Of all the results of THQ's recent auction, perhaps the most unexpected was Germany's Koch Media stepping in to snatch up some of THQ's biggest assets: Saints Row and its developer Volition, and the rights to the promising Metro series.
Dr. Klemens Kundratitz, CEO of Koch, and his management team took a crash course in the Chapter 11 process and came out the other side as a more formidable player in the triple-A game space, with Saints Row 4 and Metro: Last Light in development.
And despite the threats posed against that market -- such as shrinking consumer spend at game retail and intense competition from big publishers -- he's confident that quality and strong brands will always have an audience.
So after THQ declared bankruptcy, how exactly did all of this unravel?
Kundratitz: Our initial thought was, "My God." Our second thought was, "Maybe there are opportunities that come along with this." We immediately indicated our interesting in the Chapter 11 situation, in having a look at assets. They gave us the opportunity, like any other interested party, to check out the assets, do the due diligence, and formulate our plans.
Did you try bidding on anything else aside from Volition and Metro?
No, we did not. We only bid for those two assets.
You were bidding against other people. Did you almost lose it at any point? What kind of drama was involved there?
[laughs] One thing I think has to be said is that we are not people who do this all the time, so it was a very, very interesting week, full of adrenaline and twists and turns that nobody expected. We started into this adventure with no idea what the degree of probability would be to come out with anything.
But we felt it was worth throwing our hat in the ring because we had a very solid understanding of the product, and we knew the financial background, and in a very short space of time to make a decision. That was one of the more important elements of this; that everybody found it challenging to do the due diligence and come to a position to bid in this auction. We're an independent company, so we can make quick decisions and respond to new opportunities. That may have given us an advantage to some extent.
We were challenged on both assets. On Volition and Saints Row, we were in the final round of bidding with a small consortium of publishers against Clearlake. After the final bid amounts came out, Clearlake decided not to continue their bidding. The final competitor was Clearlake, in that regard.
In the case of Metro, it was Ubisoft that was bidding against us in the first round of the piecemeal bidders. We started out at $4.5 million, and ended at $5.4 million after a few rounds of bidding. In the second round, we bid against Clearlake, so it went higher than $5.4 million at the end [ending at $5.9 million].
With Volition, Saints Row and Metro, what is it about those that made you think 'I need to have those'?
It wasn't black and white -- it wasn't that there was nothing else that was of interest. We just had to make a decision for ourselves, as to where we should place our emphasis, because we were not willing to bid for the entire company, or the majority of these assets. And we had to consider who would be interested in the other assets. The outcome of the auction has been to the favor of the piecemeal bidders.
Taking into account all of the piecemeal bidders, the final total amount for the assets as substantially higher than Clearlake had bid for the entire company.
For us, Saints Row and Volition are the crown jewels of THQ. We believe that this is an IP which has shown over three products a constant increase in popularity. We believe there is much more upward potential. And we believe that the studio is made up of enormously talented, creative people. We did due diligence on the studio, even if it was brief, it clearly showed us it was a great bunch of people, and a great asset for any publisher. So early on in the auction, we made a clear statement that we wanted that asset.
The change at Volition [which was sold for $22.3 million] is that they now work for a new company, Deep Silver Volition, LLC. And we offered absolutely everybody a job the first day we came in. We have no intention to come in and tell them that everything will change. In fact, we are, as you know, they are working on Saints Row 4, and we'll do everything to help them meet the expectations of that game's community.
And what was it about Metro: Last Light that was attractive to Koch?
A number of factors played into that. The first one was that the game is totally underestimated by THQ. The [first Metro] product, Metro 2033, was not fully exploited. I think that may people underestimate the power of the Metro brand.
This coupled with the fact that this product [sequel Metro: Last Light] was in a very advanced state that we can see and feel and play. And there was a studio that we know back from the STALKER days -- we published STALKER: Clear Skies -- and part of that GSC development team is now developing Metro under the studio 4A Games. These guys are talented, and we want to work with them. I think that was an easy decision. On this one, we were very sure that Metro: Last Light will very easily outperform the first one, especially since it's on three platforms now, and the game will launch at a very high quality.