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Time for a Change at THQ

NOTE: This is a letter the GameSpot news desk received from an anonymous source on January 24. I've written an editorial that references it. I can not speak to the authenticity of the letter, but the author does make valid points, which I expound upon in the editorial.


The editorial can be found here: http://www.gamespot.com/features/is-thq-on-the-verge-of-collapse-6349841/


****

To:
THQ Board of Directors
Lawrence Burstein, Uhf Incorporated
James Whims, Gigex, Inc.
Henry DeNero, Arcturus Capital
Brian Dougherty, AirSet, Inc.
Jeffrey Griffiths , Lumber Liquidators,

From:
Current and Ex-Employees, Shareholders, and The Public

Dear THQ Board,
I am an ex-employee at THQ. I saw the tweet-started headlines over the past week from an "industry expert." This expert is one who I and my friends and co-workers in the industry have never heard of after a long time in the field. I had been reading the various following articles and accounts and it generated sympathy for friends both recently laid off and currently still there. I thought it would be a good idea to send a note with their input. This note has honest facts and thoughts about THQ and the current problems there. Most of these facts are public knowledge and they have been confirmed by public records or can be confirmed by current and former THQ staff there both before and after my and their time.
I am sending this note to you directly individually and have incorporated a BCC to gaming press.

I have long felt the need to explain to outsiders how this beaten-down company has wound up in this position. It is to the point where having it on your resume is not a point in your favor. And that shouldn't be the case. I'm/We're sending this note anonymously because some of us are still awaiting final checks and others know how little corporations like employees who air their dirty laundry. We feel the need to say something to combat the partial misinformation being written.
THQ had been known through the years for having a formula. They find a hot license, make a cheap game, barely advertise it, and make money. This formula worked during the Playstation and Xbox and Gameboy days and made the company a lot of cash. Unfortunately, THQ's old guard executives seem to be stuck trying to manage the company the same way they did back then and haven't realized the industry has changed.

The beginning of the end came years ago as Brian Farrell lead an executive team to acquire a large number of studios. A large amount of cash was used in the acquisition or setup of game developers with different degrees of talent. The problem was they were bought without strategic reasoning or specific plan on to use them. So after awhile another large amount of money was spent as those studios failed and were sold off and shut down. The executive team at the time were an entirely different group of people with one key exception in the CEO. The CEO/the then executive team wasted the cash that the company had built up with these massive investments and selloffs.
The studio purchase errors were not helped by the mistakes in the licensing deals that were signed by the same CEO. Millions and millions of dollars were wasted on acquiring licenses at the same time the kids, family, casual business was declining at a rapid rate. Instead of slowing those acquisitions he overpaid for more of them until again cash was wasted in paying for brands that didn't sell well anymore.

The mistakes in decisions and cash losses triggered wave after wave of layoffs. In the most recent wave, about 40 people lost their jobs this past December through no fault of their own. The reason why is the chronic and constant mismanagement of their company. The fact is that the CEO and executive committee were so focused on trying to hit an unrealistic financial goal that they bet everything on an extremely risky proposition in the uDraw tablet. When they lost, they further displayed their lack of management skills by not having a contingency plan. Three weeks after the game launched, an entire business unit was wiped out when it didn't meet its goal due to relying on that one product to hit an unrealistic target.

After the layoffs many ex-employees walked around shell-shocked and trying to figure out who was responsible. They came to the understanding that most of us do after leaving the company. The issue with THQ has never been one of lack of staff creativity, intellect or business intelligence. It all rests of the failure of its management team and you the Board of Directors.

This Board has allowed the Brian Farrell, the CEO, the ongoing ability to take a cash-rich profitable company and drive it from a $30 share price down to around $.70 without acting despite numerous mistakes that even for those lacking business training, could see were errors. Even without glaring mistakes how can the same CEO stay in charge after a 99% share price loss? Aside from the board, who is responsible for the current situation and who is accountable for the current and future job losses at the company? When you ask the recently departed who are a good source of information, you get the same answers. This uDraw failure is the largest and most recent one in a string of them that were hushed over and hidden. The answer aside from the Board is the current executive team that allowed this uDraw implosion to happen.
Brian Farrell, CEO with a 2011 salary of $1,289,558, for a lack of business intelligence or fiscal accountability. A vocal inside group pointed out the mistake of trying to launch a year-old product that received almost no software support in the last 12 months. Instead of listening and having a back-up plan, he went ahead and invested a ridiculous amount of money in the manufacturing and advertising of the product and failed miserably. It is passed time for him to go. We are wondering what is taking so long for you to act. We have been wondering this same question for a long time.

Martin Good, EVP and head of Kids, Family, Casual with a 2011 salary of $1,198,023, for bringing no strategic thought or business sense to the role. He was brought out from Australia sales to replace an outgoing head of the business unit and rapidly displayed a complete lack of leadership skills, vision, and any sort of analytical sense. Looking at his compensation package, he is an excellent negotiator as his salary is higher than anyone's except for the CEO. On the plus side he lost his job with the rest of those laid off. On the minus side, he will be floating down on a golden parachute while the rest of the former employees scramble to look for jobs in this challenging environment. Most of those jobs will be at studios in other parts of the country, so they will be forced to relocate their families in the middle of their childrens school years. It is incredible that he made this level of income while doing such a poor job, but it serves as a reflection of the lack of Brian Farrell's ability to staff well and manage.
Paul Pucino, CFO with a 2011 salary of $674,855, for not planning for this possibility and having a safety net or a plan to cover THQ just in case of failure. We have a line of credit that we likely used to buy the plastic that is not selling to customers. It is like taking a cash advance to buy THQ stock and just as worthless of an investment. Paul is known as an absentee executive who is missing when business situations gets complicated. While he was in the loop at the point of the risk, with the following failure he has been clearly unavailable. It is another example of Brian Farrell's inability to staff.

Ian Curran, EVP and head of global publishing with a 2011 salary of $1,037,047, for not flagging an unrealistic sales goal to the CEO or the Board when a big part of the corporation felt the numbers were unrealistic. He blindly held up an unachievable target and didn't act when multiple people told him he was aiming to high and out of step with the marketplace. If a sales executive's job is to anticipate the market, he has done a poor job of it. Another example of Brian Farrell not being able to find the right people for the right job.

Ed Kauffman, EVP of Legal and Business Affairs who clearly was signing bad deals on licensed products, not factoring in the changes in the business and being more critical with financial terms with partners. uDraw by itself cannot possibly explain the companies poor financial health. It is a combination of that product and a string of bad licensed deals that the company took on against better judgement. While Brain Farrell would logically be the final decisionmaker for deals, Kauffman is either unpersuasive in his arguments to not do them or supported them. Either situation equates to another example of poor staffing choices by the CEO.
uDraw was failure and the only people to blame are the people listed above. THQ and its current financial situation is also their responsibility. And they were paid around $4.5 million dollars for their poor decisions. If there is any doubt we would recommend talking to current and former staff to get the straight story. Don't read this note as bitterness on their part, but more as long overdue truth.

So, Board, it is time. Passed time for you to act and passed time for you to do something about the mismanagement that has gone on for too many years. We've watched the stock from the outside and read the comments and the reason why the company is valued so low despite its sales is because of this underqualified management team.
Board it is time for you to act before your names are added to the list above of things that must change.
Sincerely,

The Formerly Mismanaged

The HotSpot is taking live calls!

Hey @everyone,

For those of you who somehow managed to make it all the way through last week's HotSpot, you may have heard me promise that we're going to experiment with live-to-tape calls. I don't know why I promised that, but I feel like it would be rude to back out now, so eff it. We're doin' it live.

Here's how it's going to go down, in theory. We record the show each Tuesday between 1 pm PST and 3 pm PST. So, from about 2:15 to 2:45, I'm going to have Skype loaded up, ready and waiting to take your calls.

There's two options to contact us. You can call us through your own Skype account by adding "GameSpotHotSpot" to your contact list. Alternatively, for those who'd like to call us using your boring old phone, the call-in number will be +1 (415) 644-5065.

Please note that this phone number is different than our boring old number +1 (877) 506-8324 (aka 1-877-j0n-tech). I assure you, j0n-tech is alive and well, and if you'd simply like to leave us a message anytime throughout the week, keep using that number.

OK, some ground rules for how phone calls will work. I'm limiting your time on the air to 90 seconds, so keep it concise. With this time, you can either ask us a question (about whatever you like, but preferably game-related) or take to your soapbox for a rant (must be game related).

To be clear, in the interest of time, I will be cutting you off after 90 seconds, even if we haven't completely finished answering your question or if you haven't even finished asking your question. When I do so, please do not take it personally. Know that I still love you. We simply need to move on.

Griefers take note: If the call goes South, I'll simply kill the line and then pipe warp your ass in post-production. It will not be satisfying, I promise.

One more thing to note. I'll be using the GameSpotHotSpot Twitter feed to provide updates for when we begin and end answering live calls. Prior to recording, I'll also send out a Twitter blast of the news and reviews we'll be talking about, if you'd like to focus your question or rant on something current.

Alright folks, I think that covers it. Let me know if you've got any questions, but otherwise, we're looking forward to hearing from you on Tuesday!

Tom Magrino Ornament

This blog is a part of the scavenger hunt.

Share a couple of items on your Christmas wishlist this year.
As this is a family Web site, I'd better not.

What games will you play during the holidays?
For whatever reason, my brother is more inclined to take bullets out of people than to put bullets into them. It's an odd and esoteric practice, one that I don't quite understand and find vaguely intolerable and slightly inflammatory. I mean, who is he to thwart the work of others? But it is what it is. Also, my mom digs the crap out of New Super Mario Bros Wii.

What are the kinds of food or drinks you must have during the holidays?
My family is crazy. Alcoholic anything works.

ORNAMENT HUNT ANSWER - CLUE 27

A special kind of crazy

Hey blog, haven't seen you in a while. How you doing? Right on. Hey, I wanted to show you something. No, no, nothing like that. Come on, now. Look, it was just that one time, and we both thought it was funny if I recall correctly. OK, are we done? Good. So back to what I was saying, I just found this press release and thought of you. Check it out:

Left Behind Games Announces Release of Tribulation Forces

TEMECULA, Calif. - (Business Wire) Left Behind Games Inc. (OTCBB:LFBG), also known as Inspired Media Entertainment, announces the mainstream distribution release of LEFT BEHIND II: Tribulation Forces, the PC Game, on June 15th, 2009. Tribulation Forces is the much-awaited sequel to the original game LEFT BEHIND: Eternal Forces, which is known as the most widely distributed Christian PC game in history.

Public Relations Director, Tammy La Barbera, says, "The original game 'Eternal Forces' became one of the most highly publicized games of 2006, as politically motivated groups launched an all-out war against the game, by making false claims that the game included conversion to Christianity as a requirement or gave points for killing Muslims. The media frenzy resulted in feature stories on ABC, NBC, CBS, FOX NEWS, MSNBC, CNN, BBC, and numerous other worldwide networks and in print in the San Jose Chronicle, Newsweek, Wired and many others. After more than two years and a third-party investigation, it was determined that the Tides Center, a taxpayer supported non-profit, and others, launched and paid for a campaign to smear the game and Company, which may have resulted in a $200 million loss in shareholder value as the stock plummeted as a result of their misinformation campaign. Left Behind Games is a publicly traded company."

This new second chapter in the LEFT BEHIND PC Game series includes significant new features, improvements, maps and missions. The game includes 45 single player missions including tutorials and an all-new skirmish mode allowing players to play against the computer by themselves or with up to 7 friends online. There are 39 skirmish battle multiplayer maps and 3 different multiplayer modes of play.

CEO Troy Lyndon says, "From purely a playability point of view, Tribulation Forces is well-balanced and competes directly with other modern-day real-time strategy games." Lyndon continues, "This new game includes a new and improved version of the original as its foundation, but includes the polish gamers have requested and the all-new skirmish feature rocks!"

Amidst the original controversy, organizations including Focus on the Family and the majority of church groups worldwide support Left Behind Games. Dallas Anderson of the Billy Graham Evangelistic Association said, "The genius of these games is that they provide positive moral input to a generation that would otherwise not hear it!"

Although LEFT BEHIND: Tribulation Forces has been available online and in participating Christian stores, its mainstream debut is expected to bring it into major retailers this fall leading up until Christmas.

Gamer Eric B. of Austin, MN, says, "I play Age of Empires. But being that I'm a fan of the LEFT BEHIND books, I am now a big fan of the LEFT BEHIND PC games. When I'm done playing the LEFT BEHIND game I feel all jazzed up and don't feel emotionally wiped out like I feel after playing other video games. I love the style of the game and everything about it!"

According to the NPD Group, games on computers like Tribulation Forces accounted for $910.7 million in sales with 36.4 million units sold. According to the Entertainment Software Association, the 'strategy' genre of Tribulation Forces is played by more than 33% of PC gamers and represents the largest gaming segment in computer games.

Left Behind Games Inc., also known as Inspired Media Entertainment (www.inspiredmedia.com), was founded in 2001 for the purpose of developing and publishing inspirational games. Their mission is to become the world's leading independent developer and publisher of quality interactive entertainment products that perpetuate positive values and appeal to mainstream and faith-based audiences.

Haze-d

"Gaming for me is a religion and Haze is the **** said Jonathan Davis. "I had to come up with a track that can hit up that kind of rush I get from the game and I think we really rocked it!!"

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