THQ Is Circling The Drain?

In the last few days, THQ’s situation has deteriorated, and deteriorated fast.

First, there were the closings in Australia, and possibly Japan. Then, there was the report that since their stock had failed to stay above the price of $1 for thirty days, they might get delisted from Nasdaq. Now Kotaku is running a nasty open letter from former employees alleging mismanagement, and independent industry types are stating that they’re laying off 170 people later today. Oh, and this is just the latest round of layoffs; THQ has been at it for a while, closing seven studios in the last year or so. A quick look at their 2011 financials reveals why; THQ lost a lot of money in 2011. This is largely due to pricey bombs like “Homefront”, which dinged their stock 26% when it came out, dried up, and blew away.

What happens if the company goes belly-up? The death of Midway is pretty instructive: most of their assets were sold for cheap to Warner Brothers, although their San Diego studio did sell…to THQ. Then it sunk into a legal morass that’s been going on for three years.

The main victim, if the company buys the farm, will be the games currently in development: orphaned games rarely find new homes. That means “Saints Row 4”, the South Park RPG, and any Warhammer, WWE, and UFC games they’re currently developing might not see the light of day, depending on what happens and when. Vigil (“Darksiders”), Volition (“Saints Row”) and Relic (“Company of Heroes” and “Warhammer”) would all be either up for sale or closed. And generally we’d be out another major publisher, thus shrinking AAA console games even further.

So we hope either reports of its death have been greatly exaggerated, or somebody manages to turn this ship around. Mostly because there’s a lack of games where you beat people to death with a giant rubber dong.

image courtesy THQ