The encyclopedia · Product & Design · Product decision · 2011–2013
THQ bet $50M on a plastic tablet for kids — then filed bankruptcy with $240M in debt
THQ was the #3 game publisher. The uDraw tablet for Wii flopped, costing $50M+ in unsold inventory. THQ filed Chapter 11 in December 2012.
THQ · Nintendo · 2012-12
What happened
THQ, founded in 1989, was the third-largest video game publisher in the United States, known for franchises like Saints Row, Darksiders, and WWE SmackDown. Revenue peaked above $800 million in the mid-2000s. The company was profitable and had a diverse portfolio of licensed and original titles.
In 2010, THQ launched the uDraw GameTablet, a drawing peripheral for the Nintendo Wii. The initial Wii version sold well, so THQ expanded it to the PS3 and Xbox 360 in 2011 with a $50 million marketing push. The PS3/Xbox versions flopped: the audience for a children's drawing tablet on those consoles was tiny. THQ was left with over $50 million in unsold uDraw inventory.
The uDraw disaster was the final blow. THQ had already been weakened by the cancellation of a licensed game based on the movie 'The Avengers' and the closure of several studios. On 19 December 2012, THQ filed for Chapter 11 bankruptcy with $240 million in debt. Its game franchises were auctioned off: Saints Row to Deep Silver, Darksiders to Nordic Games, WWE to 2K Sports. A publisher that had employed 1,000+ people was liquidated in months.
Why it happened
- The uDraw expansion from Wii to PS3/Xbox assumed the same audience existed on all platforms — it did not. The Wii had families with young children; the PS3/Xbox did not.
- $50M in marketing for a children's drawing tablet on hardcore gaming consoles was a catastrophic misread of the customer.
- The unsold inventory was a cash-flow crisis: THQ had paid for manufacturing and marketing but could not convert the product into revenue.
- THQ's licensed-game strategy (WWE, Pixar, DreamWorks) meant it had few original IP assets to fall back on when licenses were lost.
The lesson
Success on one platform does not predict success on another. The uDraw sold on the Wii because the Wii had kids. THQ spent $50M marketing to an audience that did not exist.
Aftermath
THQ's assets were auctioned in January 2013. Nordic Games (later THQ Nordic) acquired the THQ name and several franchises. Saints Row, Darksiders, and other titles continue under new publishers. The uDraw is remembered as one of the worst peripheral launches in gaming history.
Sources
- THQ — Wikipedia (founded 1989; #3 US game publisher; revenue peaked $800M+; uDraw GameTablet 2010/2011; $50M+ unsold inventory; Chapter 11 filed 19 December 2012; $240M debt; franchises auctioned to Deep Silver, Nordic Games, 2K Sports)
- Forbes — THQ Files For Bankruptcy, Promises No Disruption (19 December 2012; Chapter 11 in District of Delaware; Section 363 sale; Clearlake Capital $60M stalking horse bid; $37.5M DIP financing from Clearlake and Wells Fargo; uDraw described as 'disastrous experiment in hardware')
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