THQ has decided to close down three of their studios. According to a report by GI.biz (registration required), the company is shuttering both of its Australian studios as well as a development team in Phoenix, AZ. The closures will leave 200 people out of work.
THQ CEO Brian Farrell commented regarding the company’s renewed focus:
“With this realignment, we are narrowing our focus to high-quality owned IP with broad appeal that can be leveraged across multiple platforms, and to work with the best talent in the industry… by right-sizing our internal development capacities for our console portfolio, our five internal studios are focused on delivering high-quality games with talented teams driving the execution of those titles to market.”
In addition, the company will no longer develop their MX vs. ATV franchise. This is the second major franchise that’s been axed by the company in a month, with Red Faction also being discontinued after selling well below expectations.
These moves continue the downsizing that THQ began in June with Kaos and Digital Warrington. The company is looking to release Volition-developed Saints Row the Third on November 15th.
Analysis: This is what you get when you try to hang with the big boys without the guns to do it. THQ made a big deal a couple of years ago in saying, “We’re a AAA” developer.” Too bad that, to be a AAA developer, you have to have both major franchises and the ability to create new IPs. Basically, THQ is talking the talk (lots of interviews, pre-owned killing initiatives, controversy regarding Saints Row), but they’re not walking the walk.
I’m not even sure why they bothered thinking AAA. Looking at their trade price on NASDAQ—a flawed premise, but good for comparison’s sake—THQI is currently trading at 1.86 with a $128.1m market cap as of 12:36PM EST today, which is down from a one-month peak of $3.48. They took a bath after their quarterly report came out, but even disregarding this, that’s out of line with the companies they’re trying to compete directly with, such as Electronic Arts ($17.67, $5.91bn), Take-Two ($10.75 and dropping hard today with a $943m cap), and Activision ($10.62, but a $12.5bn cap). The most comparable company to them is Majesco Entertainment ($1.79, $73.8m). In short, they don’t stand a chance against the EAs and Activisions of the industry.
Moves like this are due to poor leadership who tried punching up in weight when they didn’t have the resources. Just saying you’re a top-tier publisher doesn’t make you one, and considering THQ’s library and history, their trying to shift gears seems to have been a mistake. As a result, we’re going to be stuck with only a few main franchises—Saints Row, Warhammer 40,000, WWE—that are going to be milked, and anything that doesn’t guarantee big numbers is going to get shafted.
What is more worrying for those concerned about the global games market is that Australia is taking an all-out ass-kicking lately. Between this, other studio closures, and the Team Bondi disaster, it’s not a good time to be working in this industry in Australia.