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Analysis: THQ Needs To Pick A Focus And Stick With It

Following <a href="http://gamasutra.com/view/news/36472/THQ_Lays_Off_200_Employees_Closes_Australian_Studios.php">the THQ re-org</a>, Gamasutra editor-at-large Chris Morris discusses what the company should consider doing to "right the ship," such as focu

Chris Morris, Blogger

August 12, 2011

5 Min Read

[Following news of a reorganization at THQ, Gamasutra editor-at-large Chris Morris discusses what the company should now consider doing to "right the ship," such as focusing solely on quality core and Facebook titles.] A few years ago, I came up with an analogy that envisioned the video game world as a high school. EA was the jock. Take-Two was the guy in the leather jacket who blatantly smoked at his locker. And THQ was the guy you wanted your sister to date. These days, though, THQ's role in that little drama has changed. Lately, the company has more closely resembled the kid whose attention deficit disorder is so paralyzing that he's forced to enter special ed. News of this week's reorganization, which resulted in the layoff of 200 employees and the closure of its Australian studios, was undeniably bad news, but with it came a possible silver lining. The company has vowed to narrow its focus as it struggles to find its place in the fast-evolving industry. It's an encouraging promise, but you can hardly blame investors for being skeptical. After all, this isn't the first time THQ has sworn to right the ship. In 2008, for example, the company shut down 5 studios and cut 250 jobs, saying it had a new goal of "fewer, higher quality titles" (including, ironically, de Blob, which seems to be history as the studio behind it was axed this week). In 2009, it shifted its aim away from the children's games it was best known for (and had made the most money from) to focus on core gamers. That led to a reorganization of the company into three units: Core; Kids, Family and Casual and Online. "We know how to do this," said CEO Brian Farrell at the time, citing Red Faction as one of its key properties. Today, of course, Red Faction has been phased out, despite a substantial transmedia campaign that included a pilot movie on the SyFy channel. So this week's realignment is a familiar tune: Fewer licenses, more original content. But whether the company will stick by its promise is hardly a guarantee. Licenses, after all, seem like safe investments. You've got a studio working hard to promote awareness of an IP and you just have to ride the coattails. And production qualities on the games aren't necessarily expected to measure up to AAA titles, meaning you can spend less on development and offer them for budget prices at retail. In the past, it was one of the easiest ways to have a reliable stream of income. And THQ made a fortune through games based on SpongeBob and anything attached to a Pixar release. That gravy train dried up, though –- a victim of poor production quality and the explosion of dirt-cheap kids games on mobile devices. These days, THQ's stock is in the toilet. It hovers in the $2 range right now and hasn't seen the north side of $5 per share since March. That's due in part to the loss of income from kids' games. But investors are also tired of the company's string of core titles that have shown initial promise, but fallen flat when they hit retail -- games like Red Faction, Homefront and UFC Undisputed. It's hard to point to a single factor as the cause for the underwhelming releases, but a lack of corporate focus is a good place to start. This is a company, after all, that hopped into bed with DreamWorks Animation just nine months after publicly saying that the market for kids' games, especially those based on animated films, was getting less profitable. What scares me is that even with this week's announcement, THQ has set itself up to once again go wandering off the path. Its four-pillar strategy will see it focusing on core games (like Saints Row: The Third), iOS and Facebook titles, MMOs (specifically Warhammer 40,000: Dark Millennium Online), and sales through existing channels, including a relaunch of THQ.com. Let's run through those quickly: Core Games: Farrell was right in 2009. Core games are where the money is at in the industry these days. But to be competitive, your titles have to be polished and well executed. The howl of outrage that followed the release of Homefront wasn't the result of the miniscule single-player campaign or so-so multiplayer, it was a collective scream of frustration that THQ had taken a franchise that had such a good backstory and failed to make it shine. If the company wants to be a player in this space, it needs to ramp up its quality control in a big way. iOS and Facebook: They're cheap and, if done right, profitable. Recruiting Jimmy Buffett as an ally was a smart move to engage that older audience. Establishing a base here could help THQ rebuild itself in several years. MMOs: A tough field to compete in – and an expensive one. Does Warhammer have an audience base that can compete on the same level as World of Warcraft or BioWare's Star Wars? It's unlikely. And even if it does, those fans are likely to be in the same demographic Blizzard and EA are chasing, so there will be some players that choose the competition. Digital Sales: THQ has been a bit vague on this, but it seems to be taking a page from EA's playbook by pushing digital distribution on its site. That doesn't cost them anything, but THQ is certainly not in a position to take on Valve and win. THQ also recently launched Warhammer 40K Kill Team, a downloadable, promotional tie-in to the upcoming Space Marine that has held its own on console digital sales charts. Instead of a four-prong strategy, THQ might be better served right now by focusing instead on quality core games and iOS/Facebook. (uDraw has been a hit so far, but the clock seems to be ticking on that product as Wii sales plunge, so if the company can find a buyer for it, take the money and run.) Barring that, maybe someone could dump some Ritalin in the company water fountain.

About the Author(s)

Chris Morris


Gamasutra editor at large Chris Morris has covered the video game industry since 1996, offering analysis of news and trends and breaking several major stories, including the existence of the Game Boy Advance and the first details on Half-Life 2. Beyond Gamasutra, he currently contributes to a number of publications, including CNBC.com, Variety and Official Xbox Magazine. Prior to that, he was the author of CNNMoney's popular "Game Over" column. His work is cited regularly by other media outlets and he has appeared on The CBS Evening News, CNN, CNN Headline News, CNN International, CNNfn, G4 and Spike TV.

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