As a result of a court hearing today where auction offers for a majority of THQ’s assets and developers were entertained by US Bankruptcy Court Judge Marry F. Walrath, the storied publisher has been dissolved as talented studios and important intellectual properties were hungrily snapped up by bidders including SEGA, Ubisoft and Koch Media.
While the sale of each developer and IP must still be formally approved, and certain of THQ’s assets (including Darksiders developer, Vigil Games) remain unsold, the current picture of THQ’s situation will shift into focus tomorrow.
The Story So Far
After a troubled financial period and a dramatic shift in focus from casual, licensed and family titles to ‘core’ videogame entertainment, THQ announced it had filed for bankruptcy in late 2012, with hopes of regrouping and restructuring its business thanks to a debtor-in-possession investment by associates of Clearlake Capital Group, L.P., with designs towards selling the company – whole and complete – to the investor.
Through the agreement, THQ would be able to continue operations and release upcoming titles including Metro: Last Light, Company of Heroes 2 and South Park: The Stick of Truth to generate enough revenue to get the chance to launch the publisher’s next big hope for financial stability, Saints Row 4.
Fate Has Other Plans
THQ’s creditors – investors and financial institutions with considerable amounts of money sunk into the publisher – didn’t like the sound of this plan and objected to Clearlake’s proposed valuation of THQ, which stood at $60 million, “including a new $10 million note for the benefit of the company’s creditors.”
In order to reap the maximum cash value to repay THQ’s creditors and to give potential bidders a proper chance to put in offers for varying studios and IP, it was decided that the publisher and its assets would be sold off individually in an auction, but only if the total valuation of these individual sales exceed that of Clearlake Capital’s $60 million estimate.
Bidders would be given until January 22nd, 2013 to put in their offers, which would then be heard in open court on January 23rd, with final decisions to be announced on January 24th.
The Long Day is Over
January 22nd has come and gone, and as far as the court hearing is concerned, so has January 23rd and we now have a clearer idea of where THQ’s assets will end up.
SEGA put in an offer for Relic Entertainment (Company of Heroes, Dawn of War), Koch Media looks likely to pick up Volition (Saints Row, Red Faction) and the Metro franchise, while Ubisoft’s bid for the whole of THQ Montreal (home of former Ubisoft/Assasin’s Creed lead Patrice Désilets) and South Park: The Stick of Truth were heard.
With Crytek UK’s work on Homefront 2, Crytek GmbH bid for the Homefront franchise, and Take 2 has offered to pick up an unannounced IP, Evolve, which was in development at Turtle Rock (Left 4 Dead). Noticeably, Vigil Games (Darksiders) did not receive any bids.
Additionally, reports indicate that the rights to create WWE wrestling titles has gone to Take 2, while Ubisoft has formally announced its acquisition of South Park: The Stick of Truth, promising a release in 2013. We now also know that Vigil Games has been closed, but hope exists for the future of the Darksiders series as Platinum Games is interested in picking up the license.
Here’s the full list of bidders with assets and bid amounts included:
SEGA Bid: $26.6 million
Zenimax Media Bid: $26.3 million
- Ubisoft Bid: $2.5 million
South Park: The Stick of Truth
- Ubisoft Bid: $3.265 million
Take 2 Bid: $10.8 million
Turtle Rock Bid: $250 000
Koch Media Bid: $22.3 million
Ubisoft Bid: $5.4 million
Koch Media Bid: $5.8 million
Ubisoft Bid: $5.175 million
- Crytek Bid: $544 218
While these sales look likely to go ahead and will be finalised in January 24th’s court proceedings, the futures of the employees at each studio aren’t guaranteed and in a company-wide letter to THQ, Chief Executive Officer Brian Farrell and President Jason Rubin sincerely thanked everyone for their contributions and work while in the THQ family.
After explaining today’s events and outlining potential outcomes for now-former members of THQ and its studios, the letter concluded:
“The work that you all have done as part of the THQ family is imaginative, creative, artistic and highly valued by our loyal gamers. We are proud of what we have accomplished despite today’s outcome.
“It has been our privilege to work alongside the entire THQ team. While the company will cease to exist, we are heartened that the majority of our studios and games will continue under new ownership. We were hoping that the entire company would remain intact, but we expect to hear good news from each of the separate entities that will be operating as part of new organizations.
“For those THQ employees who are part of entities that are not included in the sale, we are confident that the talent you have displayed as part of THQ will be recognized as you take the next steps in your career.
“Thank you all for your dedication and for sharing your talent with the THQ team. We wish you the best of luck and hope you will keep in touch.”
The End is the Beginning is the End
Whatever the final decisions in tomorrow’s court hearings, these sales mark the end of THQ, a company founded in 1989, which took its current name in 1990 as an acronym for ‘Toy Head-Quarters’ fitting its business as a toy manufacturer.
Following an acquisition of Broderbund’s videogame division and the release of the publisher’s first game, ‘Peter Pan and the Pirates’ for the NES, THQ went on to publisher and distribute some of the game industry’s most memorable, highly regarded and interesting games and franchises, including WWF and WWE titles, Saints Row, Darksiders, Company of Heroes, Metro 2033, Red Faction, MX VS ATV, Full Spectrum Warrior, Warhammer: Dawn of War, Destroy All Humans, Titan Quest, Supreme Commander, de Blob, Homefront, Frontlines and UFC Undisputed.
THQ also became a powerhouse in the licensed games business with rights to create titles based on extremely popular Disney and Nickelodeon properties, resulting in games set in Disney’s Cars universe, a bevy of Spongebob Squarepants titles, and many more.
As returns on licensed property games diminished, THQ began to suffer financially year-on-year while continuing to rely heavily on sales of family friendly and casual titles during something of a Wii boom. The publisher restructured its business to focus on core titles, however, with Saints Row, Homefront, Red Faction, WWE and Darksiders amongst the franchises chosen to pursue.
THQ’s bet on its uDraw game tablet, however, didn’t pay dividends and failed to sell on PlayStation 3 and Xbox 360 despite relative successes on the Wii. Similarly, THQ’s big bet on Homefront as a contender for the lucrative military shooter audience fell flat, leaving the publisher in a dire situation.
As sales of the annually available UFC Undisputed franchise dropped and Red Faction failed to perform in the market, the hopes of THQ’s future were balanced on Saints Row: The Third and then Darksiders II. Despite positive sales of Saints Row, Darksiders II wasn’t able to meet the lofty sales expectations bestowed upon it, leading indirectly to THQ’s decision to file for bankruptcy in late 2012 in the hopes of once again regrouping for 2013.
We thank THQ for its mighty contributions to the videogame industry and we wish nothing but the very best to all those who were once a part of the publisher’s extensive and talented family.
We hope those who find themselves without jobs following the sales of THQ’s assets are able to effortlessly transition into a new period of their careers.