Profile

Brian Farrell Title: President and CEO Company: THQ Inc. Born: Santa Monica, 1954 Education: B.A. in English, Stanford University, 1975; MBA, UCLA, 1978 Most Admired Person: His father Personal: Married, three children By JENNIFER NETHERBY Staff Reporter Video game maker THQ Inc. was struck a major blow last year when it lost its license to make products based on World Championship Wrestling. Its stock price fell immediately after the announcement that WCW would transfer its games license to Silicon Valley-based Electronic Arts. But Chief Executive Brian Farrell is confident he can turn things around. A former consultant with Deloitte & Touche and then chief financial officer with Hotel Investors Trust, Farrell joined Calabasas-based THQ in 1991 as vice president and chief financial officer. In 1995, after two years of losses, THQ’s board appointed him president and CEO and the company subsequently rebounded, reporting 17 consecutive quarters of earnings growth since then. Farrell says he is confident that the recent acquisition of rival game maker Pacific Coast Power & Light Co., a partnership with MTV Sports, and deals to produce more Walt Disney Co. titles and additional “Rugrats” games will drive up the sagging stock. Farrell himself is more of a businessman than a game player. While game consoles for Sony, Nintendo and Sega are scattered throughout THQ’s headquarters, he rarely plays. Question: In the wake of the Littleton shooting, attention has shifted to video games as one of the possible causes of teen violence. Is there any validity to that concern? Answer: So far there’s been no proof that any form of entertainment movies, TV, video games actually has a cause-and-effect relationship in cases like that. By the way, as a parent, as a human being, I feel for the families and parents and everyone involved there. But it’s awfully simplistic to blame video games or anything else. I’m a parent and I watch closely the kinds of games that my children can play. There’s another point there. We have a rating on everything from kids to adult, all the way to mature. There’s a lot of entertainment value the video industry and THQ has brought to consumers. Littleton was tragic. Let’s not fall on the other side of the horse and start a witch hunt on an entire industry. Q: THQ’s stock has been in a bit of a slump despite strong support from analysts. What’s your theory? A: I think there’s probably two things going on in the marketplace right now. One is there’s some concern about the whole WCW transition. Wrestling is great but who knows what (Championship) Motocross, rodeo, MTV, all these products can add to the portfolio. And people forget we have a very significant portion of the World Wrestling Federation, which is by far the superior license in that category. We feel like we’ve answered the question. There may be some sort of wait and see. The second thing is, there is a platform transition going on now between 32-bit and 64-bit to the next generation of 128-bit. Historically, there’s been a little sloppiness through those transitions and I think investors are somewhat concerned. That said, stocks go up and down. We grow the business, make money, the stock will take care of itself. Q: When you came on as CEO in 1995, the company had lost $30 million over the two previous years. What was the problem, and what did you do to turn things around? A: There were a couple things that needed to be addressed. The product line needed to be rationalized, costs needed to be reduced and we needed to switch to a lower-risk strategy in terms of product decisions and inventory management. At that time there was a platform transition going on. A lot of publishers were getting out of the old 16-bit hand Gameboy. And we decided to try to get the best (Gameboy) titles possible. Even though the market was declining, we could generate revenue and cash flow and profits in the Gameboy category because there’s been no replacement for it. That business has just continued to grow. Question: Were you a video game player before you went to work here? Answer: I’m what we call a casual gamer. I understand games, I grew up with games, I still have an original Pong. But I’m not the core gamer that really helped build some of this business. Q: Do you enjoy test driving the new products as they come out of research and development? A: No, no. There’s a couple games I look at for my children. There have been a couple of small instances when I’ve said “Gee, the game really ought to have this, or this is my comment on it.” But I try to keep the people who are really good at that doing that. I’m not into micro-management. I’m not the creative guy here. Q: How would you describe the typical consumer of THQ products? A: We have a kids business, and then we have our sort of mass-market business, led by wrestling, which has been a big win for us. Our fishing and bowling products have surprised us on the upside. And we just announced a deal in the rodeo, so that’s Middle America. We’ve also announced a group of products to be coming with our MTV Extreme Sports line. The MTV buyer’s probably going to be a teen-age male, the kids’ products are clearly going to be a parental purchase. And when you get to that mass market, it’s parents and kids buying the products. Q: How do you gauge whether a product will sell to a certain demographic, especially the younger computer crowd? A: We try to get good feedback from our retail partners both here in the U.S. and overseas before we green light the product. That’s the difficult thing. Our whole strategy is to try and make sure the risk is covered as much as possible. Q: What new products in the pipeline are you excited about? A: I think it’s our best product line ever. In the next two weeks, we’ll have the new version of “Rugrats.” We move into the second quarter and we have the distribution rights (for “Star Wars Episode One: The Phantom Menace”) in all the German-speaking territories, which is the second largest PC market, third largest console market. “Road Rash” from our recent acquisition of Pacific Coast Power and Light. Motocross in third quarter, in fourth quarter wrestling with the WWF. Certainly more “Rugrats,” “Toy Story” on Gameboy. Q: What does THQ’s recent acquisition of rival game maker Pacific Coast Power & Light do for the company? A: One of the things it does is expand our development capabilities. We have actually done contractually the programming and artwork outside. This (purchase) now augments our ability to build things internally. What Don Traeger and his partner Dennis Harper bring to the party is, they have excellent technology and they’ve built great games before. We think people like that, who can create technology and create brands, really help build the company’s value over the long term. Q: Technology is exploding at an incredible rate. What games will we be playing five, 10 years from now, and where will those games be played? A: One of the things we try to do at THQ is say that we’re platform-agnostic. We’re in the content business, we’re in the business of providing game entertainment to consumers. Clearly the Internet could be, when the bandwidth is there, a great gaming platform. It’s sort of what are people willing to do and pay for on the Internet. I think it’s very likely there’ll be some kind of two-way cable modem in the home to provide very broadband movie, TV, Internet access and most likely video game access through a set-top box. Is that gonna be a Sony or Nintendo or Microsoft or a TCI? I don’t know.