Last Week in News analyzes all the most important stories of the previous week with the cutting edge and sharp teeth that only Vagary can provide
THQ Broken Up At Auction
It was a long time in coming, but the hammer finally fell on THQ and smashed it into many pieces. The company was sold off at auction last week, and after around 22 hours of negotiation, it was determined that THQ was worth more being sold for scrap than maintained as a single unit. The single portion of this sale that seems to have gotten the most press is the non-purchase — and subsequent dismantling — of Vigil Entertainment, the developer of the two Darksiders games. It seems that no one wished to purchase the studio, and all employees were immediately laid off following the auction.
The simple fact about Vigil is that the entire studio was built on a flawed business model. While the games themselves were received well in the press, there simply wasn’t the audience to justify the expenditures of a AAA studio. According to industry analyst Michael Pachter, the game had a break-even point of 2 million sales. Yet, the game only sold 247,000 copies in the first two weeks of launch. By early November, the game had only shipped (and that’s shipped, not sold) 1.4 million units. As a AAA gambit, Darksiders 2 was a failure.
While I enjoyed the fact that there was a studio making games like Darksiders, I wouldn’t want to wish on any publisher a studio that made money-losing games. Can a game like Darksiders be made under that sort of budget and succeed? God of War and Zelda (the two franchises after which Vigil modeled their own franchise) seem to do so, but these are long established IPs with entrenched fanbases which also had the advantage of launching in eras when game development was not nearly as expensive. And, even given those conditions, those two franchises rank among Sony and Nintendo’s least successful premiere franchises. With these two IP’s earning modest success, there’s just no room for the third wheel that is Darksiders.
Can Darksiders succeed? Maybe. But not using the model that Vigil presented. Despite their fine work, there was just insufficient demand for the product they brought to the table.
Nintendo Direct Announces Lots of Things in an Attempt at Misdirection
On the morning of the unfortunate finale to the THQ debacle, Nintendo gave hope to fans everywhere. There has been a distinct lack of content for the Wii U since launch, and one of the purposes of a call was to apologize for this absence of releases. The other purpose was to reassure people that there would be additional releases in the future. Nintendo proceeded to announce a litany of games, a veritable who’s who of classic franchises. Zelda, Smash Brothers, Mario- Nintendo hit all of the high notes. But a more thorough look at the announcement indicates that none of the games discussed would be released any time soon. While a remake of Zelda: Wind Waker was confirmed for the fall, that was the only title confirmed for 2013.
I’m all for announcements, and building hype, but this Nintendo Direct seemed like a five month preamble to announcements at E3. For an endeavor to reassure fans that games were on the way, there was a distinct lack of concrete detail over when that might be. The new Pikmin (which was supposed to have released in the “launch window”) wasn’t even mentioned. This lack of actual reassurance points me to the main purpose of the announcement: misdirection.
Owners of Xbox 360s and PS3s are about to be, in the next several months, inundated with a large number of quality titles. Grand Theft Auto V, Crysis 3, God of War: Ascension, Gears of War: Judgment, Bioshock: Infinite, and Tomb Raider (among others) are launched opposite Nintendo’s launch of… well, we don’t really know. And after several years of failing to give the Wii much support at all in terms of new titles, Nintendo fans are understandably worried about this comparison. Nintendo has long since held to a model of releasing several high quality titles a year. Yet, in the current console environment, owners of other systems look forward to several dozen high quality titles per annum. In the library comparison, Nintendo is falling further and further behind.
This situation calls into question the future viability of Nintendo’s business model. For the first time, Nintendo launched a console selling at a loss. This forces Nintendo to sell software in order to maintain profitability. But, as is becoming obvious from the large number of delays in their products, Nintendo’s development studios are having trouble getting that software to market at the same rate as their competitors. Additionally, the big third party games of the spring (the biggest being Grand Theft Auto V) are ignoring the console. All these facts combine to from a situation that, from an investor’s standpoint, is troubling.
Nintendo is by no means in any sort of danger as a company. Years of conservative financial management have left the corporation in a great position to weather the lean times. Still, concern should be expressed over a company attempting to behave in the same way they have for years, despite drastically different market conditions. Nintendo Direct portrayed a rosy future for the Wii U. The reality of the situation is far different.