It's been an interesting few years for THQ - the company has been hard at work developing its publishing strategy, acquiring new studios and launching its new wireless arm in a bid to take advantage of the booming mobile games market.
The publisher's revenues have received a healthy boost with the acquisition of major licenses from Nickelodeon, Disney/Pixar and WWE, while many of its original IP titles have also performed well. But arguably, the company still lags behind EA in the third-party publishing stakes, despite considerable growth in recent years.
We caught up with CEO Brian Farrell to discuss THQ's strategy going forward, to learn what's in store for the the company's wireless arm, and to find out why it's not neccessarily all about being number one...
GamesIndustry.biz: Let's start by looking at THQ's history - how do you think the company has changed in recent years?
Brian Farrell: I think we've really transformed the company over the last four to five years. At the beginning of the last hardware transition, we had one studio with under a hundred employees; now we have 14 studios and 1200 people, all well positioned to do next-gen and current-gen simultaneously, with games for the core gamers on next-gen and mass-market on current-gen. That's a strategy we set out about six years ago, and sitting here today I'm really pleased with our achievements.
GamesIndustry.biz: Why do you think it's important to own your own studios? Why not just stick with external developers?
Brian Farrell: We still have some great products here from external developers and we're not getting away from that, but the big thing right now is owning our own intellectual property. That way we can have a lot more control over how we manage the brand, and since we're running a public company it's important we actually own something of value.
The second thing is we've taken some of our big franchises and formed some studios. The last Pixar game was done internally, the [Pixar] Cars game was done internally, and we've got all the Nickelodeon games being done internally. Those are big, big franchises for us, and we wanted more control over their development. One is ownership and the other is a brand.
GamesIndustry.biz: Talking about developing franchises and brands, how do you avoid getting into the trap of churning out nothing but yet more sequels? How much emphasis do you put on producing new IP and original, innovative games?
Brian Farrell: That's what I think THQ has truly been a leader in. I don't know if you've seen Destroy All Humans! 2, but that's the sequel - and when we brought out that original game, there were a lot of people asking if we'd gone crazy, because we were trying to bring out a new intellectual property late in the cycle - a sort of US, 50s humour sci-fi game - but it was a great game, roundly applauded as bold, new, differentiated.
And if you look at the things we're doing now, we're one of the few companies still producing really high-end real-time strategy games. There hasn't been a game like Titan Quest in several years. So, we will only do sequels when it's a game we think people will enjoy. Part of our strategy is that sequels are important, but the new stuff is even more important - we're going to be one of the real innovators in the industry.
GamesIndustry.biz: But then look at EA, which has made a vast amount of money from sequels - why not follow that business model?
Brian Farrell: Because that's EA's strategy [laughs]. We looked for an opportunity in the marketplace, and we saw a lot of our competitors getting a bit complacent, and frankly when you start talking to gamers they say, "Give me something new, give me something different."
When you look at THQ from a gamer's standpoint, it's big business. Of course we've got some big brands we can sequel every year like WWE. And the Pixar games - they're not really sequels, as they have new content every year, and Nickelodeon are similar. So we have that solid foundation to take some creative risks - it sounds great for gamers, and it's also a great business proposition.
It's refreshing - Destroy All Humans!, to use that example again, is now approaching two million units. It's very commercially successful, we own it, we've got ideas set down now for a potential TV show, and that's a huge win for a company like ours. And, arguably, it's a huge win for gamers who have cool new games to play.
GamesIndustry.biz: With regard to the next-gen consoles, are you committed to supporting all three of them equally?
Brian Farrell: Our most dear asset is game development resources, and we try to allocate those to the platforms we think where there's commercial returns. Right now with 360 we're out in front, because it's been out for six months now.
We've also got a game where we're learning to use the Revolution controller, because we've had that for a while. We're deep in development on several PS3 games. You can't play favourites, you've got to make your investments based on demographics - we think Nintendo's going to capture that six-to-16 year old gap - but also installed base, and it could be a pretty fair fight on next-gen.
GamesIndustry.biz: Given that the Xbox 360's had a year to gain a foothold, do you think it has a chance to be the market leader?
Brian Farrell: Give them a chance. At the end of the day, the best games win, so the platform that does the best job getting innovative, cool games that attract an audience, is probably best placed to win.
It's never been about technology. Arguably Microsoft had the technical edge last round, but they didn't beat PlayStation. You've got to be careful about how you view the overall marketplace - the only rule that's going to be effective is, "Do you have the best games?"
GamesIndustry.biz: Let's turn to the mobile arm of your business, THQ Wireless. Talk at GDC Mobile focused on the question of whether there's more quantity than quality out there at the moment - what's your mobile gaming strategy? Are you trying to get as much out there as possible, and get people interested, or are you focusing on quality?
Brian Farrell: Part of our strategy is to do very casual games, which is a real challenge in mobile games. The handsets by definition limit the experience. I'm unclear what you mean by quality when you talk about a mobile game - is it the gameplay, is it the interface?
Our strategy has been to do a couple of things - pitch into our biggest brands like WWE, Star Wars, National Basketball Association, and make quality games based on those franchises. That being said we have some very mass-market games, very casual games coming out from Wireless, because a lot of our research shows that the way mobile players are playing is on a five-minute time period basis. So high quality or low quality reflects what people want to do. I think there's a market for both things.
The thing about wireless [gaming] now is we're going into this new market with all sorts of weird things going on, so we're going to keep steering into what works for us. We've done some very high quality games that have won awards but done zip commercially; and we've done some games that haven't done well in the reviews but done very well commercially. Our job is to find the market.
GamesIndustry.biz: It still seems like there's being a lot of money thrown into the mobile games industry. Do you feel like there could be a boom and bust situation, that there's a danger of the whole thing imploding?
Brian Farrell: You know, we've been in the industry a long time and we've seen developers and publishers come and go in the market, and with wireless it's no different. There was a bit of a gold rush, I think, after JAMDAT had a very successful offering and was bought by EA, but it's a difficult business with great contest, and you have to find your consumer. I think it's only a handful of companies that can do that well, and some will move out of the mobile sector which will benefit people like us here for the long haul.
GamesIndustry.biz: Talking of the JAMDAT deal - would you consider a similar strategy at THQ, of acquiring an already established mobile company?
Brian Farrell: That was unique... You know, EA took up number one in the space immediately. We were in the space two years ago, and we believed we were only a couple of years behind where JAMDAT was, and they started a few years before us.
I won't rule out any potential acquisitions, but I think what we've built up so far might have a much lower investment cost than EA had to get into that business. We think a little bit differently than our competitors - I think that's one of our strengths.
GamesIndustry.biz: Would you say that's also true for your main games publishing business?
Yeah, we are trying to think differently. We're not the largest, but that doesn't mean we can't be the best, and best in a number of different categories. Look at RTS - Company of Heroes is one of the best real-time strategy games. Saint's Row we think will be one of the best open-world games.
There are other areas where we think we can keep moving up the market, and maybe we start talking about casual games; Cars and The Incredibles have been incredible for us. We can be the best in the various markets, we don't have to be the biggest.
GamesIndustry.biz: So you wouldn't say it's your goal to beat EA, and be the number one?
Brian Farrell: I wouldn't rule out anything eventually. We're arguably among the elite in the industry now. The thing I love about this business, is he who has the best games wins.