January 25, 2012
Posted by on
I’ve said before that I like to not only follow creative mediums but often the businesses behind them as I think it’s valuable to know where the stuff we enjoy comes from. One of my early posts here was about THQ, specifically taking the piss out of Danny Bilson and what I believed was a botched strategy that attempted–and largely failed–to revitalise the company. Since then, THQ’s fortunes have gotten markedly worse with their one potential saving grace of Saint’s Row The Third selling well but not as well as they wanted and rumours of dwindling cash reserves, massive cancellations and the possible sale of the company, which were promptly denied and followed up by a statement that they are dumping licensed games and refocusing on core products. Their stock price is well under a dollar and they will be faced with delisting if they can’t turn things around fast. In short, things are dire at what is still the world’s fourth largest publisher.
This morning, NeoGAF posted a lengthy (and I must say very poorly written) letter from an anonymous group claiming to be made up of ex-employees and shareholders. You can read it for yourself but if its contents are true, it paints a very unflattering picture of the top management and a trend of poor decisions and leadership that goes back many years. It shows that the company’s problems are historically rooted and not just a result of bad luck over the last couple of years but of someone running the show who doesn’t really seem to understand the business they’re in. I still maintain that many strategic and creative decisions made under Danny Bilson’s watch (like turning away Respawn, Homefront and Red Faction Armageddon) were bad ones and hurt the company big. However, it also appears as though many of those bad decisions and many past ones were influenced by an overall poor strategic vision employed by Brian Farrell, long-time CEO. I’m not sure if Bilson’s ideas are what THQ needs to save itself but in light of this new information, I will admit that I was probably harder on him than I needed to be. Plus there’s that whole uDraw things which even before I admitted he had nothing to do with. That facepalmingly dumb project was all Farrell.
Despite a plummeting stock price, botched initiatives, massive layoffs and studio closures, the top echelon’s of THQ’s management still took home millions in compensation, millions the company desperately needs to stay afloat. Yet for some reason, shareholders don’t seem to be fighting for a change. Whether or not Danny Bilson should be there is debatable but at this point, I think there’s no question that the CEO and other members of the company’s leadership don’t know what they’re doing and don’t know how to carry the company forward in a new direction. They need to be kicked to the curb and soon if they want to have any hope of recovering. With so many stories in the news of ruthless shareholder rebellions at other companies just for failing to meet a quarter of two’s expectations, I don’t know how Farrell & Co. have survived this long without being overturned.
As I’ve said before (and will say again), the triple-A video game industry is in a bad way right now and it needs more competition, not less. This is a brutal industry and it requires adaptive leadership with razor-sharp business wit and a pulse on industry trends. Brian Farrell is not providing that and if the open letter is true, hasn’t been for a long time. There are a lot of employees, shareholders and gamers who want to see THQ succeed and grow. They clearly can’t do that with the current team at the helm. They gotta’ go.
October 23, 2011
Posted by on
In the world of large video game publishers, THQ has always been an interesting one to me. They started as a toy company in 1989 (industry nerd trivia: THQ stands for Toy HeadQuarters) and blew up in the 1990s into one of the top 5 publishers today. They’ve never had the financial might of an EA or a Ubisoft but they still manage to crank out a lot of triple-A content and have not been afraid to push riskier franchises without huge sales potential. In today’s industry where big publishers are often fleeing to the financial safe havens of licensed properties or going on acquisition benders, THQ has actually doubled down on their expensive triple-A franchises, shedding the licensed stuff which was their bread and butter for many years, reducing their title slate and trying to make more with less.
Many of their recent moves have been attributed to Danny Bilson, their Executive Vice President of Core Games who also often acts as a public spokesman for the company. As big company executives go, Bilson has an interesting history. He got his start in comic books, film and television as a writer and director. Ever seen the Rocketeer? He co-wrote it. From there, he moved into a few different positions in the games industry, including another Vice President position at EA before moving to THQ. He’s a business guy but he also loves playing games, a trait amazingly not found in many industry heads. He’s only one of many corporate officers at the company but he was brought into THQ to take it in a radical new direction so I think he’s probably at the helm of many of their new changes. They’ve had some success with them but from a longer term financial point of view, it has not proven very lucrative. In the last couple of years, they’ve mostly lost money, slashed a bunch of talent and studios and their stock is sinking. One thing you can say about THQ is that they’re not afraid to get rid of baggage. If they see something as not working, they don’t turn it into a money pit, they cut their losses and move on. Being that nimble is critical in business today and they seem to understand that. Given that, I think it’s time for them to realise that Bilson’s experiment while a worthwhile attempt, has not worked out and it’s time for a change, either to his strategy or possibly to his entire position within THQ. I’m the first to admit that I’ve never worked in the video game industry and I’m not an expert on how that business should operate. However, speaking from the point of view of a hardcore gamer (the demographic Bilson’s title says he’s catering to) who also closely follows the business side of the issue, many of his initiatives were things I personally saw flaws in from the beginning and which ultimately ended in failure. Here’s a few examples of what I believe were missteps made on his watch:
- Turning away Respawn: After a very public falling out with Activision, the creators of the mind boggingly successful Call of Duty series parted ways with the mega publisher and started Respawn Entertainment, a new independent triple-A studio. They went shopping for publishers and talked to THQ as I’m sure they did everyone else. According to Danny Bilson himself, THQ had Respawn all but locked up to publish with them but in the end, the deal fell through because THQ refused to allow Respawn to retain the IP for their new project. He said “My responsibility to our stockholders and to my CEO and the company is to build an IP library” and due to that, THQ had to turn them away. Shortly after, Respawn signed with larger rival EA, who let them keep their IP. My jaw dropped when I first read this. Every publisher wants to own the IP if they can and a deal is significantly more valuable to them if they do. But this isn’t any new studio, it’s the creators of the biggest triple-A franchise there ever was. Unless many balls are dropped, their title is going to sell huge. It’s virtually a lock. Had THQ signed them and not owned the IP, they would still see a major slice of all those sales and made a mint to say the least. That would eventually have turned into a franchise and had they played their cards right, they could have ridden high on that franchise and eventually, probably purchased Respawn and ended up with the IP anyway. Instead, they let them go and got nothing, handing all those sales to a larger competitor. If EA thought it was worthwhile for their shareholders to let Respawn own their IP, why wasn’t it OK for THQ who has a lot more to gain? For that matter, why didn’t they care about owning Double Fine’s Costume Quest and Stacking or the new You Don’t Know Jack game? They were looking a cash cow right in the eye and said “Nah, if we can’t have it all, we don’t want any.”
- Homefront: I was really excited about this game. A modern day first person shooter with a story that wasn’t written for idiot dudebros who think Michael Bay films are high art. Though the team at Kaos Studios apparently crunched on Homefront for more than a year before release and THQ put a ton of marketing money behind it, it just wasn’t very good. The campaign was short (I finished it in a Saturday afternoon), the story was full of cookie cutter characters you couldn’t sympathise with, their attempts at meaningful imagery and plot points felt forced and contrived and while the multiplayer had promise, it was horribly balanced and went unsupported. The reviews were mixed (with the negative ones being really negative) and though it quickly sold more than 2 million units, it was well under expectations and barely a rounding error compared to Call of Duty’s 11+ million sales each year. While THQ was quick to say that the franchise will continue, it closed Kaos Studios shortly after launch and relocated development to its new Montreal studio whose startup is largely being funded by the Quebec government. It’s possible that more time could have made Homefront better or maybe they should have roped in other studios to help realise the vision. But in the end, they bet huge on a title that almost anyone in the games press or the buying public could have told them wasn’t worth the investment and lost big.
- MX vs. ATV Alive and the related experiment: To be fair, it was more CEO Brian Farrell that hyped this in the press than Danny Bilson so maybe it wasn’t his baby. MX vs. ATV was a racing series that had done well for THQ but had waned in recent years. To re-launch it, they proposed an experiment: Put the game out at $40 instead of $60 with limited content on the disc but have a ton of DLC options available that would allow people to customise the experience to their liking. The thought was that by lowering the cost of entry and betting the success on higher margin DLC purchases, they could end up making more money in the long run. I thought this was a really neat idea at the time but it ended up having its execution botched for a few reasons. Firstly, the game didn’t get a lot of marketing and what it did get failed to attack the fundamental problem in the gamer mindset which is that games which launch at a budget price are crap. For any experiment like this to work, it needs to be drilled into people’s heads that they’re not buying a $60 game but they are still buying a triple-A experience, just one built differently. This was not done so people saw a budget game and stayed away. Secondly, they didn’t built the triple-A experience I talked about. MX vs. ATV Alive launched at $40 and had $40 production values. I didn’t play it but I watched a lot of video of it and I think the results speak for themselves. You can’t say you’re experimenting with budget priced triple-A titles, sell it to triple-A consumers and then give them B grade stuff. Lastly, $40 was still too much. I understand that there’s a lot of fixed material, manufacturing and certification costs that come with retail games which doesn’t change no matter what price you charge. However, given the pithy options MX vs. ATV Alive shipped with, I think $30 would have been a more reasonable asking price and this sentiment was echoed in several reviews. It kind of ties into the second point but in a different way. If you are going to strip a game down to bare bones to allow people to choose their experience, you can’t make the entry point so high. I think this was a neat experiment that I would like to see tried again in a smarter way by either THQ or another publisher. However, rumour is the next generation of consoles will support free to play titles so the whole paradigm may change by then.
- Red Faction: Armageddon (i.e. Red Space): I’ve said in other places that I think 2009′s Red Faction: Guerilla is one of the best games of this generation. It was a semi open world game based around destroying stuff and it was a ton of fun. It also sold fairly well. When I heard a sequel was coming in Red Faction: Armageddon, I was thrilled. Then it came out and I found a title that was nothing like its awesome predecessor. While it retained some of the crazy environmental destruction, they turned the game into another linear corridor shooter with a wafer thin story, generic characters and in a very clear attempt to rip off rival EA’s successful Dead Space franchise, they introduced aliens to the mix, something unseen in Red Faction before. THQ once again backed this title in a big way, striking a TV movie deal with SyFy which eventually produced the unrelated Red Faction: Origins. I never saw the movie but it was apparently OK, though I don’t think many watched it and it clearly didn’t drive sales for the game. As with Homefront before it, the press opinion leading up to Armageddon was one of skeptical optimism and when it launched, it was largely met a response of “What did you do to Red Faction?!” and was a sales flop. My guess is that developer Volition didn’t want to take the great formula of Guerilla and break it. Given the clear attempts to ape other franchises, this title reeked of executive interference. With Bilson’s experience in writing television and movies (which I’m sure led to the SyFy deal), I’m kind of shocked he chose to take Red Faction in this direction and why in both the case of this and Homefront, he didn’t stop and realise that the narratives were simply not good and needed big improvements. Injecting aliens into the Red Faction universe wasn’t necessarily a bad idea but it was so poorly handled that it just looked bad. After the poor sales of Armageddon, THQ announced the franchise was being shelved indefinitely.
- Crappy downloadable tie-in games: One of Danny Bilson’s mission objectives when he was brought on to THQ was making their properties “transmedia”, basically meaning that every release should have other things tie into it to drive brand awareness and secondary revenue. That was the idea behind the Red Faction SyFy movie. It also morphed into the idea of releasing small downloadable titles on places like Xbox Live Arcade and PlayStation Network which were based in the universes of bigger triple-A titles that would follow soon after. I always thought this was kind of a weird idea but given how expensive PR is for publishers now, this may be a cheaper way to drive consumer engagement. The problem was, these titles had very little to do with their triple-A cohorts and were pretty terrible games. The first preceded the aforementioned Red Faction: Armageddon and was called Red Faction: Battlegrounds. Aside from taking place on Mars, this game had nothing whatsoever to do with the series. It was an arena vehicle combat game and a bad one at that. Ironically, while Red Faction: Guerilla did have vehicles and combat with them, Armageddon only had a couple of flight and mech segments so nothing portrayed in Battlegrounds related to the new game. The second title was Warhammer 40,000: Kill Team which was supposed to lead the release of Space Marine. This title was better that Red Faction: Battlegrounds but not by much. It was a co-op twin stick shooter that took place on an Ork ship the Space Marines were trying to invade. I actually think it’s kind of fun but again, it had nothing to do with Space Marine aside from taking place in the Warhammer 40,000 universe. The story (what there was) didn’t relate and it played completely differently. Both of these titles were overpriced and flopped, THQ Digital Studios Warrington who developed them both was closed and the initiative was scrapped, including the planned Saint’s Row: The Third tie-in. In fairness, THQ wasn’t the first or only publisher to try this model. EA did the same with Dead Space: Ignition and it also didn’t take but at least that game loosely tied into the fiction of the bigger titles. In this case, we got two titles designed to promote IPs that had almost nothing to do with them, except share the names and setting. I’m sure these were cheap titles to make but that’s money THQ could have spent promoting the bigger ones and in the end, was money pissed away.
So where have all these failed experiments left THQ? Well, they’re still kicking and likely will be for a while but they’re bleeding bad and the one bright spot that can save their finances this year is Saint’s Row: The Third, which based on buzz is poised to sell very well, though it also has its share of face palm inducing design choices
. Many speculate they are a prime takeover target. The continuing consolidation of publishers in the video game industry isn’t a good thing for consumers or innovation and the last thing I want to see is the number of competitors reduced even further. I think a willingness to experiment is important and I admire THQ for doing so, despite having a lot more to lose than their larger rivals. However, I think the decisions above were largely bad ones and since Danny Bilson has been the one talking him up, I assume they’re his. They can’t afford to make many more mistakes and continuing as they are now isn’t going to save them, especially with a newer and more expensive console generation approaching. I’m not sure if the solution is canning Bilson or shifting his responsibilities around but they need another shake up and soon. This is all just based on my observations and I don’t claim to have the answers but so far, it doesn’t appear Bilson does either. I hope THQ can get back in the fray but they need to make big changes and soon.