Take-Two Predicts that THQ Won't Be Around in 6 Months

During the MIT Business in Gaming conference, Take-Two CEO Strauss Zelnick took a shot at THQ, saying the game publisher probably won't be around in six months.

The comment came up while he talked about the difference between his company's strategy on core game development, and that of rival publisher THQ. The latter Rayman company just recently revealed a $56 million loss for the fiscal quarter ending December 31, 2011 -- triple the loss seen in the same timeframe the year before.

Prior to the third quarter results, THQ actually thought earnings would be the largest in the company's history. But according to THQ CEO Brian Farrell, they were (obviously) way wrong. He explained that revenues were lower by about $100 million, and that 1.4 million uDraw units were still in inventory (although they're slated to be sold at some point). He estimated about $80 million of the lost revenue was from units the company didn't sell, and the other $20 million was from lowering the price of what they did sell.

"We would have doubled the profitability in the quarter were it not for uDraw," he said.

In speaking about THQ, the Take-Two CEO said that the rival company's strategy centers on licensed properties like UFC, WWE and intellectual properties (IPs) owned by Hollywood studios, and making games based on those licenses. The problem here is that -- even if a publisher does a great job with a property -- it will have to renegotiate the license in a few years. By then its margins will have decreased because the brand it built up in the gaming space will require a higher licensing fee.

Take-Two, on the other hand, deals with 100-percent owned IPs. He said eventually THQ shifted its strategy to partially using in-house IPs like uDraw, but that doesn't happen overnight. Take-Two also has higher quality products whereas THQ has had some good games.

"The most important difference is quality," he told the audience. "Take-Two has the highest quality ratings among third-party publishers, according to Metacritic and most people in the industry. Quality really, really, really matters. THQ has had some good games, but their quality levels aren't even remotely ... the quality hasn't measured up."

Zelnick then moved on to trash THQ's strategy. "Strategy didn't work and the execution was bad. To put it another way: the food was no good and the portions were small."

"THQ won't be around in six months," he concluded.

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  • rantoc
    They are one of the few remaining publishers that won't alienate their customers by forcing them to be on-line for single-play and the like. THQ have always been striking me as a fair publisher. And no i don't think they end up bankrupt.
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  • aftcomet
    Regardless of Take-Two trash-talking, I absolutely love the organization. Their philosophy should be the golden standard of the gaming world. They really focus on outputting the highest quality products. They are against milking a series. That's why they said their IPs aren't an annual affair a la Call of Duty. I'm sure they could easily pump out a garbage version of GTA, BioShock, Max Payne, etc every November, instead their games always have development cycles of 2-3 years. They believe that this is how you maintain sustainability. And they're right. People are dumb. But are they dumb enough to buy the same game every year, even after a certain point? Okay, don't answer that. Anyway, virtually everything Take-Two publishes is high quality stuff.

    As for THQ, they're in serious trouble. I was going to buy stock when it was $5 back in mid-2011 because I thought THQ was too big to not get their shit together. Thank god I didn't, it's selling at 50 cents a share. Who knows, maybe now is actually the best time to buy. Hopefully South Park ends up being a good game. Metro 2033: Last Light is another one. Other than that, they really have no killer app. Well, I guess Metro is a killer app because it'll kill any system right now.
  • rantoc
    They are one of the few remaining publishers that won't alienate their customers by forcing them to be on-line for single-play and the like. THQ have always been striking me as a fair publisher. And no i don't think they end up bankrupt.
  • Raid3r
    Well that is one way to look at it. My way, is THQ is missing the mark, period. They have had chance after chance and blow it 80% of the time. Spacemarine....imo if they had done the pc community right and given the users the power of dedicated servers they would have acquired what they needed, but they went with P2P=failz. It's just all but destroyed and useless in the end. Dark millennium coming up...more than likely dead to me unless I know for a fact it's not crippled by the internetz and P2P. Go back to the pc roots if you want pc adoration.