After a few touch-and-go years of hanging by a financial thread, it looks like game publisher THQ is finally done. After entering Chapter 11 bankruptcy and launching a bid to keep the company together by selling out to a single bidder, THQ saw its game development studios and properties sold off individually at auction this week to bidders including Ubisoft, Sega and Crytek.
When it applied for bankruptcy last December, THQ had hoped for an orderly purchase and restructuring, but the judgment that it had greater potential value broken up and sold off than continuing to function, and that THQ’s proposed complete sale did not make a strong enough case in the face of this, prevented this, leading to this auction.
The U.S. bankruptcy court has now "granted a motion to approve a sale of the majority of THQ’s assets to multiple buyers." The court is expected to formally approve the sale tomorrow. Based on bids received, THQ notes that the THQ estate will receive approximately $72 million, making the total estimated value of the estate $100 million including certain assets and other intellectual properties which were excluded from the sale.
In a somewhat emotional letter from CEO Brian Farrell and president Jason Rubin sent to THQ's former employees, they filled everyone in on what's happening to THQ:
"Some assets, including our publishing businesses and Vigil, along with some other intellectual properties are not included in the sale agreements. They will remain part of the Chapter 11 case. We will make every effort to find appropriate buyers, if possible.
If you are an employee of an entity that is not included in the sale [i.e. Vigil], we regret that your position will end. A small number of our headquarters staff will continue to be employed by THQ beyond 25th January to assist with the transition. THQ has sufficient resources to pay these employees for work going forward, and we will be contacting these employees immediately to ensure their continued employment during this transition period. We are requesting the ability to offer certain severance pay to minimise disruption for employees of non-included entities as they determine the next steps in their careers.
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."
Following THQ’s auction of its assets, the new homes of THQ franchises are slowly being revealed. Koch Media, Take-Two, Ubisoft and SEGA are among the potential new owners of THQ’s intellectual property and studios. THQ's most valuable assets have been auctioned off to the highest bidder, meaning the publisher's hope of continuing are over. Here's where THQ's assets have ended up:
- Relic Entertainment (Company of Heroes, Warhammer 40,000: Dawn of War) went to Sega for $26.6 million , with Zenimax Media (owners of id Studios and Bethesda) kept as reserve after bidding .3 million less.
- Koch Media, which publishes games under the Deep Silver label, will acquire Volition (Saint’s Row) and the Metro franchise.
- Evolve, the new property from Turtle Rock Studios (co-creators of Left 4 Dead) was purchased by Take-Two Interactive, for a long time THQ’s closest competitor in the second tier of US publishers, for $10.894 million. Turtle Rock had perhaps hoped to escape notice, as their game was in its early stages, and had put in a $250,000 bid for the property themselves.
- The Homefront IP – based on John Milius’ concept of a United States under occupation – was purchased by Crytek, whose UK division had ben contracted to produce Homefront 2. The $544,218 fee seems low for a banner IP, but Homefront‘s underperformance in the market would have affected the cost: one is buying an IP, but also a considerable marketing challenge.
- Publishing rights for South Park: The Stick of Truth,which is preparing for launch on March 5, was purchased by Ubisoft for $3,265,306
- THQ Montreal – the first organically-grown (rather than acquired) THQ studio in North America, and its largest, was also purchased by Ubisoft, which already has a significant presence in Montreal. With no titles in the works, this can be seen as an opportunity to acquire a lot of talent relatively cheaply at $2.5 million.
As it stands, the Darksiders series, the Red Faction series and the WWE series have still to find homes. It's unfortunate, but not all is lost. There are some companies sniffing around, hoping to invest in these games.
THQ, established in 1989 to produce toys and videogames, had a well-deserved reputation in the early days for cranking out mostly licensed games and shovelware. Recently THQ have been winning acclaim for its Saints Row, Darksiders and Metro series. It opened a Montreal development studio and hired Patrice Desilets, creative director of Ubisoft’s Assassin’s Creed, to run it. It published several of Double Fine’s games and signed Tomonobu Itagaki (Ninja Gaiden) and Guillermo Del Toro for high-profile game projects.
This is truly a sad day for the gaming industry, and THQ will be sorely missed. Good luck to all the staff hit by this news, we wish you the best for the future.