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THQ Details Job Cuts, New Plans Following 'Very Tough Year'
THQ Details Job Cuts, New Plans Following 'Very Tough Year'
May 7, 2008 | By Brandon Boyer

May 7, 2008 | By Brandon Boyer
More: Console/PC

In an analyst call following its financial results, which saw the publisher drop to a yearly loss, THQ president and CEO Brian Farrell outlined its company-wide plans to restore profitability.

These include a new greenlight process, testing the waters of microtransaction supported free to play games, and layoffs of some 200 employees -- though the company plans to grow its headcount by year-end.

Farrell said in the call that its performance was the "first time in many years" the company did not deliver profit, and noted a number of the challenges THQ faced in 2007.

THQ's 'Very Tough Year'

Aside from a few of its PS3 and 360 releases, particularly Juiced, Stuntman and Conan, being "simply not competitive" and showing "insufficient game quality," Farrell said the year showed the "most crowded market for kids in recent memory," particularly from Nintendo's first party output and music-related games.

THQ also spent too heavily to market next-gen titles Juiced and Stuntman, said Farrell, and made investments in its studio system that didn't pan out. To rectify the situation, Farrell said the company was focusing on its three new initiatives to turn the company around.

Key Changes

The first of these was to prepare a more competitive slate of titles, as outlined in its financial results. The second was to bring in new management talent to product development, along with a four stage greenlight process that would not let games through until they met key competitive technological and gameplay feature benchmarks.

Finally, new CFO Colin Slade explained that THQ would be realigning its cost structure along four key elements, notably a company wide plan to reduce infrastructure.

In addition, Slade promised the company would be realigning its resources toward more strategic franchises, instituting a new company-wide operating budget, and making sure its product development and marketing dollars were focused more efficiently on its most competitive titles.

Reducing, Growing Headcount

Along with these plans, Farrell said that overall headcount across its various studios around the world would be reduced by 200 staff members, those which Farrell said possessed more "last gen" skill sets focused on platforms like the PS2.

In light of this, though, the executives said that by year end, the company planned to increase its overall headcount from around 2400 at the end of last quarter to just under 2700.

The ramping up at THQ would occur, according to Farrell, around staff in its unspecified "key studios" that are working on "key products" for next-gen platforms.

Future Free To Play

Finally, Farrell was optimistic about its first foray into new revenue streams with the upcoming Asian launch of Company Of Heroes Online (pictured), a co-production of its Relic studio and China's Shanda, which will be free to play but feature paid microtransaction downloads.

Farrell wouldn't say whether the game would be launched in the West any time soon, but said that THQ did "have those rights" and was investigating potential markets, and added that the company was looking into future products of that nature as well.

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Steffen Gutzeit
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"along with a four stage greenlight process that would not let games through until they met key competitive technological and gameplay feature benchmarks."

This one I actually don't understand. Does not almost all publishers push their development studios to finish their games, deliver the gold version and sell it as soon as possible to produce some revenue?

So if it seems to be the common solution in the branch, why would it help THQ to get out of a financial crisis?

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Don’t be a “last gen” thinker here. Firstly, publishers don’t only put to street (that is to release) content developed by internal studios, in “some” cases content published comes from independent studios either as original/new IP or work for hire capacity, so regulating through a better green light process structure is in my opinion a good thing in the long run! God knows there is far too much crap being green lit these days, and far too often good, original content is being laid to rest as a result of money centric or sequel driven eval processes, which in most cases end up being BS titles anyway. How many times have we seen content refused by publisher A because the P&L or ROI says “NO” only to be published by publisher B and the title is a cracker! I say, if more stringent well formulated green light processes end up regulating the amount of crap being released then in the long run it is better for the industry as a whole from the top down!

So in a nutshell, it means that currently there are 4 titles that drive the fiscal year and offset the losses incurred by the crap that magically made the grade, so the big idea is to have less crap titles in the release lineup for those 4 winners to offset. Note better evaluation and green light processes don’t imply that the number of fiscal year winners will increase, but the aim most likely is to reduce the number of losers?