Rumor: Ubisoft Looking to Purchase THQ’s Studios and IPs

If a new report proves to be true, Ubisoft is looking to bid on THQ‘s stable of top-notch development studios and their franchises.

Inside sources have told MCV that the mega-publisher is currently eyeing five of THQ’s studios as well as a number of the publisher’s intellectual properties, not the least of which include Saints Row, Darksiders, Company of Heroes, Red Faction, Homefront and WWE.

The report goes on to suggest that while Ubisoft is currently in negotiations with THQ, the company is waiting for the struggling publisher to be forced to sell off its studios at a much cheaper price. Mind you, this is all merely rumor for the time being, but if/when Ubisoft decides to make a move, you can be sure we here at PlayStation LifeStyle will keep you updated on all the details.

What do you think about this potential purchase? Would these franchises be better served under Ubisoft’s wing? Share your thoughts in the comments below.


Source: psls

THQ in default with Wells Fargo over $50 million credit facility

Troubled publisher THQ dropped more potentially bad financial news on Friday, revealing that it was in “certain defaults” on a $50 million credit facility with lender Wells Fargo.

The Agoura Hills based publisher of Darksiders, Saints Row and WWE wrestling games wouldn’t clarify the conditions of the credit facility it has defaulted on, but did report “loan availability on the Credit Facility was less than 12.5% of the maximum revolver amount,” a technical default of the terms of the loan. THQ tells Polygon that Wells Fargo continues to fund its requests while the two parties discuss the terms of their credit agreement.

In a filing with the SEC, THQ says it was notified by Wells Fargo on Nov. 7 that “one or more events of default have occurred under the terms of the Credit Facility, including the failure to comply with financial covenants” for the most recent quarter.

THQ entered into the $50 million revolving credit facility with Wells Fargo in 2011. The company borrowed $21 million from that credit facility during its third quarter, which ended Sept. 30.

THQ offered the update on its financial situation in a form filed with the SEC, notifying the commission of a late filing of its Form 10-Q, a quarterly report on the publicly traded company’s financial position.

The publisher provided the following statement to Polygon when asked for clarification about its financial status.

“Today THQ filed a notification for a five-day extension to file our quarterly report (10-Q). The delay in the filing of our 10-Q has been caused by certain issues under the terms of our credit agreement with Wells Fargo. We are in discussions with Wells Fargo and believe we will reach an agreement with them to resolve these issues. Wells Fargo has continued to fund requests from us while we attempt to reach an agreement. We expect to file our 10-Q within the five days, on Tuesday, November 13, as required by the SEC.”

Earlier this week, THQ posted a $21 million loss for the third quarter of its fiscal year. The company announced it was “evaluating strategic and financing alternatives” with investment banking and private equity firm Centerview Partners after it delayed three of its 2013 gamesSouth Park: The Stick of TruthMetro: Last Light and Company of Heroes 2.

Following THQ’s dire earnings call on Monday, the publisher’s stock plummeted, bottoming out at around $1.10 per share on Wednesday.

Daily Reaction: THQ – The Rise, The Fall, The End?

With THQ’s share price having collapsed and rumors of bankruptcy, studio closures or a sale swirling, the Daily Reaction crew of Dan and Seb discuss the road THQ has taken to get to this point.

Dan: THQ is a company that has been around for years, and has had a significant presence in the gaming world, as they have produced a number of great titles throughout their history. Sadly even though they have a decent lineage of titles under their belt, they are currently one of the next major publishers to be facing bankruptcy. As at the end of this quarter (Dec 31) they will be projected to be at a loss of $56 million dollars, and might be forced to sell off IPs, studios, and anything that isn’t nailed down, just to pull themselves out of the fire.

One of the biggest hits THQ faced this year was the incredibly bad judgment call on last year’s production of the uDraw game that they projected to be a complete success on HD consoles. Sadly, as THQ were sitting with almost $100 million dollars worth of inventory from that product alone, months after it’s release, they were forced to take a significant loss just to clear out inventory. A loss that had not been notified to shareholders who had the legal right to know the stance of the company, and as the news came out, those who owned stock in THQ filed a lawsuit against the company for not disclosing this vital hit to the company’s worth. This complete fuck-up should have been a wake up call to THQ and their partners, and shown them that as a company they really had lost touch with the market and its audience, but instead they continued business as normal, over relying on sales of specific franchises and completely screwed themselves over.

Seb: The uDraw fiasco was just the tip of the iceberg, sadly. Darksiders 2, for example, didn’t sell very well at all and probably will make them a loss. Their reasoning as to why this happened? “Observing this and other recent industry releases, one is left with a firm understanding that in the current marketplace, only the absolute top tier of releases is making an impact on the game consumer.” Really? It took you till late 2012 to realize that the mid-tier market has bottomed out?

The death of mid-tier happened early this gen and killed THQ’s profits way back then. 2007 was a bumper year for them as they made $1 billion in revenue for the first time. But things began to fall apart, and after hundreds of millions of dollars of losses in 2008 they closed 5 development studios. They reacted slowly, watching their money drain away and investors leave. And when they did finally try to react, they did so with incredibly poor planning. Homefront was their attempt at trying to cash in on the success ofCall of Duty – they invested heavily with money they didn’t have, and failed.Polygon have written a fantastically depressing look at how everything was destined to fail from the beginning, and how THQ’s desperation to make it like COD was the game’s very undoing. Now Kaos is gone and THQ had to explain to investors once again why things had gone wrong.

Their history is riddled with a multitude of poor and baffling business moves, like the 2008 purchase of Big Huge Games in 2008, followed by the near closure, and then sale, of Big Huge Games in 2009 – before the studio could release a title, wasting the money invested in the two games in development.

Now, THQ has around $36 million in cash, but some analysts believe they’re spending $15 million a month. They don’t have any more major releases coming out this year. Oh, and they have to pay back $100 million by March 2014.

Dan: Simply put, things don’t look good for THQ. As they have developed some quality titles like Darksiders 1 and 2, and are the home of the Saints Row series, they really have never broken past that mid-tier level of development. The reasons why are debatable, but it seems obvious that they haven’t brought much of anything new to the market that has been successful in years. Most of their biggest hitters this generation are only takes on existing titles that are already in the hands of consumers, and can only reach a portion of that already segmented audience, placing THQ further down the drain after their big success in 2007.

On top of all the other issues THQ was having with lawsuits and bad judgment calls on products, 2012 was infested with delays on some of their most prominent titles. Having announced the delay of the South Park game,Company of Heroes 2, and Metro: Last Light, THQ has placed themselves in a very bad spot especially as the financial year comes to a close. Instead of launching around Q4, both Company of Heroes 2 and Metro: Last Lightwill be taking on major hitters like BioShock Infinite outside of the holiday window. A move that will probably be a death sentence, especially since they also pushed off Saints Row the Third’s DLC into Saints Row 4.

As 2012 really could be the defining year for their future, it’s a wonder why they are pushing everything out as far as possible, instead of getting cash where they can. It is possible that THQ will sell of as much of the company as possible, and try to re-establish themselves using only a small handful of titles. Whether or not this is what they do, or even if it will work is something we can only wait to find out about, I just wish the best for THQ’s employees and their families who are having to weather this storm.

Seb: From a gamer’s perspective, I’m proud of THQ for delaying their games to improve the quality of the titles. It’s the first big move by new president Jason Rubin, of Naughty Dog fame. But I can’t help but think they underestimated how the market would react. Their shares plummeted nearly 50%, and they weren’t very high to start with.

They’ve brought on Centerview Partners to “evaluate strategic alternatives”, which essentially means they’re open to a sale. Really, they need to sell or work out another way to raise capital to hang on until they can right the ship. But to do that they need to get investors upbeat about their future.

Delaying games is a risky strategy, but the quality could pay off long term – if they can make it long term. Rubin states ten titles are in development, including the baffling decision to pay Crytek to bring out another Homefront– something that seems more like an attempt to show investors they have a big plan for the franchise, than to make actual money. They cut inSane, which is a shame for players, but is probably a smart move considering the fact that it seemed like a long shot. They’ve also lost licenses from Adidas, Marvel and DreamWorks, which hurt them over the past few years, but will force them to invest in their own IP – crucial to making a return in today’s industry. However, the loss of UFC was a shame for both gamers and investors as it could have continued to make a decent profit, so you really have to wonder why they sold the license to EA.

THQ will always have a place in my heart, from when I used to eagerly play ‘WWF’ back in the day. But over the last few years they have fallen further and further down a dark hole, hemorrhaging money, investors and studios. The appointment of Jason Rubin was the first sign that they actually want to try to climb out. But it might be too late.

What was the last THQ game you bought? Do you think that THQ can turn things around? Or will they join the long line of companies to go under this generation? Let us know in the comments


Source: Playstationlifestyle

THQ Delays South Park, Loses Millions, Needs to Raise Capital

THQ has issued its second quarter earnings report, with the investor call announcing a net loss of $21 million for the period ended on September 30. The good news is that it’s better than the $92 million loss the year before, but sales also dipped from $146 million to $107.4 million.

The publisher revealed that it shipped 1.4 million units of Darksiders II in the second quarter, but some analysts don’t think the game will break even. Then THQ announced that South Park: The Stick of Truth has been delayed from March 5, 2013 to early fiscal 2014 (around April or May 2013). On top of that, Company of Heroes 2 and Metro: Last Light will see their release dates pushed back to March.

With those games delayed, it will obviously “create a need for additional capital” and has suspended net sales and earnings guidance, as well as withdrawing its previous guidance for fiscal 2013. THQ has begun talks with Centerview Partners LLC to “assist the company in evaluating strategic and financing alternatives intended to improve THQ’s overall liquidity, including raising additional capital, preserve the company’s ability to bring the best possible games to market during the most advantageous release windows and to help address the $100 million 5% convertible senior notes due August 2014.” Some have speculated that the talks could mean THQ is planning to go up for sale.

Jason Rubin, THQ’s President, said:

When I joined THQ the company made a public commitment to quality titles. We always expected that in some cases this would mean that more time would be needed to make sure that every title is of the highest possible quality. Our fourth quarter releases are the first titles that I have had the ability to materially impact, and experience told me that the games needed additional development time to be market-ready.

I believe South Park’s market opportunity is significant. It is shaping up to be one of the most anticipated titles of calendar 2013. It is also an expansive title, encompassing multiple television seasons’ worth of content. We have been working closely with the co-creators of South Park, Matt Stone and Trey Parker, to make sure all of the game’s content performs to the high standards of the TV show, and this takes time. THQ is committed to giving gamers no less than the rich South Park game they have been waiting for and deserve.

We are also inspired by the potential for Metro: Last Light and Company of Heroes 2. I believe Metro: Last Light is a title that should set standards for visuals with its stunning atmosphere, unique location and cutting-edge style. Company of Heroes was one of the highest rated RTS titles in history, and Relic insists that the sequel live up to its pedigree. Giving both of these titles time to reach their full potential is the right thing to do for the products.

THQ is excited about our position and pipeline of games beyond fiscal 2013, including the sequel for Saints Row: The Third, Homefront 2 and the as-yet-unannounced game from Turtle Rock Studios. In total we have ten titles in development for fiscal 2014 and later, almost all of which are based on our own IP. We intend to announce more details about our future slate in the coming months.

I firmly believe releasing our fourth quarter titles without extra time for polish in the current environment would lead to underperformance that could in turn lead to future additional capital shortfalls. But extending development schedules in order to make the best possible titles also has financial implications. Yet there can be no doubt which path has the greatest chance of leading to the long-term success of the company. We must follow the course that generates the highest quality games, and will establish THQ as a mark of quality for the consumer.

Brian Farrell, THQ’s Chairman and CEO, added:

Clearly, THQ faces a number of opportunities and challenges. I am confident about the opportunities that lie in our robust slate of games and in our studios. But we also face challenges operating with limited capital resources in the highly competitive market for games, and we are working diligently to resolve those challenges.

It’s obviously great to see that a publisher is prepared to delay their games to ensure quality, although it is worrying to watch how poorly THQ has performed over the last few years.