THQ closes multiple studios

Robin just pointed out that THQ is laying off a ton of people as well as EA. Paradigm Entertainment has been closed, one third of the staff at Juice Games in the UK has been laid off, Mass Media has been closed, Helixe may have been closed, Locomotive Games has been closed, and staff from Rainbow Studios has been laid off.

One plausible theory I heard is that it makes good business sense to contract now and hoard cash, so as to be better prepared for when things get better again in a year or two. It is no surprise that EA and THQ, big public companies, do this first. (I am also hearing rumors of a hiring freeze at Ubisoft.)

This means that companies that don’t lay off people may wish they had in a year or so, and may then become prime takeover targets – for EA and THQ. I wonder if Blizzard Activision might lay people off to be seen to do the right thing and to get rid of dead wood, even though they might not need to do so because of the money they are making with WoW.

In any case, as Alex pointed out on Twitter recently, working for a big, publisher-owned development studio is no longer a guarantee of safe employment (if it ever was).

Comments 3

  1. Stitched wrote:

    “In any case, as Alex pointed out on Twitter recently, working for a big, publisher-owned development studio is no longer a guarantee of safe employment (if it ever was)”

    It never was. Ever.

    I am fond of reminding people that your company is one project away from layoffs (just look at Avalanche Studios who had Just Cause 2 cancelled).

    Imagine, however unlikely, that the GTA franchise was developed somewhere else because it was cheaper and a “different creative direction”. Without another IP, Rockstar North would cease to be. That’s at least 200+ people (if the game credits for GTA4 are to be believed).

    You can see how this would affect other “one-hit” wonder studios who deliver a game that their publisher passes on/cancels (Ensemble Studios? FASA? The guys who made Titan Quest?)

    Ironically, the people who can afford to have multiple franchises that generate revenue, are the ones least likely to take risks or changes of direction; afterall, if ain’t broke, why fix it?

    It casts into light just how broken the financial model for funding games is.

    I also agree that this whole “trimming the fat” stage is going to prep the groundwork for acquisitions; The strongest financially will sweep up IP at bargain prices. They can always close the studio later, absorb the best, and liquefy the assets.

    Posted 04 Nov 2008 at 5:09
  2. Thaddaeus Frogley wrote:

    There is no such thing as job security, not now, not ever. But you knew that already, Jurie. I’m sure the industry, despite it’s reputation for being ‘recession proof’ will see a lot more redundancies, and a lot more trimming; not because it needs too, but because it’s a good time to get it over with – people will not cry foul, the global-economic-slowdown is a very powerful excuse for doing ‘what had to be done’.

    Posted 04 Nov 2008 at 5:16
  3. Jurie wrote:

    The only long-term job strategy I can think of is keep learning, be flexible, be nice to people, and live in a place with a lot of developers. Or do your own thing. Or switch industries.

    The industry is only proof against mild recessions. Games are still a luxury product. Sometimes I think I should learn how to farm. From scratch.

    It is incredibly difficult to be independent and develop original IP on a regular basis. Arkane Studios is actually one of the few companies who manage that. But that does not mean they are immune – they are still very much tied to the core games industry.

    Thad: Exactly, this will be used as an excuse to trim the fat. It would be fun to analyze financial statements, compare, and see how necessary the cuts really were.

    Posted 04 Nov 2008 at 6:32