April 7, 2008
THQ says it won’t be left behind
The video game publisher THQ must be feeling a little like WALL.E, the robot title character in the next Pixar game it plans to release in sync with the animated movie this June.
WALL.E is left behind on earth to clear up the trash after all the humans have left, just as THQ faces a solitary future after the galactic mergers of Activision with Vivendi and potentially Electronic Arts with Take-Two.
THQ would be left among the rubble in the US as the only other significant third-party publisher (THQ’s $1.5bn market capitalisation is six times that of the persistently underperforming Midway Games.)
EA has argued that Take-Two ($1.9bn market cap) is sub-scale and unable to compete effectively in a world where truly global marketing and publishing operations are needed to maximise the revenues from hit games.
By that measure, THQ is sub-scale, but it’s an argument that Brian Farrell, THQ’s chief executive, tried to refute when I met him in San Francisco last week.
“The truth of the matter is that we do have scale,” he said.
“We have 2,000 people in product development on three continents, we are in every market, we put out 147 Skus [versions] of Ratatouille.”
“There are disadvantages to being overly large as well, we can can say: ‘Do you want to be number 30 in a bigger publisher’s roster or be in our top 10 - it’s a big argument with licensors.”
Mr Farrell says THQ and France’s Ubisoft would be left in the $1bn-$2bn market-cap range if both mergers take place and everyone else would be “sub-scale”.
THQ has hit a rough patch in the past few months. In January, it said games, including Stuntman and Ratatouille had underperformed, other games were being cancelled and its Concrete Games studio was being shut down.
“We have a very disciplined review process, [Concrete Games] wasn’t making progress and we had to make a tough call. It’s probably the first studio we’ve closed, but it’s all about talent and the management of that talent,” said Mr Farrell.
He has positioned two experienced executives to monitor production values and processes and is upbeat about the new games that reviewers were let loose on at a San Francisco event.
I had fun with Red Faction:Guerrilla, a game that allows you to demolish a building piece by piece with a hammer, and de Blob, a Nintendo Wii game where you can literally paint the town red. Saints Row 2, due in August, also looked impressive and Pixar’s WALL.E may well sell better than its Ratatouille. Making an engaging game about a rat that likes cooking was a tough one, Mr Farrell admitted.
