THQ Trying New Hybrid Model For Next MX vs. ATV, Details Growth Plans

THQ said Wednesday that it will use the next iteration of its offroad racing series MX vs. ATV as a testing ground for a new hybrid business model, and detailed plans for growth in the years ahead. Speaking at New York's Kaufman Brothers 13th Annual Investor Conference, THQ chief financial officer Paul Pucino explained that the game, slated for spring 2011, will be a "scaled-down" version that "sells for something less" than the typical $60, "maybe 49.99, maybe $39.99." He added, "Hopefully more people will buy the original [not used] game; the lower price will help that." THQ will then release high-margin paid downloadable digital content so players can pick and choose what they want to add to the game. He did not offer details specifically what kind of content would be available or how much it would cost. THQ said at GDC Europe last month that it is repositioning itself to accommodate more online business models. The publisher recently rebranded wholly-owned UK studio Juice Games as THQ Digital Warrington, which is currently making the top down vehicle combat title Red Faction: Battlegrounds, and has studios such as Relic Entertainment and THQ Digital Phoenix working on online-centric titles. Relic is currently at work on Company of Heroes Online, a downloadable free-to-play version of the 2006 acclaimed real-time strategy game that will incorporate microtransactions. Another big title at the THQ-owned Vancouver studio is the licensed sci-fi fantasy MMO Warhammer 40,000: Dark Millennium, which could potentially be a strong source of recurring revenue for the company. Maintaining Packaged Retail Presence While the focus is shifting to digital at THQ, the publisher's hit-reliant release slate is still committed to packaged retail. Pucino noted that "there is certainly a migration to digital," but he also cited a report from PricewaterhouseCoopers that said that the majority of game industry sales through 2014 "will continue to come from traditional gaming platforms." "We believe the PS3 and Xbox 360 are the key platforms in calendar year '10. We also believe that the Microsoft Kinect and Sony Move should broaden the mass market audience," he added. Key upcoming retail games include the calendar 2011 action-oriented titles Homefront, Red Faction: Armageddon and Warhammer 40K Space Marine. THQ is also working on Saints Row 3, the next installment in the open-world crime franchise, which Pucino said has shipped 6 million units life to date, including 3.4-3.5 million units of 2008's Saints Row II. Along with game development initatives, the publisher is working on "transmedia" strategies that bring THQ properties to other entertainment media, such as a planned Red Faction-based TV show pilot. Pucino also revealed, "There is a very compelling transmedia initiative that we're working on here with Saints Row that we haven't announced yet, but stay tuned -- we think it's something you'll be very excited about." An accompanying slide characterized the deal as a "Huge transmedia initiative." uDraw Potential A potential dark horse at THQ is its previously-announced uDraw, a Wii peripheral that lets users draw and write on their screens via a wireless tablet. The peripheral launches a week before Thanksgiving in the U.S. for $70, packaged with uDraw Studio. Pucino said of the uDraw, "We think there is a very strong value proposition here," adding that THQ expects to ship 1 million units this fiscal year, ending March 2011. If the game is as successful as THQ hopes, Pucino said, "We think there may be some other long-term revenue and profit opportunities." He explained that THQ, with Nintendo's support, could license out the software such that other publishers could develop software for the uDraw tablet. "[That] would be good for us, because more software could drive more hardware sales. We make money on hardware, it's profitable for us, and we then we can potentially get a royalty on the software. So it could be a good model for us." Pucino also said, "Our last fiscal year was a turnaround year for us and a very successful turnaround year. We were profitable in fiscal '10 and generated cash in fiscal '10." He characterized fiscal '11, the current fiscal year, as an "investment year": "We have a robust product pipeline... that we're very excited about."