THQ had a very rough fiscal year, losing $431 million as revenues slipped to $830 million. The publisher had to cut almost 25% of its global workforce and institute cost cutting measures across the board. Now the company is extremely focused on turning its business around and it believes it has the IP and talent to do so. Earlier this year at the Game Developers Conference, IndustryGamers curiously observed aspiring developers lining up at THQ's booth in the career pavillion. It's not exactly the site we expected to see considering THQ's financial woes.
Danny Bilson (yes, the same guy who made the Wii comments), who spent five years at EA working on franchises like Harry Potter, James Bond and Medal of Honor, was brought to THQ to help revitalize the publisher and overhaul its publishing strategy. Responding to our question about hiring in spite of economic difficulties, he explained to us his premise for the "New THQ."
"We've downsized, but what we downsized down to are really big core titles and really strong family titles. Now, I'm not going to pretend it was just reducing games that weren't as good; we shut some very good studios, some AAA studios even, but we had to reduce the portfolio to a manageable level," he noted. "I'm in production, I'm not in publishing, and we had to get our production budget down to make the company profitable this year, but at the same time, we still have a lot of games in production, and they're all really strong. I've only been at THQ for one year, and I was brought in with a mandate to essentially raise the bar in quality – a program they had started maybe a year to eighteen months before I got there, because you started to see the results of it this Fall with seven games in a row hitting 80 or above on Metacritic. That was all a result of what's been going on for a couple of years.
"You're going to see and you have seen a number of dates slip in games. I would call that the transition from 'old THQ' to 'new THQ.' New THQ says to compete in this environment, you can only compete at the highest level – at the highest level in big titles, where we're spending a lot of money. So what you saw these kids lining up for [potential work with us], I'd like to think and I believe... are some unbelievable games. I promise that our top stuff is going to be head to head competitive with everybody else's top stuff. Because we've shut a bunch of studios... I can use the word 'focus' but I can also use the words 'financial resource.' We didn't go across the board and take everything down; we actually are fully funding this stuff to be competitive with a very high level of quality, and we had to kill stuff to do that. We had to kill stuff so that others could live in this world.
Darksiders is one of THQ's big bets on new IP, and it's looking pretty cool
"I also believe in this environment that you can only succeed with great games. I think the middling games are just going to go away and those studios are going to get wiped out, so we can't be in that business either. We're either going to make our family and kids stuff on big licenses like we always have in true quality, because we're not doing anything that's not great, at least on my watch, but they're going to be lower budgeted to match the audience and the returns we're getting and seeing in the family and kids world, but on the other end of the spectrum, on the high end, we're going head to head with everybody else. And we're spending the money and we're taking the time to do it. So all the slips you hear of are how these games are coming out of the 80s and hopefully we've got one that's going to hit a 90 next year. That doesn't happen with magic; it happens with more money and more time and so we're investing in that.
"So [regarding] the guys you saw lining up, the studios that are open and are increasing head count, they're really great studios that have really great products. In spinning out the high, AAA quality we had with Big Huge Studios, that must mean we have something of equal value, at least, that we kept... There's a lot of stuff we don't have anymore, which is a lot of development resources and some games, but a lot of them were very early, like years away, so we only kept one game that's years away that's not announced yet, because we just had to focus on the present. We're covered for the next couple of years in the production pipeline."
Bilson also commented that with the exception of big licenses like UFC or WWE, THQ's major investments will be in original IP. "If you look at the money that we're spending, the lion's sum of our investment is in original IP and those fighting licenses, and then we have a bunch of stuff across the traditionals with Nickelodeon, Pixar, and that stuff," he said. "But frankly if you look around, they aren't returning the kind of numbers they were. Now, the way we're dealing with that is to not attack them so aggressively financially on the production side, because what are the expectations of that audience? And how many units can we sell on a movie game in this world?"
He continued, "My whole agenda and job is to pick up where my predecessors left off on quality and drive it for the company hard. Everybody's on board... everything is under the umbrella of quality. So when you see a studio like Vigil and what they're making, the creative is spectacular. Darksiders will ship this year and it's a spectacular game, it really is. We had to even shut stuff that was great just to make the finances work, so that means the ones we kept better be really great. So whatever the perception was of old THQ, I had it too as a consumer -- kids licenses, kinda junky with lame packaging, all that stuff – [that's] over! [We're now] focus driven, targeted and we've got a couple of new maniacs in there like me."
Bilson went on to talk about his new "transmedia" strategy that he borrowed in part from the film business. He also explained that THQ simply will not allow for waste anymore and will be extremely careful about which projects to greenlight.
"[My strategy] has to do with what I call transmedia IPs. All of the original stuff we're building, and especially the stuff I've started that's unannounced, is all designed to inspire a movie, games or toys," he stated. " Everybody talks about this... if you go back to 1997, you'll find my name all over transmedia, or Henry Jenkins at MIT. Because I came from linear media and I've always been a game freak, I've always wanted to find the way to make it work. But I can tell you that I have five originals... and every single one of them I'm going to place in film production. That doesn't mean they'll be made, but step one is to get them into film development, and that supports game development because there's another party invested, and ultimately I'm trying to flip the whole model on movie games. I'm trying to do it so that when we start the game – and the game is usually extended or parallel fiction, not the same as the movie story – they start building up the brand and I tell them when we're going to ship and this is our pitch and what our marketing spend is going to be two and a half years from now. They have plenty of time to license the property from us, become a partner, go make the movie, make a great movie, but I'm on the path to make a quality game, not a movie game. ... So what I'm really doing is launching an original IP with the biggest commercial you've ever had in your life. That's what I'm really doing ,and that's what I tell those guys. I say, 'Your movie for me is a commercial. It's to move my game.' And from then as a partnership, we can get to comics and start a comic the year before, just to build the IP and zeitgeist a little bit – no big numbers, it's just to start building it.
"... So that's sort of the transmedia strategy that is game first, not movie first. It's start the IP, but the people who work on my IPs are the same screenwriters that are selling movies to them, or novelists or artists, so we tend to bring in screenwriters or production designers from film into the teams to inspire vision, and then we let the teams drive and we support them to get to a higher level of creative quality.
"The other thing I want to talk about in quality is a process. We have a very rigorous system now at THQ that was not in existence before. It starts with concept, prototyping, schedule... a team will go eight months before they have an official green light, so we have long pre-productions, many check ins... And we stop games and we will not have $15 million dollar write offs at THQ anymore, because games will get stopped in the early R&D phase."
He continued, "On the marketing side, I want to mitigate risk by making it not feel original when it hits by having that transmedia play. On the production side, whether it's an internal or external studio, we have a whole different studio system now that's been in place since October when me and my partners took over. And there's a lot of central support for the studios, much more than there was before, but there are many more checks and balances in production where we're not going to put a junky game in a box... but better than that, we're going to stop them before we're writing off a bunch of money that's killing us. That kind of waste is unacceptable to me, unacceptable. It's not in my genetics to write off money and not have something to show for it, so we have processes to avoid that. And the one thing I'm waiting for – and it might take another year – is when you guys stop saying there's product quality risk at THQ. I will start saying to you guys, seven out of eight have been above 80 in a row and we're not going to back off, because we have to recover from perception from the past, but at a certain point, you're going to have to go, 'Holy sh*t this is a quality product development department that's shipping quality games.'"
