just being over dramatic. I will say that it was released on the right system at the right time and distributed widely enough that for many people it was their first time with a good RPG. That doesn't mean it was the first game to do many of the things people laud it for achieving, nor does it mean that FFVII did things far better than any RPG before it.

People who claim the FFVII was the first or best with some of the RPG mechanics in the game over rate FFVII; and that is why it is over-rated. That is why you see the dissenters. Not because popular = bad, but because there's a longer history to the genre than FFVII that isn't acknowledged when they speak of it in reverent tones. Jim seems angry people don't acknowledge the achievements of FFVII, when many of those achievements occurred in games before and are ignored merely because FFVII was the first RPG game for many people.

To imply that everyone who says FFVII is over-rated is full of shit, or is just being anti-popular is absurd. The fact is that for many people it just wasn't the mind blowing experience it was for others, for it to be called one of the best games ever made and to still have people trying to convince others of how great it was over a decade later to them is an over reaction, and it always will be.

Dear EA:

For years you have crossed the line of taste in your video games. You have allowed scenes of blurry sexual relations in your Sims series of video games, encouraged reckless driving with your Burnout series, and to my understanding the Mass Effect games you publish allow sexual congress with a member of a different species or possibly one of the creatures from the movie Avatar.

It was not enough that you have spewed this filth in the form of digital entertainment, you had to cross the line by naming the enemy team in your upcoming online shooter Medal of Honor after the terrible 1986 movie Opposing Force.

I don't see how shooting soldiers based on failed actors is entertainment when the real career of different actors are dying every day. How can you say it would be okay for people to play against the actors of Opposing Force? You will have people sitting home, drinking beer, maybe missing, maybe getting up to go to the bathroom or stratching themselves, and then starting over again. Well Paul Joynt didn't have a chance to start over. After Opposing Force his career was as good as dead.

Here we are, trying to live the rest of our lives and doing the best to put the memory of that terrible, terrible movie behind us, and your company comes up with this game. I want the people who made this game to watch Opposing Force then look me in the eye and tell me that is entertainment. That they would subject a whole new generation to characters from that movie is irresponsible.

The saddest thing about this is the terrible disconnect between the horrible reality that is the Opposing Force movie and the people in their bedrooms playing this game. They will be running around as Logan, Casey and Becker, possibly having fun, without realizing the terrible movie they will be unintentionally supporting.

Anyone who has seen Opposing Force will tell you IT IS NOT A GOOD MOVIE. If you disagree with that I invite you to check it out from Netflix and and see the end of what could have been many fine acting careers for all eternity.

Truly your company should have ground the enemy in some real life terror instead of the film atrocity that is Opposing Force. I suggest the Taliban.

Yours Truly,
Whipt

Do you want to enjoy video games less? Become a video game reviewer.

I say this as a person who has reviewed games for the last six years. Unlike Jim Sterling I have done so as a hobby and not a job, from the websites 411mania to Inside Pulse to Diehard GameFan (places I'm sure most haven't heard of) I have written reviews with the roughly the same group of guys as something we do because we like writing and video games and not for money. Each of us started for the same reason, we liked video games and thought it would be fun to review them.

It's a lot less fun than you would think. The thing I discovered quickly that it seems Jim has seen a lot of is the fact that in general the online gaming community doesn't want your opinion of a video game. They want you to validate their opinion of a game they just spent money on. Don't believe me? Check out a site like Metacritic that gathers scores from multiple places and averages them. For entertainment like movies, TV, books and music the average review score is lower and the tone more critical than it is for video games.

It has reached the point where one reviewer has a negative opinion on a game and fans take it as a personal insult.

The worst part about this is the pressure for higher scores isn't just on the consumer end of video games. Most people don't realize this but PR companies for publishers can have things like their bonuses tied to the Gameranking average for the game they represent. These are often the same people who send out advance and review copies of video games as well as pay for ads. They don't take kindly to people being rough on their games.

On top of all that there are plenty of reasons reviewing games aren't much fun. Like when you want to play a different game but you are under the gun to play a lengthy title and have a deadline for writing the review. Or when you work hard on a review only to have people skip the review and argue about the score. Or when a game flat out sucks and in order to do a proper review you have to keep playing instead of playing...well something good. That's why the guys who do it all the time get paid to do so because if you like games it's a fun job, but don't be fooled. It's still a job.

So when Jim says FFXIII wasn't fun it isn't surprising to me anymore that people are upset. Some of the comments are pretty hilarious though. He's just a troll because he rates a game low? No one wants to spend their time playing a game they don't like, only to have to spend time writing about it, then have to listen to people tell you how much you suck for presenting your opinion. If every game was amazing then being a video game reviewer would be the best job in the world. Every half done Wii title, underwhelming sequel, or major series whose developers shifted into neutral is something that no one wants to spend the majority of their time playing. Or writing about. Or being personally attacked about.

It's just much easier to make fans, publishers, PR guys, and so on, happy by just throwing out a good score and it takes some balls to just give your honest opinion in a culture that wants to be placated instead of challenged.

This is getting long, but one other thing I've read is criticism that Jim did not finish the game. Seriously? Take a look at every video game magazine or website. Check out the number of reviewers versus the number of games they review versus the completion time of those games. If you see a game reviewed before it's released, especially if it is a long game, they didn't play it all the way through. There's a lot of pressure to get games reviews out there on the day of release, which means that likely it hasn't been played all the way through.

Regardless, if after 30 hours if a game isn't fun, then how the hell does it deserve a decent score? No one would put up with a 20 hour long boring movie, a long pointless book, or a dull CD. Even if the end is the best thing ever created, the journey isn't worth it.

The reaction to Jim's review shows that while video games as a form of medium have grown, the audience hasn't matured.