THQ Loses Its Fight for Solvency

By Rebecca Smith, 6 years ago
THQ has been having financial difficulties for the last five years. Their games that were based on family and childrens' licenses performed poorly, so THQ switched their development focus to 'core' titles. Although the uDraw was a success on the Wii, the lacklustre support of the peripheral on the Xbox 360 and Playstation 3 led to weak sales and the cancellation of the peripheral manufacture. Key titles Saints Row: The Third and Darksiders II both failed to meet sales targets. Several THQ published XBLA games and DLC content have been removed from the Marketplace. From a gaming perspective, the situation didn't look good.

Things weren't rosy behind the scenes either. THQ had restructured their staff, a process that involved layoffs in certain places. THQ Phoenix and their San Diego studio were both closed. To prevent delisting from the NASDAQ index, shareholders approved a reverse stock split to decrease the number of shares but dramatically increase the value of the remaining shares. Their Q2 fiscal 2013 financial results showed an operating loss of $19 million, although this was much improved on previous quarterly results.

In a last ditch attempt to raise some hard cash, THQ offered the Humble Bundle where several PC titles and expansion packs were available for whatever price the buyer wished to pay. The bundle raised over $5 million, but this wasn't enough to stop THQ from filing for Chapter 11 bankruptcy. For those readers who are unaware of US law, this allows the company to retain control of their business while another buyer is found. Several bidders can make competing offers for the company. THQ has confirmed that they have secured an investor, but it will be 30 days before they confirm the arrangement. In a letter to the THQ Community, their President Jason Rubin explains how the new investor will impact the company:

Today THQ announced that it has secured an investor, a private equity firm named Clearlake Capital Group, who is interested in purchasing most of what you think makes up THQ: the teams that make the games (Relic, THQ Montreal, Vigil and Volition), THQ’s Intellectual Property (titles, source code, etc.), THQ’s contracts (like the ones with Crytek, South Park Digital Studios, 4A games, Obsidian, and Turtle Rock) and the support staff that are required to help the teams succeed.

In fact, Clearlake is even providing the company the money it needs to keep working on the products as the process plays itself out. And importantly, when the purchase is complete, Clearlake has committed to invest additional ample capital to let us finish the games we are making and continue making games going forward.

In short, they are investing in a new start for our company.
Development of their upcoming titles has been unaffected. Gamers can still pre-order imminent titles South Park: The Stick of Truth (Xbox 360), Metro: Last Light and Company of Heroes 2. The development of other titles is also still underway. Crytek UK, who are unaffected by the Chapter 11 proceedings in the US, are working on Vigil is currently working on a title with the codename Crawler. Volition is working on Saints Row 4. Relic is working on a game with the working title Atlas, as well as the aforementioned Company of Heroes 2. THQ Montreal is still working on Patrice Désilets co-op multiplayer action game. Although it wasn't mentioned, work is believed to be continuing on Turtle Rock Studios' new IP too.

Finally, THQ servers will remain open. To my knowledge, no THQ Xbox 360 game has ever had the servers closed down, even for those games that have since been removed from the Marketplace. There is no need to panic over online achievements.

Thanks to the many members of the community who sent this one in!
Rebecca Smith
Written by Rebecca Smith
Rebecca is the Newshound Manager at TrueGaming Network. She has been contributing articles since 2010, especially those that involve intimidatingly long lists. When not writing news, she works in an independent game shop so that she can spend all day talking about games too. She'll occasionally go outside.