Fighting Fit

In part one of our interview with Brian Farrell, the THQ CEO discussed the importance of bringing new IP to market and the challenges of competing with other third-party publishers.

Here, in part two, he talks about striking a balance between following trends and being different. He also explains why cross platform titles are no longer as key to THQ's strategy, and discusses the publisher's current forecast for the market share split between Sony, Microsoft and Nintendo.

Brian Farrell: I joke, and Blizzard's heard me say this - in the investor community, they say, 'Just do a World of Warcraft,' right? 'Just do a Grand Theft Auto, do the market leading product.' But kidding aside, it just shows that game style resonates with people.

What we're not going to do is a World of Warcraft knock-off. We want to give people something new, so the Warhammer 40k universe is totally different. It's not fantasy based or futuristic based.

[Worldwide publishing VP] Kelly Flock has some great ideas about what people want to do, the next thing in MMOs, which I'm not going to talk about today - but there are very unique points of difference to attract that consumer base from World of Warcraft. We have a great franchise and we're putting together a hyper-competitive development team. We want to be in the business, but we want to do it right.

If you look at something like Company of Heroes, I think that's one of the best RTSes ever made. Its cutting edge thing was to take the RTS and rather than just having it be about management, there are a lot more action elements. So we have no problem leading.

With Grand Theft Auto and Saints Row, superficially - yes, there's a street with a player in it, and if you just stop there and take a screenshot it may look the same. But the way it plays is very, very different; there's a lot more going on, what you can do with your world. I don't know if you saw the YouTube video with the guy taking the bazooka and knocking the train down - you can't do that in Grand Theft Auto.

There are certain game mechanics and game styles that are proven and will always exist. But even with something like The Outfit, we experiment with blending RTS with action. Commercially, not the most successful product, but we'll take some real creative risks. I like to think of us as someone who's leading.

The way we're looking at the market over the next five years is that it's going to be more segmented. Not fragmented, segmented. What I mean by that is 360 and PS3 are very powerful machines, with very robust online components, and they're more targeted at the core gamer.

We're seeing very robust PS2 and Wii markets that are sitting right next to 360 and PS3. What does that tell us? That there are a lot of casual gamers for whom $129 for a PS2 is a great value proposition. The same with Wii, $249, very new, very casual. Handhelds - DS probably goes from the ages of 6 to 16, and the PSP's provided a new market of 16 or above.

I don't mean to over-simplify this, but in the past a lot of publishers - including us - would say, 'Okay, let's make a game and get it across every system.' That's not our strategy going forward; there are going to be different gamers for the different systems. So our strategy is different types of content, segmented on who the users of the systems are.

It's unclear at this point. The mass market will always be, when you get to the right price point, the biggest. The Wii has a great opportunity, but does that mean it's going to be the largest platform in this generation? It's hard to say initially.

It's clear that you've got three well capitalised competitors who are not going to go quietly into the night, which for a games publisher is nirvana. Microsoft has the early lead with the core gamer; Sony's ramping up quickly, particularly in Europe, where trying to erode Sony's market leadership is going to be very difficult.

As we look out and reforecast, it looks like a three-way split. I don't mean to be politically correct here, but that's not a bad way to be thinking about it. Something could change tomorrow, but it's going to be a really interesting race. I can't remember when three platforms co-existed like this.

You're right in that question. Sony and Microsoft have both already talked to us about our mass market portfolio. For example, we're going to bring Ratatouille to 360 and PS3, and they love that content. Look at what Microsoft did with Viva Piñata - they want to get that market.

We released Cars on the 360, and it was a great commercial investment for us; we did several hundred thousand units. It didn't do as well as the PS2 or the DS, because the installed base wasn't as high. That mass market consumer is not yet in droves on the 360 or the PS3, but there is an addressable market there.

I think Microsoft was making a statement with Viva Piñata - 'We are not just a core gamer machine, we are going to be a broad market machine.' Commercial success aside, sending that message was the right strategy for them.

Probably in terms of number of SKUs we're slightly more aggressive on Wii, just because we see that as the biggest market opportunity with Pixar, Nickelodeon, WWE is a natural opportunity on Wii. There are a couple of other things I can't talk about today that I saw at one of our studios where I thought, 'These products belong on the Wii.'

Then when you look at the core gamer properties, these are the big bets - the high cost, very targeted games. Things like Frontlines, Saints Row. You've got to compete at the highest level of quality. There are fewer of those bets, but they'll probably be very large in terms of sales numbers.

It's probably more SKUs, more actual games on the Wii, but in terms of revenue dollars, as we look out it's pretty evenly split.

Yes, because in that world you're going after the core gamer. To date, all of our core gamer titles are cross-platform on 360 and PS3. When people say, 'Who's going to win the race?', it's an interesting conversation, and we can bet a beer on it. But at the end of the day, if it's 60/40, PS3/360 or vice versa, we really don't care.