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Forums - Nintendo - If YOU were head of a third party what would YOU do? THQ casestudy

puffy on 11 February 2009

You have been appointed CEO of THQ after the firing of 600 people or 24% of your work force.

This means you are left with 1900 employees.

 

According to a survey done in 2007, the average salary of a video game developer is $73,000. For argument sake and to take into account any increases from two years ago and also to take into account the marketing, legal and executive team, we'll put the average salary for a THQ employee at $150,000.

survey found here: http://www.gamecareerguide.com/features/416/the_game_industry_salary_survey_2007.php

 

This means that you as CEO are dishing out $285,000,000 a year in salaries. That means you have to make $152 Million each and every year and also hopefully generate a profit on top of that.

This doesn't give you any room for marketing, licence fees or transport either so you need more than $152 Million a year to from your sales to get you your marketing budget, transport and the licencing fees will be including in each game sale so you won't need to worry about that.

 

Now it's your job to restructure the company - you can go in depth and talk about each division, which games to make, marketing budgets etc or you can say 'I'd make more hardcore games'. It's up to you as you're the boss :P

Before you start on your journey however I'd like to point out a few things that you'll want to take into consideration.

 

1. Which games did THQ release in 2008 and which sold well?

 

  • Wall-E (Multi) - 3.52M
  • WWE Smackdown vs. Raw 2009 (Multi) - 3.08M
  • Saints Row 2(360/PS3/PC) - 2.6 Million
  • Big Beach Sports(Wii) - 1.2 Million
  • De Blob(Wii) - 700k
  • Nicktoons: Globs of Doom (PS2/DS/Wii) - 690k
  • Drawn to Life: Spongebob Edition (DS) - 650k
  • Are you Smarter than a 5th grader?(Wii/DS/PC) - 520k
  • Viva Pinata: Pocket Paradise (DS) - 380k
  • Bratz: Girlz Really Rock (PS2/DS/Wii) - 300k
  • Bratz: Super Babyz (PC/DS) - 230k
  • Age of Empires: Mythologies(DS) - 90k
  • Lock's Quest (DS) - 20k
  • DropCast (DS) - 10k
  • Baja Edge of Control (PS3/360) - unknown (very little)
  • Drakensang: The Dark Eye (PC) - unknown
  • Gallop and Ride (Wii) - unknown
  • Warhammer 40,000: Dawn of War: Soulstorm (PC) - unknown
If I've missed any please let me know and I'll add them

2. I got lazy

3. I expect this thread to die very quickly so someone better come up with a funny plan before it does

4. I'm more interested in the distinctions made between fanboys and level headed people who use the information they have. Should be interesting!

 

5. Here's a release list so far this year

 

  • 50 Cent: Blood on the Sand (PS2/360)
  • Deadly Creatures (Wii)
  • Neighbourhood Games (Wii)
  • Red Faction: Guerilla (PS3/360)?
  • Darksiders (PS3/360)?
  • UFC 2009 (PS3/360)?
  • Marvel Super Hero Squad (Multi)?

 

 

Again please help by adding any you may know..

6. Have fun!

 

DISCLAIMER: All information present is hypothetical: THQ made a revenue of just over $1 billion last year but still made a net loss however if there is something major in the above post you think NEEDS fixing, please let me know :)



 

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HappySqurriel on 11 February 2009

Well, in order to keep your developers working it costs much more than just the basic salary and (if their average salary was $75,000) you would expect that the cost per employee (not including marketing, licencing and whatnot) would be somewhere between $100,000 and $150,000 ... This would put the costs for them somewhere between $190 and $285 Million.

Where I suspect that THQ is really getting hurt is (potentially) in releasing HD versions of a lot of their lower quality licenced IPs. While I can't be sure on this, I suspect that many of these HD versions cost as much as it costs to develop the Wii/PS2/PSP and DS version of many of these games, and they tend to see much lower sales ... What this means is they are probably not making the profit they once did on these IPs and any large game that underperforms (Conan) really hurts their bottom line.



puffy on 11 February 2009
HappySqurriel said:

Well, in order to keep your developers working it costs much more than just the basic salary and (if their average salary was $75,000) you would expect that the cost per employee (not including marketing, licencing and whatnot) would be somewhere between $100,000 and $150,000 ... This would put the costs for them somewhere between $190 and $285 Million.

Where I suspect that THQ is really getting hurt is (potentially) in releasing HD versions of a lot of their lower quality licenced IPs. While I can't be sure on this, I suspect that many of these HD versions cost as much as it costs to develop the Wii/PS2/PSP and DS version of many of these games, and they tend to see much lower sales ... What this means is they are probably not making the profit they once did on these IPs and any large game that underperforms (Conan) really hurts their bottom line.

 

A problem may be that they are obligated to release those licenced IP's on all platforms.. 

You are right though. For example Wall-E had the largest amount of sales on DS and Wii and those would have costed much less than the same game for the PS3 and the XBOX 360.

How might one deal with that?

 



 

HappySqurriel on 11 February 2009
puffy said:
HappySqurriel said:

Well, in order to keep your developers working it costs much more than just the basic salary and (if their average salary was $75,000) you would expect that the cost per employee (not including marketing, licencing and whatnot) would be somewhere between $100,000 and $150,000 ... This would put the costs for them somewhere between $190 and $285 Million.

Where I suspect that THQ is really getting hurt is (potentially) in releasing HD versions of a lot of their lower quality licenced IPs. While I can't be sure on this, I suspect that many of these HD versions cost as much as it costs to develop the Wii/PS2/PSP and DS version of many of these games, and they tend to see much lower sales ... What this means is they are probably not making the profit they once did on these IPs and any large game that underperforms (Conan) really hurts their bottom line.

 

A problem may be that they are obligated to release those licenced IP's on all platforms.. 

You are right though. For example Wall-E had the largest amount of sales on DS and Wii and those would have costed much less than the same game for the PS3 and the XBOX 360.

How might one deal with that?

 

If they have-to produce versions of these games to the PS3 and XBox 360 I would probably just release the PS2/PSP/Wii version of these games to the HD consoles with minor graphical upgrades. While the overall product would not be (amazingly) desireable I'm not sure if the core consumer for these products would notice.

 



Me on 11 February 2009

wonder if it would be possible to just put a tender in for the psp / ps2 / wii versions and let some other pick up the Hd versions.

It seems there may be a trend where we start to see less HD games released but these will be no brainers and well known names or hugs budgets where the more bulk of games coming (and maybe more creative or experimental choices ) over to Wii / DS / PS2 as we get furhter into this gen.