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THQ Talks Cars Success, MMO Fears

THQ president and CEO Brian Farrell has provided a comprehensive overview of the state of the company, including the sales success of the company's Pixar-licensed Cars...
THQ president and CEO Brian Farrell has provided a comprehensive overview of the state of the company, including the sales success of the company's Pixar-licensed Cars game, and his company's concerns about getting into the MMO market. Speaking during a presentation to the Lazard Capital Markets Investors Breakfast made available for rebroadcast through THQ's corporate website, Farrell noted that sales of Cars were ahead of The Incredibles and Finding Nemo one week after release, boding extremely well for the core THQ title. He also noted that THQ had repurchased 500,000 shares due to the weakness in the current game share market, and that a previous SEC investigation into THQ had closed with no action. Moving on to a further overview, Farrell revealed an 11th consecutive year of revenue growth for THQ, and noted that in FY06, it shipped 10 titles that sold more than 1 million units, as opposed to 6 titles the year before. He also commented that THQ's internal studio system has now grown to 1200 people in 14 studios. One of Farrell's key messages was that original IP (previously a notable weakness) and next-gen development were vital for the company. He noted that THQ currently has 18 titles in development for next-gen consoles, and also that the company is aiming to shift its revenues from 30% original IP-sourced in FY06 to 40% in FY08. He also revealed the continuing drive to internalize development at THQ, going from 20% of all titles in FY06 to 50% in FY08. In addition, in the Q&A session following the presentation, and widely reported, Farrell claimed it would be “misguided” for anyone, including THQ, to attempt to produce a direct competitor to Blizzard’s massively multiplayer online role-playing game (MMORPG) World of WarCraft. Farrell made the comments in response to a question asking why THQ and other major publishers had not attempted to create their own MMORPGs. "We're looking at it very closely, but I want to find the right opportunity," Farrell answered. "I think what you will not see THQ do is come out with another fantasy type game. The other thing we're thinking is these things tend to have a window. Right now that product is World of WarCraft, so the idea would be to time something for when that product is going to be on its downward slope.” Farrell’s concerns may also be related to the considerable costs and associated risks associated with MMORPGs, with World of WarCraft recently credited with a four and half year gestation period and a $50 million development price tag. The game’s six million worldwide subscribers have justified this considerable outlay but many other potential rivals have been cancelled long before release often to the peril of the associated developer, if not publisher. Titles such as Mythica, Dragon Empires and Ultima X: Odyssey were all cancelled before release, while other high profile titles such as The Matrix Online have failed to perform as expected.

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