Opinion: THQ Had No Choice But To Drop Devil's Third
Written Wednesday, May 16, 2012 By Lee BradleyView author's profile
Following the announcement of THQ’s intention to drop Devil’s Third, the future of Tomonobu Itagaki’s long-awaited action game hangs in the balance. But this isn’t another example of a publisher playing the bad guy. The truth is that THQ doesn’t really have a choice.
Beset by development troubles and set against the backdrop of THQ’s perilous financial situation, doubts have surrounded Devil’s Third for quite some time. It’s a title that represents a significant gamble for any publisher. But for a company in THQ’s position, it’s a risk that they just can’t afford to take.
So what is that position? Earlier this year, THQ laid off hundreds of staff and sliced their CEO’s salary in half, following a sharp decline in its licensed and core games and the disastrous performance of its uDraw gaming tablet. To this day, around 1.4 million units of the peripheral sit gathering dust in warehouses.
As a result of these previous missteps, the company now faces the very real danger of being delisted from NASDAQ, if by July 23rd it hasn’t raised its stock price above $1 for 10 consecutive days. With just over a month to go, the price is currently hovering at around 0.60¢ per share.
Such is the position of the company that Take-Two CEO Strauss Zelnick recently said that he believes THQ will be dead before November. He later apologised for his comments, but tellingly, he didn’t retract them. We think Zelnick is wrong, but THQ’s precarious position is undeniable.
Which brings us to Devil’s Third. The first game from Itagaki’s new outfit Valhalla Game Studios, Devil’s Third is a sci-fi, third-person shooter that marks a dramatic departure from the veteran’s legacy of games like Ninja Gaiden and Dead or Alive. Bolstered by Itagaki’s reputation, it’s a highly-anticipated prospect.
Yet despite this, concerns for the commercial viability of the project remain. Itagaki may have spawned some huge franchises in the past, but his name does not guarantee healthy sales, especially in the West. We may know who Itagaki is, but he has far less cachet with the wider gaming public.
These worries are accentuated by the waning popularity of Japanese titles across the world. While many commenters point to a decline in the quality of games developed in Japan, even the stand-out examples struggle to pick up much of a following. They’re just not as popular as they once were.
With titles like Shadows of the Damned failing to make an impact, even well-received, Western-influenced action games like Vanquish don’t perform particularly well. It costs so much to bring a mainstream title to the market that sales figures comfortably in excess of a million aren’t just a luxury, they’re a necessity.
Coupled with the fact that Itagaki hasn’t created a successful new IP in some time - remember Trapt on PlayStation 2? No, us either - Devil’s Third was always going to be a big gamble.
None of this is to say that Devil’s Third won’t be a wonderful game, of course. Perhaps it will be. But publishers are just as concerned with marketability as they are with quality. Games have to make a profit. And for THQ, that need is even greater. The stakes are high.
There’s more too. In THQ’s recent earnings call, CEO Brian Farrell explained the publisher’s decision to drop Devil’s Third by pointing to a number of other factors in the development of the game. Factors that neither THQ nor Valhalla could do anything about.
According to Farrell, Valhalla’s engine provider went under recently, necessitating a costly and time-hungry shift. In addition to this, the Japanese Yen has substantially appreciated against the US Dollar, meaning that development costs have crept up and up. Ultimately, Farrell said that continued investment in the project just didn’t make sense against other titles in THQ’s lineup.
Despite this, it’s not all doom and gloom for the publisher. While it recently recorded a $240 million annual loss; the restructuring of the company, a big upswing in digital sales, and the decision to drop licensed kids titles in favour of big core games has changed their outlook. Sales figures for the last financial quarter exceeded expectations. Things are looking up.
Saints Row recently became THQ’s most successful non-licensed franchise, spurred on by sales in excess of 4.25 million for Saints Row: The Third, while the game’s revenue from digital distribution channels exceeds that of any console title in the company’s history. Add Darksiders II’s pre-order figures to this, which come in at five times that of its predecessor, and the publisher’s renewed focus has them back on track.
Unfortunately for Itagaki and Valhalla, however, this new approach leaves no room for Devil’s Third.
We would love to see Devil’s Third hit retail, fly off shelves and sell millions. We hope it finds a new publisher and that Itagaki has another hit franchise on his hands. We also believe that the industry should stick its neck out for games of this type as they contribute to the diversity of the medium. But it’s not the right game for THQ. Not now.