Putting the toys away
As you may have heard, THQ is no more. The once giant publisher has finally completed its long, merciless road to dissolution through a piecemeal auction that saw the majority of its remaining studios and IPs fall into the hands of its former competitors. And while the writing had been on the wall for THQ for many months prior, seeing a former pillar of the industry disappear for good can still be depressing--especially when many good peoples jobs disappear along with it.
So lets pour one out for THQ, finding out just how it came to flourish and flounder in the process. Here is the history of a company thats dead, but not forgotten.
Toy Head-Quarters starts off in Neverland
The beginnings of THQ technically trace back to early 1990, when Jack Friedman founded the company known as Toy Head-Quarters, or T*HQ. Friedman was experienced in gaming at the time, having co-founded the former toy and video game publisher LJN, but formed T*HQ as a toy company with his initial investments. A few months after establishing the company, though, Friedman steered T*HQ into the world of gaming by acquiring the video game segment of Broderbund, a video game company best known today as the group behind Jordan Mechners original Prince of Persia game.
In 1991, T*HQ released the first of its many eventual titles: Peter Pan and the Pirates. Yeah, not exactly memorable. The side-scroller was based off of the animated movie of the same name, and kicked off a string of licensed titles that T*HQ would rely on over the next few years. T*HQ would merge with the Trinity Acquisition Corporation, a publicly-traded company that had been raising money without a real M.O. at the time, by the end of the year. It was growing.
Its all about the licenses, baby
T*HQs earliest hits in both the toy and game market were based on existing IPs. Friedmans previous company, LJN, was known for its catalogue of licensed games--ranging from the great WWF RAW to the horrid Friday the 13th--so the CEOs strategy wasnt exactly untested at the time. T*HQs plan was to gobble up licenses that would appeal to young audiences and turn them around into toys and games as soon as possible to assure relevancy. Products were made on the cheap and sold through big-name retailers so that a potential failure would not devastate the company.
This strategy wasnt exactly unique to T*HQ, but for the most part, it worked. Like its competitors, T*HQ benefited from being licensed by Nintendo to sell and market its games for the NES and Game Boy. By the end of its first year of game publishing it had hit $33 million in sales. This Toy Headquarters seemed shrewd and sharp; its blend of video games, board games, and action figures (Vanilla Ice! Kevin McAllister!) wasn't original, but it was doing well enough. Things were looking up.
Things begin to slide
Then they werent. T*HQ continued its rapid licensing strategy into 1992, getting licensed by Sega to publish for its systems alongside Nintendos, although most of T*HQs efforts would stay with the Big N. It even acquired its first developer, Black Pearl Software, later in the year. Games based on Waynes World, Ren and Stimpy, Swamp Thing, and other IPs were released, and sales figures continued to grow. This was good.
But creating lots of games requires lots of money. The cost of producing all these products and herding all these licenses grew alongside the sales of the games themselves. The companys greater emphasis on Super Nintendo games also faltered as the Sega Genesis proved the more popular console in the US. Profits began to shrink, and eventually turned into multi-million dollar losses. T*HQ attempted to salvage its dough by selling stock, shaving the salary of its executives, and even dropping production of its regular toys to focus squarely on games, but more drastic changes were needed. So in 1995, founder Jack Friedman stepped down from his position as CEO, and a new leader took T*HQs reigns.
The Brian Farrell reign begins
That leader was chief financial officer Brian Farrell, a man who would serve at the top of THQ until its ultimate demise. He almost immediately made changes to the companys structure, firing half of T*HQs then 60-man staff while simultaneously ramping up the speed and quantity of game development. Harsh.
But Farrell, who had taken control right around the start of the fifth generation of consoles, had a new direction in mind. While the industry collectively fawned over the power of the Sony PlayStation, Sega Saturn, and Nintendo 64, T*HQ would instead cater to the many gamers who stuck with last-gen systems. It fired off a veritable army of games in 1995 and 1996 for older consoles and struck up deals with more established licensors to produce them on the cheap. Games like The Mask (yes, the Jim Carrey one), Mohawk and Headphone Jack, Time Killers, and others werent ever going to set the world on fire, but they cost under $15, which was good enough for many SNES and Genesis holdovers. The low-risk onslaught of titles quickly put T*HQ back in the black. It was then time to jump into the next generation.
T*HQ becomes THQ and enters the 64-bit era
THQ was almost completely into the 32/64-bit era by 1997. It had dropped that weird asterisk/dot thingy from its name, acquired a few new companies as part of its recovery efforts, and brought its fast and furious licensed games strategy to the PlayStation, Game Boy, PC, Saturn, and Nintendo 64. A few of these games were alright, like the PS1 adaptation of Ghost in the Shell, but for the most part, THQ wasnt doing any favors for the gaming communitys perception of licensed games. And as for the other efforts, we doubt many of you fondly remember titles like Vs., Bravo Air Race, or K-1: The Arena Fighters.
Other games based on popular films (Hercules, The Lost World: Jurassic Park), and actual sports (the Brunswick Circuit Pro Bowling series, the Bass Masters fishing games, and later, the Championship Motocross series) also made their expected money, but werent doing much beyond that. But thankfully, there was one type of game THQ would come to revolutionize in the late 90s--a genre that it would stay with until the bitter end.
The wrestling wars layeth the smackdown (and bring in millions)...
That genre, of course, was wrestling. THQ had secured a crucial licensing agreement with Ted Turners World Championship Wrestling, and in 1997 released two games starring Hulk Hogan, Sting, and the gang: WCW vs. the World for the PlayStation, and WCW vs. nWo: World Tour for the Nintendo 64. Both developed by the AKI Corporation, it was the latter of these two that took the gaming world by storm--and raked in tens of millions of dollars for THQ.
Its innovative grappling system became the genres gold standard, and its roster of WCW stars took full advantage of the wrestling craze of the time. It was also a near-clone of its Japanese counterpart, Virtual Pro Wrestling 64, but hey, it was still fun.
...but EA smelled what THQ was cooking
World Tours sequel, WCW/nWo Revenge, improved nearly everything about the original, and became the highest-selling non-Nintendo game ever released for the Nintendo 64. More wrestlers followed, but unfortunately for THQ, its success caught the eyes of those dastardly folks at Electronic Arts.
EA soon scooped up the WCW license from Farrell and company, but THQ countered by getting another one of its own from WCWs chief rival, the World Wrestling Federation. That snag eventually resulted in classics like WWF No Mercy and the WWF SmackDown! series, which won the hearts and wallets of millions of gamers for THQ. The WWF wound up buying the WCW in 2001, and THQ would go on to make hits based on Vince McMahons clan each and every year until it folded.
THQ stretches into the new millennium
THQ was riding high into the new millennium. Its wrestling games were body slamming successes, while titles based on other high-profile IPs like the Power Rangers and Rugrats brought the company loads of revenue from the kids market. The company was still churning out its annual slate of mostlyalright licensed games, but their intended audiences kept gobbling them up, and both sides were more or less content. With brands like Disney, Nickelodeon, MTV, Pixar, and Star Wars slapped on their products, at least some money was always guaranteed to roll in.
It was around this time that THQ began to expand its horizons a little bit further. The late 90s and early 00s saw the publisher acquire a variety of existing game companies, most notably Volition, which was then developer of the FreeSpace series and would later head up the Red Faction and Saints Row franchises. It expanded its operations into France and Australia, and even changed its logo into a more forward-looking design (literally). The early bits of the sixth generation of consoles brought a brief dip in profits, but the companys licensed games barrage soon brought it back up to speed.
THQ reaches its highest highs...
THQs dark days were only a few years away by the mid-00s, but before everything exploded, the company managed to reach some relatively great highs. Its strengths by and large remained its WWE and kids games offerings. The company went bonkers with the latter in particular. Games based on Disney, Nickelodeon, and other kiddie franchises were released by the dozens, and stayed big with the young ones into the seventh generation of consoles.
At the time, the lesson was simple: put SpongeBob/any Pixar franchise on a game, [???], and profit. Sure, gamers might look down on tie-ins to kids shows and animated movies, but as long as the dough kept rolling in there was no reason to stop.
...and mature, original IPs began to thrive
But perhaps more notable was the fact that THQ had managed to diversify and mature its games portfolio around this time too. The developers it had acquired and/or worked with over the years were the companys real all-stars. Volitions Red Faction and Saints Row games largely succeeded. Blue Tongue produced both licensed kids games and the charming de Blob series for the Wii. Pandemic lent its hand for the first two Destroy All Humans! titles, and the Full Spectrum Warrior series. Rainbow put out the typically reliable MX vs. ATV series of racing games. Later on, Vigil would contribute the underappreciated Darksiders; ditto with 4A Games and Metro 2033. Relic came to be known as one of the industrys premier developers for its work on the Dawn of War (itself based on the Warhammer 40K license) and Company of Heroes titles. (Also, 50 Cent: Blood on the Sand. That is all.)
These games didnt always have spectacular sales or critical reception, but they lent a certain sense of legitimacy to a company long known for relying on existing ideas for success. THQ had something for gamers of all kinds by the later part of the 2000s, and hit its highest revenues and profits ever in 2007.
Things begin to slide, part deux
Then the bad stuff started. THQs revenues and profits began their sharp, unending decline in 2008. In truth, the companys great fall happened for a number of reasons. The most obvious is the Great Recession of the time; it was a disaster in the late 00s, and its largely a disaster now. The way it slammed consumers across the globe and devalued the US dollar certainly didnt do any favors for the gaming industry--THQ included.
But plenty of game companies have made it through those rough times well enough. The thing that unfortunately caused THQ to stand out from the bunch was simple: bad decision making. Misguided ideas seemed to permeate all aspects of the companys management over those last few years, so lets take a brief look back at a few of the more notable ones.
Cause of death I: THQ refused to let the kids grow up
First among these bad ideas was the companys elongated reliance on the licensed childrens games market. What little reputation kiddie games had was basically destroyed by the waves of terrible titles released over this past generation of consoles. More significant, though, was the concurrent rise of modern smartphones and tablets. Mobile hasnt killed console gaming, as some would suggest, but that doesnt mean it hasnt killed parts of it. Android and iOS devices today come jam packed with thousands of cheap (or free) games, most of which are tailor made for childrens fickle attention spans.
The fact of the matter is that a free download of Angry Birds simply does it for many younglings. And it certainly does it for the parents who dont have to shell out $40-60 for the kind of game that has a good chance of being an inferior product. Kids games were always an enormous part of THQs business, which likely caused the company to hang on for just a little longer. By the time it shuttered its final childrens game studio in 2011 in a last ditch effort to instead focus on the core, the damage was just too much to repair.
Cause of death II: THQ overestimated its worth
This is an admittedly broad explanation, but the core idea that seemed to be behind many of THQs bad decisions in the late '00s was that it thought it was bigger than it was. It had reached some outstanding high points, without a doubt, but nobody really believed (nor should have believed) that THQ would be on the level of Activision, Ubisoft, or EA in the near future. Well, nobody besides THQ.
Kaos Studios 2011 Homefront was one of the companys highest-profile failures. From its start, THQ tried hyping it to the moon, saying that the folks who made the less-than-stellar Frontlines: Fuel of War would now be making a competitor to Call of Duty. Confidence is all well and good, but the problem was that THQ (and by extension, Kaos) never had any real vision for the game besides making it as good as COD. THQ thought it could make it happen by just throwing more money and man hours at it. So when Homefront inevitably flopped, losing the company tens of millions of dollars, the only people that couldve been surprised were the ones that worked at THQ. Thats not a good sign.
Cause of death III: No, seriously, THQ really overestimated its worth
The tragic trial of Homefront wasnt the only instance in which THQ overvalued itself during its final years. Just look at how it treated its WWE and UFC franchises, whose sales underwhelmed despite the fact that they were two of the companys best sellers. The thing is, being a best seller for THQ never meant being an absolute world beater. Last years WWE 13 sold just under 2 million copies, while UFC Undisputed 3--a license which at first did well, and then dropped off--has done worse.
Thats just not going to cut it in todays blockbuster-driven market. Now, thats not to say selling in the 2-3 million range is chump change, but the amount of money THQ paid for the licenses to these and other franchises was often pretty high. Too high, it turned out, to justify games based on licenses that just arent enormously popular, relatively speaking.
Cause of death IV: You dont understand how much THQ overestimated its worth
If that doesnt get the point across, then look at how THQ handled the fabled Warhammer 40,000 MMO, Dark Millennium Online. In 2007, the company put Vigil Games on an IP that, again, wasnt exactly worth the price of admission. Talented people dwelled on it for years, and THQ eventually slashed the MMO aspect from it last March. The game was officially cancelled this year, and the money spent on it was labeled massive wasted capital.
The same thing goes for Red Faction, a once beloved series that was annihilated in 2011 by an unpopular sequel (Red Faction: Armageddon), and in turn completely backfired despite THQs new core-only mentality. Just as was the case with Homefront, THQ threw too much money at Red Faction: Armageddons marketing in hopes of buying word-of-mouth success, even producing a SyFy movie in order to hype the game. The list of unfortunate decisions goes on and on.
Cause of death V: the uDraw
None of those unfortunate decisions will go down in greater infamy than THQs uDraw GameTablet. Originally released for the Wii in 2010, the uDraw was, well, a thing players could draw on. It let players doodle and sketch their way through family-friendly games and saw some modest success on its initial run, but when THQ attempted to bring uDraw over to the PlayStation 3 and Xbox 360 a year later, the wheels started to come off for good. And by that, we mean that nobody bought it.
THQ dumped tens of millions of dollars into producing and manufacturing millions of non-Wii uDraws, only to be met with the predictable cold shoulder from PS3 and 360 players. It was yet another case of blind overconfidence. When the dust had settled, THQ was left with a whopping 1.4 million unsold uDraw units, which were good for a total revenue loss of about $100 million. Whatever chance the company had at a full rebound was likely killed then and there.
Developers start to close
These bad decisions, combined with the evolving gaming landscape, caused THQ to slowly and painfully dissolve from 2008 to the present day. Over the span of those 5+ years, the company closed, sold, or lost over 20 (20!) separate studios, from Kaos to Blue Tongue to THQ Digital Warrington to Big Huge Games (whose luck didnt get any better).
The Red Faction and MX vs. ATV series were placed on hiatus. Its mobile and wireless division was sold off in 2011, and the UFC license was lost to its longtime rival EA (who else?) in 2012. Intriguing upcoming titles like Devils Third and the Guillermo del Toro-directed inSANE had to be let go, while flagships like Metro: Last Light and South Park: The Stick of Truth were delayed across the board. Hundreds of jobs were lost over the period, and a net loss of almost $240 million was reported for the fiscal year ending March 2012.
Things fall apart
The aforementioned shift to only publishing core IP titles was a matter of too little, too late. Games like Saints Row: The Third, Darksiders II, Company of Heroes and Metro 2033 proved that THQ could produce excellent hardcore offerings, but they were attached to a name that had built itself on decades of subpar licensed and kids games. Some of them sold well, all things considered, but none could really ever be the runaway blockbuster THQ sorely needed.
It had to scale back and change direction much sooner than it eventually did. Naughty Dog co-founder Jason Rubin was brought in as the companys new President in 2012, and last-ditch efforts like the THQ Humble Bundle spurred some final hurrahs, but the writing was on the wall in permanent ink. By the end of 2012, THQ had defaulted on a $50 million loan from banking company Wells Fargo, was delisted by Nasdaq, and filed for Chapter 11 bankruptcy. It was the end.
The assets are acquired
Which brings us to today, and the massive auction that started this whole journey through THQs history. Rubin and company originally wanted the company to be sold as a whole, but creditors refused, and THQs assets were sold off one by one--laying off even more employees in the process.
Now, Volition and the Metro franchises belong to Koch Media. Relic is a part of Sega. THQ Montreal (and just-acquired Assassins Creed creator Patrice Dsilets) works for Ubisoft. Crytek owns Homefront. Take-Two is in charge of Turtle Rock Studios Evolve project. The remains of Vigil are now Crytek USA. Destroy All Humans, Darksiders, de Blob, and THQ itself belongs to no one. A former gaming giant took too many hits, made too many poor decisions, and suffered from too much bad luck in too short of a time period. Today, it has been reduced to memory.
Miss THQ already?
Sucks, doesnt it? But lets not dwell on the bad here. What were your favorite THQ games? Did you spend as much time piledriving dudes in WWF No Mercy as we did? Do you think youll miss the company now that its gone? And what do you think of the results of last months auction? Let us know in the comments.
And if youre in the mood for more THQ-related features, be sure to have a look at our list of Seven developers we want to finish Insane with Guiilermo Del Toro and our not-so-Nostradamus-like pre-auction thoughts on What publishers should buy THQs properties.