THQ Keeps Up the Competitive Heat

What's your target for internally owned content as a portion of your overall sales?

Somewhere around just under half is what we're targeting. ... It's going to be based on our release schedule, but that's about the right balance.

THQ's bread-and-butter has traditionally been mass-market games. That seems to be a great business: Such games do well in times like these when the older consoles are in the hands of tens of millions of consumers; development costs for those games tend to be a lot lower than those for cutting-edge titles, and profit margins are higher. Why not stick with what you know?

Well, I'd argue we know the core gamer pretty well.

[Look at] Juiced, Destroy All Humans, even Dawn of War. That title with its expansion packs has gone over a million units in a very high-margin business.

If you look at our management team ... our two top product guys have a lot more core gamer expertise than most of our competitors right now. We have a core competency there. Yeah, we've been very successful in the mass market, but there's a growth opportunity to ramp properly our offerings against the core gamer.

We're not walking away from Pixar and Nickelodeon and Bratz. ... There's a lot of great things about that younger demo, but there's no reason why we can't do both.

For companies to continue to play in this industry is requiring more and more resources, more and more money. The hope for the industry seems to be -- at least for the lower tier guys -- this idea of the online casual games, the mobile gaming space, potentially online advertising or online gaming or selling ancillary content. How do you see things shaking out, and where do you see THQ in this evolving marketplace?

The bets are bigger, and it's going to be the larger, well-capitalized multinational, multiproduct ... companies that are going to be the ones that survive. You've got to be broad-based in your content, broad-based in your distribution capabilities and broad-based in your approach to the market. ... That requires scale.

I'm glad we're in the "have-scale" camp. But when you look at the other opportunities -- in-game advertising and the online -- those are generally a function of how the underlying products do. So, those of us that do the 1-, 2-, 3-, 4-million-unit sellers, the advertising revenue, the online revenues are going to flow that way as well. So it's only going to exacerbate that issue of the big getting bigger.

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