THQ 2010 Annual Report Download - page 29

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21
Executing on Our S trategy in Fiscal 2010
In addition to achieving the financial targets we set for fiscal 2010, we also made significant progress towards
our strategic operating goals.
Core Games
The goals of our Core Games business unit are to develop a select number of high quality titles each year
that are targeted at the core gamer, to build franchises through sequels and to extend our leadership in the
fighting category. In fiscal 2010, Core Games released
Red Faction: Guerrilla
with an 85 Metacritic rating and
Darksiders
with an 83 Metacritic rating. We also extended our leadership in the fighting games category. In
May 2009, we successfully launched our first games based on the UFC franchise,
UFC Undisputed 2009
,
with an 84 Metacritic rating and shipments of almost 4 million units in fiscal 2010. In December 2009, we
signed a direct eight-year license agreement with WWE and we plan to continue to publish games annually
based on this leading sports entertainment brand. During fiscal 2010, we shipped nearly 4 million units of
WWE SmackDown vs. Raw 2010
, which achieved a Metacritic rating of 81.
In February 2010, we announced a realignment of two of our development studios to focus solely on the
creation of digital content and technology. We renamed them THQ Digital Studios UK and THQ Digital
Studios Phoenix. The three main objectives for our digital studios will be the creation of online-only games
based on our Core Games brands, the development of new original digital intellectual properties and the
delivery of supporting technology to connect consumers to all of our Core Games using proprietary
technology.
Kids, Family and Casual Games
The goals of our Kids, Family and Casual Games business unit are to reinvigorate our kids product portfolio
and improve profitability in our kids’ business and to build strong mass appeal/family game franchises. During
fiscal 2010, we signed multi-property, multi-year license agreements with DreamWorks Animation to publish
games based on
Kung Fu Panda: The Kaboom of Doom, Puss in Boots
and
The Penguins of Madagascar
.
In fiscal 2010, we shipped over one million units of our first games based on Marvel Super Hero Squad under
our multi-year agreement. In addition, we have been taking aggressive actions to reduce the cost structure
for our kids games by reducing our development spending and signing new license agreements at more
attractive rates.
With respect to mass appeal/family game franchises, we successfully launched
The Biggest Loser
in fiscal
2010.
The Biggest Loser
was the #1 fitness game from an independent publisher in the U.S. during the
December quarter and ranked in the top five fitness games in the U.S. for calendar 2009, according to The
NPD Group. We continued to build our Drawn to Life brand, with our fiscal 2010 title shipping more than one
million units and total lifetime franchise shipments in excess of 3 million units. We also established a new
original game,
World of Zoo
, at nearly 800,000 units shipped. In fiscal 2010, we signed a new multi-year,
multi-property license agreement with Sony Pictures Consumer Products to publish games based on the
popular game shows
Wheel of Fortune
and
JEOPARDY!
.
Online Games
The goal of our Online Games business unit is to embrace digital migration and extend our brands into online
markets. During fiscal 2010, we developed games to bring online in fiscal 2011, including Company of
Heroes Online for Korean and North American markets and a WWE online game for release initially in Asian
markets. In addition, we are developing a massively multiplayer online game based on Warhammer 40,000.
Trends A f fecting Our Bu siness
The following significant trends currently affect our business:
Retail Video Game Sales
The video games industry in North America and Europe reported retail software sales of $19.0 billion in the
twelve months ended March 31, 2010, down 12% from the prior-year period, according to The NPD Group,
Chart Track and GfK. The decrease in retail software sales was due primarily to a difficult consumer spending