GAMING
Playing by the Rules
THQ's BRIAN FARRELL rolls with gamers' changing landscape
{AGOURA HILLS, CA}
By Jason Carignan
Brian Farrell doesn't have much time to battle his son in video games lately. Instead, he is engrossed in the real-world fight of his life at THQ, the Agoura Hills-based video game maker where he has been CEO for 17 years.
Like every sector of the entertainment business, the video game industry is undergoing a sea change of simultaneous disruptive forces that are turning the tides on the old guard. The emergence of Facebook, Apple's iPhone and App Store and new "free-to-play" games have fundamentally changed the way games, and the business of games, are played.
The stakes are huge. The $74 billion gaming industry has surpassed Hollywood in terms of total revenues and is expected to reach $112 billion by 2015, according to technology consultancy Gartner. Last year, Activision, one of THQ's main competitors, made over $650 million in just five days from the sale of its megahit, Call of Duty: Black Ops. And social-gaming darling Zynga, maker of the hugely popular FarmVille, has seen its market cap hit $10 billion.
Meanwhile, THQ suffered a disastrous holiday season after one of its big bets, the uDraw GameTablet, a peripheral device that lets users draw on a tablet and see their creations on their television, tanked. The company's stock now hovers around $0.52, down from a high of $36.16 in April 2007, and faces possible delisting if Farrell can't turn the business around by July.
For his part, Farrell is already earning renewed company faith on Wall Street. "We've had to reinvent ourselves several times, and we're doing it again." says Farrell, 57, with an undaunted optimism for the future of gaming and the prospects for THQ. Drawing comparisons to an independent Hollywood studio, Farrell outlined his plans for success with new titles that target "core gamers" who buy between 12 to 20 games per year.
In the early days, the videogame maker was known for its kids games based on licensed characters from companies such as Disney and Dreamworks. But, as kids have moved away from consoles to mobile devices, THQ has seen this market evaporate. Now the company is pegging its future on homegrown titles like its highly successful Saints Row and Darksiders franchises, along with popular licensed games Ultimate Fighting Championship and World Wrestling Entertainment.
In an industry where one hit can change everything, Farrell also notes that a number of new and innovative titles in the pipeline have the potential to turn the tides back in the company's favor. He recently struck a deal with game designer Patrice Désilets, best known for his Assassin's Creed action-adventure game series, and he is also working on a project with acclaimed Hollywood producer Guillermo del Toro (of Pan's Labyrinth and Hellboy fame).
But Farrell is quick to state that "the past 90 days have been the most challenging of my career." He praises his father, a CPA with the former PriceWaterhouse, for teaching him the value of treating people at all levels in an organization with respect, especially when challenges arise. "You have to stay really visible. You can't sit in your office doing emails."
Farrell acknowledges that the rise of new gaming platforms, new play styles and new consumer wants will require more than a just few big hits to achieve a sustainable turnaround. He believes that THQ must create new "connected experiences" that change the gaming paradigm and seek new ways to make money in the new world. "Do we have the answer yet? No. But we have some really interesting ideas and experiences in play. And we like to fight battles we can win."
