THQ Inc. is a leading worldwide developer and publisher of interactive entertainment software for all popular game systems. Their line of popular titles spans a wide range of categories, which includes action, adventure, fighting, racing, role-playing, simulation, sports and strategy. They have created, licensed and acquired a group of highly recognizable brands, which we market to a variety of consumer demographics ranging from products targeted at children and the mass market to products targeted at core gamers. Their portfolio of licensed properties includes the Disney•Pixar properties Finding Nemo , The Incredibles , Cars, Ratatouille  and WALL•E ; World Wrestling Entertainment; Nickelodeon properties such as SpongeBob SquarePants , Avatar , and Nicktoons ; Bratz ; Warhammer 40,000 ; and the Ultimate Fighting Championship; as well as others.

Business

THQ Inc. is in the business of developing and publishing interactive entertainment software game systems including home consoles such as Microsoft Xbox 360, Microsoft Xbox, Nintendo Wii, Nintendo GameCube, Sony PlayStation 3 and Sony PlayStation 2; handheld platforms, such as Nintendo Dual Screen, Nintendo Game Boy Advance, PlayStation portable entertainment system; and personal computers.

Their portfolio of titles spans several categories which include action, adventure, fighting, racing, role-playing, simulation, sports and strategy. Their list of licensed properties include titles from Disner Pixar with Finding Nemo, The Incredibles, Cars, Ratatouille and WALL•E; World Wrestling Entertainment; Nickelodeon, with SpongeBob SquarePants, Avatar and Nicktoons; Bratz; Warhammer 40,000, and the Ultimate Fighting Championship.

Aside from licensed properties, they have developed wholly owned games with titles such as Company of Heroes, DeBlob, Frontlines, MX vs. ATV, Red Faction and Saints Row.

During the fiscal year ended March 31, 2008 (fiscal 2008), the Company acquired Big Huge Games, Inc., a development studio focused on the role playing games (RPG) genre; Universomo Ltd., a developer of interactive entertainment software for mobile platforms, and Elephant Entertainment, LLC, a publisher and distributor of casual personal computer (PC) games.

THQ’s games are developed through both internal resources consisting of producers, game designers, software engineers, artists, animators and game testers located within their internal development studios and corporate headquarters; and their external resources which comprise of third-party software developers and other independent resources.

Their sales are accomplished through a global sales network which includes offices in North America, Europe and Asia Pacific and markets and distributes games directly to mass merchandisers, consumer electronic stores, discount warehouses and other national retail chain stores as well as direct-to-retail basis internationally.

Their business strategy involves four key areas of implementation. Increasing their sales and profits generated from their leading portfolio of mass-market franchises is an important part of their strategy. In order to achieve this THQ has diversified their products to include big name brands in entertainment including Disney Pixar, World Wrestling Entertainment, Nickelodeon, DreamWorks Animation, MGA, Ultimate Fighting Championship and Marvel.

The next step to their four part strategy involves developing sequels and extending their owned intellectual property. This strategy was met with the shipment of 1.5 million copies of MX vs ATV: Untamed, the recent release from MX vs ATV franchise. They have also grown their portfolio of wholly owned franchises with Frontlines: Fuel of War and Drawn to Life.

THQ also continues to pursue growth opportunities in digital content creation and  distribution by focusing on generating revenue from in-game advertising, downloadable content/micro-transactions, mobile content and massively multi-player online ("MMO") gaming.

Lastly, THQI is intent in growing their overseas business through a global product portfolio and a strategy of driving sales via a direct distribution sales channel. Their international net sales grew 24% in Fiscal year 2008 to represents more than 50% of total net sales.

Financials

Fiscal year 2008, was a solid year for THQ with their revenues equaling and even slightly surpassing the previous year. They generated $1 billion in 2008 and 2007 and $806 million in 2006.

They have the highest presence in Platform Consoles with a total of $568 million in 2008. Most of their revenues generated in Platform consoles have come from Sony PlayStation 2 related products with $252 million. This is seen to decline in the next year as they grow their presence in the second generation platforms. In 2007, Second generation platforms have generated total revenue of $306 million with Microsoft Xbox 360 leading the way with $129 million while Sony PlayStation and the Nintendo Wii following through with $85 million and $91 million, respectively.

Handheld gaming consoles accounted for the second largest portion of revenues with $367 million in 2008 and $325 million in 2007. Among Handheld consoles in 2008, the Nintendo Dual Screen accounted for most of the revenues in this product segment with $226 million. Sales of PlayStation Portable Games made significant strides as it grew to $84 million in 2008 compared to $65 million the previous year. In contrast, Game Boy advance titles have dropped significantly with $36 million in 2008 compared to $119 million in 2007.

PC and other sources of revenues brought in less than $95 million in 2008 compared to 151 million in 2007. This is a decline of 37% year over year.

Geographically, Revenues made in North America is $503 million or 48.8%. International revenues account for 51.2% total revenues with Europe pitching in $454 million and Asia and the pacific putting in $72 million of revenus in 2008.

Operating expense grew to $1.11 billion in 2008 compared to $948 million in 2007 and $774 million in 2006. Expenses increased in all points with the exception of General and Administrative expenses which declined to $69 million from $78 million the previous year. Cost of sales, which includes product costs, software amortization and royalties, license amortization and royalties, and venture partner success, went up in 2008 to $744 million compared to $633 million in 2007. There was also a significant rise in product development with expenses of $128 million in 2008 compared to $97 million in 2007. Selling and Marketing expenses grew to $175 million in 2008 from $139 million in 2007.

THQ has operated at a loss in 2008 with $35 million in losses. Before 2008, they have generated a continuous stream of income with $68 million in 2007, $32 million in 2006 and $61 million in 2005. THQ had a diluted net loss per share of $0.53 in 2008 and diluted net income per share of $1.01 in 2007, $0.49 in 2006 and $1.02 in 2005.

Competition

THQ incorporated competes with other companies that operate in the Multimedia and Graphics software industry. Some of the companies they compete with include Activision, Atari, Electronic Arts, LucasArts, Namco, Sega, Take-Two Interactive Software, Ubisoft and Vivendi Games. In addition they compete with platform and handheld console makers who develop game titles specifically for their gaming systems like Microsoft’s Halo, and Nintendo’s Mario Franchise.

Activision, Inc. is the leading international publisher of interactive entertainment software products. Their portfolio covers games in all categories including action/adventure, action sports, racing, role-playing, simulation, first-person action, music-based gaming, and strategy based games. Activision, Inc. was founded in 1979 under the name of Activision, Inc.; in 1988 the company chose to change its name to Mediagenic, Inc. In 1992 the company changed its name back to the original name, Activision, Inc. the company is headquartered in Santa Monica, California.

Electronics Arts Inc. is the largest video game maker in America, largely due to its frequent acquisition of small, successful gaming studios. Incorporated in 1982, the company engages in the development, marketing, publishing, and distribution of interactive software games and content worldwide. Some of its notable game franchises include The Sims, Madden NFL, Medal of Honor, and Rock Band.

NAMCO BANDAI Holdings Inc. is a Japan-based holding company engaged in six business segments, the Toy Hobby segment, the Amusement Facilities segment, the Gaming Contents segment, the Network segment, the Image and Music Contents segment, and the Others segment. The Company had 73 subsidiaries and 11 associated companies.

Take-Two Interactive Software, Inc. develops, publishes, and distributes interactive software games for personal computers, video game consoles, and handheld platforms. The company, headquartered in New York, New York, distributes to customers worldwide. The branded games produced by the company include: Rockstar Games, 2K Games, 2K Sports, and Global Star Software. The Distribution segment distributes its products to customers worldwide through third parties distributors. Take-Two Interactive was founded in 1993.

THQ's earnings generally dip every even number years as seen in 2008, 2006, and 2004. However, 2008 was brutal thanks to the slowing down of consumer spending and increase in commodities. The company has streamlined their porcess closing several studios and cutting around 250 jobs, keeping only the profitable titles. If they increase their efficiency look for this company to rebound strong after this quarter.

THQ inc. is in trouble. Their stock has fallen dramatically. Their stock price has gone down from over $27.00 to below $5.00. They have also cut over 250 jobs and closed  four to five development studios.