Major Video Game Developer Files Bankruptcy


Matt Mersel
Staff Writer

Raise your hand if you’ve ever played “Saints Row,” “Metro 2033,” “Warhammer 40,000,” “Darksiders,” “Red Faction,” “Company of Heroes,” any WWE game, or one of the many games based on Nickelodeon shows and Pixar movies. If you have, then you’ve experienced a game by longtime developer and publisher THQ. Founded in 1989, the company has produced a staggering amount of titles across multiple genres, recruiting an army of followers in the process.

This makes it all the more distressing that on Dec. 19, 2012, THQ filed for Chapter 11 bankruptcy. But how could a company that was once so successful end up being forced to take this course of action? As Daniel Nye Griffiths of Forbes reports, it was a collection of issues, “including delays to anticipated games such as the Obsidian Entertainment-created ‘South Park’ tie-in ‘The Stick of Truth,’ poor sales of critically acclaimed games such as ‘Darksiders,’ an expensive attempt to compete with ‘Call of Duty’ and [‘Battlefield’] with ‘Homefront,’ the loss of its UFC franchise to EA and the disastrous oversupply and failure in the market of uDraw, a tablet product for console.” Projects like “Homefront” and the uDraw especially drained large amounts of capital from the company, and by Nov. 13, 2012, THQ had revealed that they had failed to meet their contract obligations on a $50 million loan from Wells Fargo.

The company tried to save itself by partnering with the Humble Indie Bundle project, which allows for consumers to make a charitable donation of any amount in return for a heavily discounted collection of games. In THQ’s case, a few dollars rewarded donors with “Saints Row: The Third,” “Company of Heroes,” “Metro 2033,” and more. However, the project was only able to generate about $5 million, not nearly enough to save the floundering company. Their fate was already pre-determined; according to Ben Fritz of the Los Angeles Times, stock prices for THQ had been plummeting since a high of $341.70 in 2007, eventually bottoming out at 36 cents the day that the company entered bankruptcy.

THQ President Jason Rubin had originally planned to sell the company wholesale. However, as detailed in VentureBeat by Jeffrey Grubb, the Bankruptcy Court of the District of Delaware (where the bankruptcy was filed) decided that the company would be worth more if its assets were portioned and sold off to several different bidders. As a result, THQ would essentially be chopped up and forced to close its doors for good. On Jan. 22, 2013, the auction took place.

Relic Entertainment (“Company of Heroes,” “Warhammer 40,000”) was sold to Sega for $26.6 million. Koch Media—no relation to the American businessmen—purchased Volition, Inc. (“Saints Row”) and the “Metro” intellectual property for $22.2 million. Ubisoft purchased the rights to “South Park: The Stick of Truth” and THQ Montreal for $3.26 million and $2.5 million, respectively. Take Two Interactive obtained “Evolve,” a property by Turtle Rock Studios (“Left 4 Dead”) for almost $10.9 million, and will also receive the WWE license. The “Homefront” intellectual property went to Crytek (“Crysis” series) for $500,000. Vigil Games (“Darksiders”) and THQ’s publishing group were not sold in the auction.

For better or for worse, these franchises now rest in different hands. “Company of Heroes 2,” “Metro: Last Light,” and “South Park” have all been announced and will still be released, but now it is anybody’s guess regarding how titles like “Saints Row” and “Warhammer” will adapt to the changes. In addition, the diffusion of talented employees throughout the industry will undoubtedly have an impact on current game studios.

THQ is responsible for some of the most critically acclaimed and successful games of the past few console generations. However, a few poor business decisions were enough to cause the company to shut down after almost 30 years. It is always sad to see a studio like this go, but a proper ceremony was given.

As reported by Patricia Hernandez of Kotaku, THQ employee Neal Pabon found a 40 from an old “Saints Row” promotion while he was cleaning out the offices on the employees’ last day. As he walked out of the building for the last time, he paused on the steps and poured one out for their fallen homie. A small gesture, but a very meaningful one nonetheless.

Good luck to all of the THQ employees. For a talented bunch like them, work should not be too difficult to find.