Power Button Podcast
Tip JarTHQ Ditching Kids And Turning Towards Core Audience
January 25, 2012
THQ has a reputation for acquiring licenses to properties aimed at children, producing a quick game based on them, and then raking in the profits. That strategy isn't working so well for the company these days, so a fresh news release from the company announces that the time has come to turn away from cranking out games for kids and will instead focus on the core audience. Here's part of the statement:
AGOURA HILLS, Calif.--(BUSINESS WIRE)--Jan. 25, 2012-- THQ Inc. (NASDAQ: THQI) announced its updated business strategy as the company exits traditional kids’ licensed video games and focuses on its core video game franchises and digital initiatives for the future. The company will continue to build its strong portfolio of core game franchises and align its resources to deliver games on both existing consoles and new and emerging platforms. The company intends to accelerate digital revenues by extending and supporting key console launches, and to create dedicated digital properties for emerging platforms.
As part of the alignment, THQ is in the process of exiting its relationships with kids’ licensed entertainment companies but will continue to sell certain previously released titles.
“THQ will be a more streamlined organization focused only on our strongest franchises,” said Brian Farrell, President and CEO, THQ. “The success of Saints Row®: The Third™ is an example of what our revised strategy and focus can achieve. We have now shipped 3.8 million units globally and are currently expecting to ship between five and six million units lifetime on this title. Additionally, our robust digital content offerings for this game have resulted in the highest digital revenue of any console title in our history.”
The company’s five internal studios are developing games aligned to several of THQ’s key franchises, including the upcoming launch of UFC® Undisputed™ 3 and Darksiders® II, as well as Company of Heroes, inSANE, Saints Row, Warhammer 40,000, and the new title from Patrice Désilets and his team. The company also continues to work with prominent external development talent on both existing and new franchises. THQ’s goal is to optimize its portfolio for the current generation of consoles and to establish new franchises on the next generation of game devices.
Part of this decision has to stem from the fact that THQ drastically overbet on its failed uDraw GameTablet peripheral and supported kid-centric software which is part of the reason that the company's stock price has lost nearly all of its value in the past year. While I can understand wagering heavily on uDraw for Wii (as a controller that allows kids to draw on a tablet as part games like Disney Princess: Enchanting Storybooks, Marvel Super Hero Squad: Comic Combat, The Penguins of Madagascar: Dr. Blowhole Returns – Again!, and SpongeBob SquigglePants is aimed right at the Wii's demographic these days), producing mass quantities of uDraw tablets and software for the older-skewing Sony PlayStation 3 and Microsoft Xbox 360 was a recipe for disaster. I can't imagine why THQ's management thought that was a good idea. Neither can former THQ employees who are lashing out at the aforementioned CEO Brian Farrell and other members of management in an open letter sent to the Board of Directors and the press. Joystiq has reprinted the entire letter, but here's the most scathing part:
This Board has allowed the Brian Farrell, the CEO, the ongoing ability to take a cash-rich profitable company and drive it from a $30 share price down to around $.70 without acting despite numerous mistakes that even for those lacking business training, could see were errors. Even without glaring mistakes how can the same CEO stay in charge after a 99% share price loss? Aside from the board, who is responsible for the current situation and who is accountable for the current and future job losses at the company? When you ask the recently departed who are a good source of information, you get the same answers. This uDraw failure is the largest and most recent one in a string of them that were hushed over and hidden. The answer aside from the Board is the current executive team that allowed this uDraw implosion to happen.
Brian Farrell, CEO with a 2011 salary of $1,289,558, for a lack of business intelligence or fiscal accountability. A vocal inside group pointed out the mistake of 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. It is passed time for him to go. We are wondering what is taking so long for you to act. We have been wondering this same question for a long time.
THQ definitely needs a management shake-up after all of this. Every company bets on a dud product now and then, but THQ's top people seems to have developed a knack for making poor decision after poor decision and then compounding the situation with additional poor decisions. I just hope that whomever takes the reins next keeps Saints Row a priority. We need fewer games pushing uDraw and more games about breaking the law.