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THQ Refocuses - Open Letter

NeoGAF has a lengthy letter sent anonymously overnight to the THQ Board of Directors, and signed by "The Formerly Mismanaged," who claim to be a group of "Current and Ex-Employees, Shareholders, and The Public" (thanks Strategy Informer). The letter attempts "to explain to outsiders how this beaten-down company has wound up in this position, laying blame for sharp declines to the company's stock price at the feet of CEO Brian Farrell, and calling other executives to task by name for failures to live up to their seven-figure salaries. On a related, though perhaps coincidental note, THQ announces a realignment whereby it is "exiting its relationships with kidsí licensed entertainment companies but will continue to sell certain previously released titles." Going forward, word is: "The company will continue to build its strong portfolio of core game franchises and align its resources to deliver games on both existing consoles and new and emerging platforms. The company intends to accelerate digital revenues by extending and supporting key console launches, and to create dedicated digital properties for emerging platforms." Here's a portion of the open letter:

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, THQís old guard executives seem to be stuck trying to manage the company the same way they did back then and havenít 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 didnít sell well anymore.

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48. Re: THQ Refocuses - Open Letter Jan 25, 2012, 17:45 Wowbagger_TIP
Prez wrote on Jan 25, 2012, 17:16:
Not to sound patronizing, but both Wowbagger and Matshock are right.

The rich have been demonized like nobody's business. It's classic class warfare drummed up by politician's who turn anger at the well-to-do people of society into votes for themselves. The problem is that CEO's of many companies become completely out of touch with reality (blinded by ambition or greed?) and end up making themselves fodder for such attacks.

It's easy to see both sides of the argument when on the one hand it's the "fat cats" who embark on business ventures that translate into jobs for the middle class, and on the other hand CEO's generally suffer the least out of anyone when a company tanks (and in fact can profit handsomely) when they are often the very ones responsible for the company's failure.

The reality is, however, Capitalism is the least vile of all the economic setups out there by a fair margin despite how it has been perverted by greedy, unethical corporate entities and equally greedy and equally unethical politicians. So, in my estimation, any solutions will be far from perfect. Sometimes so imperfect as to be more damaging than the problem it was developed to solve (see the current Administration's incompetence for recent examples).
Don't forget the previous administrations as well, which lead up to the 2008 collapse. Freeing companies like AIG and the banks from all those regulations over the last decade or so just let them go nuts with the risk with very little requirement to report any of it or to be remotely transparent about what they were doing. Then they just hold a gun to the head of the nation and demand that we not allow them to go broke. Nice. AIG was basically printing money for itself because thanks to "regulatory reform", they weren't required to maintain any capital reserve to cover all those CDOs they were insuring, nor did they even have to report any of it to anyone. So they could just keep raking in the fees without anyone being the wiser. At least until the housing market tanked and it blew up in their faces and we had to spend well over a hundred billion to bail them out, and that was just the direct bailout.

Of course the wealthy argued that you can't bail out the homeowners because that would create a moral hazard. If we were gonna spend a trillion or so anyway, might as well stop the first domino from falling, right? Then the CDOs wouldn't blow up, the banks wouldn't be failing, and the insurance wouldn't get hit. But no, they just wanted to bail out the guys at the top of the food chain. Funny how they didn't see the moral hazard problem with that.

Oh, and of course we continue to chug along with the most moronic regulatory infrastructure as well. Ratings agencies that are beholden to those that they're rating, and staffed by those who just weren't good enough to get jobs with the companies they're serving, and therefore not bright enough to figure out what they're up to. Regulatory agencies with similar staffing problems, lack of information thanks to the aforementioned "regulatory reform", and faced with political opposition serving as a barrier even to investigation much of the time.

These are the reasons we're so screwed.
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"The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts." -- Bertrand Russell (I think...)
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