The THQ Auction - Who Got What?

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THQ's auction has come and gone, leaving some studios and IPs with new homes, while others remain in the wind. Leading up to the auction there was speculation about what companies such as Electronic Arts (NASDAQ: EA) and Time Warner's (NYSE: TWX) Warner Brothers Interactive Entertainment were hoping to get from the asset auction; now that the auction has ended and all that remains is to complete the auction-related sales, there were a few surprises to be had.

Most surprisingly, neither Electronic Arts nor Warner Brothers Interactive Entertainment walked away with anything. Both of the companies were mentioned frequently in discussions leading up to the auction, but neither was listed as the winning or backup bidder in court documents released upon the conclusion of the auction. It's possible, of course, that one or both companies placed bids on THQ assets but were outbid by others participating in the auction.

Another surprise came from Relic Entertainment, developer of the Dawn of War and Company of Heroes franchises. Sega Sammy Holdings won the studio with a $26.6 million bid, making it the highest-valued asset in the auction. Relic's value may be in part due to how close the planned release date for Company of Heroes 2 is; Sega could have paid a premium due to having a game ready to release soon after acquisition. They weren't the only company bidding high; however, as the backup bid listed in court documents was $26.3 million from Bethesda Softworks' parent ZeniMax Media Only the Company of Heroes franchise was mentioned in the documents so it is unclear whether Sega will gain rights to other Relic-developed IP in the purchase; at the very least it has been confirmed that the Homeworld series is not included as it is scheduled for inclusion in a later sale. The company will likely have to license the Dawn of War series separately from Games Workshop, though given that Sega already holds a license for Warhammer Fantasy games there is a good possibility that it could end up with the necessary Warhammer 40k license as well.

The asset with the next highest value was Saints Row and Red Faction developer Volition Inc. which received a winning bid of $22.3 million from Koch Media GmbH. It remains to be seen what Volition's ultimate fate will be, however, as Koch is transferring the Saints Row franchise to its Deep Silver studio. Koch also aquired the rights to the Metro franchise for $5.8 million, beating out bids from Ubisoft Entertainment on both of those properties.

That doesn't mean that Ubisoft is walking away empty-handed, however. The company succeeded in acquiring distribution rights to South Park: The Stick of Truth for $3.2 million, and also picked up the THQ Montreal studio and its 1666 and Underdog projects for $2.5 million. There had been rumors that Ubisoft was wanting to expand its presence in Canada, and the purchase of the Montreal studio was one of the options I mentioned when I previously discussed the THQ bankruptcy. South Park Digital Studios had attempted to block the sale of The Stick of Truth's distribution rights, but so long as the court doesn't stop the purchase at the last moment it should go through without a problem.

Other non-studio assets sold in the auction include Evolve, a shooter that was picked up by Take-Two Interactive Software (NASDAQ: TTWO) for $10.8 million, and the Homefront franchise which was purchased by Crytek GmbH for just over $544,000. The Evolve purchase is notable in that Take-Two outbid the game's own developer, Turtle Rock Studios, Inc., leaving it unclear as to whether the game will be reworked by a Take-Two developer or if Turtle Rock will remain involved in some respect. The purchase of Homefront by Crytek is reasonable as Crytek was already working with THQ on the game's development; the biggest shock there was that the IP sold for so little.

One notable absence in the auction results is Vigil Games and its Darksiders franchise. It's unclear as to what the future will hold for Vigil and Darksiders, though the properties and other unsold IP remain part of the bankruptcy case. In a letter sent to THQ employees, THQ president Jason Rubin and CEO Brian Farrell stated that these unsold properties may still be sold at a later time as they continue to search for buyers while the bankruptcy moves forward. This could also open the door for companies such as EA and Warner Brothers to benefit from the bankruptcy even though they did not win any of the items sold in this auction.

There is still a lot of uncertainty surrounding these new acquisitions, especially in regard to what the purchasing companies will do with their new studios and franchises. Sega could be positioning itself to become a strategy game powerhouse with both Relic and The Creative Assembly under its control; Koch Media, on the other hand, may have purchased Volition largely for its IP and may have plans to shut the studio down after its assets are transferred to other studios. The wording of the auction results also leaves the fate of several IPs up in the air, though some of those missing properties may be included in the later sale. There's also a few of THQ's licensed properties that are unaccounted for, though rumors have begun circulating that Take-Two has purchased the WWE license outside of the THQ auctions.

For now, it seems that there's still a lot that isn't known about the future of THQ's assets. It seems likely that Company of Heroes 2, Metro: Last Light and South Park: The Stick of Truth will still see release, but beyond those games only time will tell what will happen to the newly purchased or as-yet-unclaimed studios and intellectual property.

Croaxleigh has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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