THQ 2004 Annual Report Download - page 21

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18:19
THQ : 2004 : ANNUAL REPORT
Building on this foundation of solid brands, we plan to launch some of the most exciting new titles in the industry:
Full Spectrum Warrior™; S.T.A.L.K.E.R.: Shadow of Chernobyl; Warhammer®40,000: Dawn of War™; Destroy All Humans!™and
The Punisher™. Our product quality and innovation have achieved industry recognition. At the 2004 Electronic Entertainment
Expo, the largest tradeshow for the video game industry, Warhammer®40,000: Dawn of War™, Destroy All Humans!™and Full
Spectrum Warrior™were each nominated for The Game Critics Best of E3 Awards.
STRATEGIC INITIATIVES
THQ is well positioned to leverage our key properties for the mass-market consumer across the significant installed
base of current generation of video game hardware. We are also preparing to establish a leadership position on the next
generation of video game hardware. We expect new consoles from Microsoft, Nintendo and Sony by 2006, as well as new
handheld devices from Nintendo and Sony by early 2005, and we intend to be aggressive in developing new products for
these platforms.
We are focused on six key strategic initiatives:
1. Increasing our market share on PlayStation®2, Xbox®and personal computers (PC), particularly
in the core gamer segment;
2. Maintaining our leadership in the handheld and family markets, and leveraging our expertise to the new
Sony and Nintendo handheld devices;
3. Continuing to build our internal development organization with a view toward even higher product quality
and next generation console leadership;
4. Becoming the market leader in wireless entertainment;
5. Expanding our global presence; and
6. Improving our operating margins and overall profitability.
Core areas of investment to support these goals include new content acquisition, expanding our product development
staff by 50%, continuing with innovative global marketing programs, and expanding our wireless content, distribution and
technology operations.
Developing new original content and owning studios with proven technology leadership are core components of THQ’s
long-term growth strategy. To that end, in April 2004, we acquired Relic®Entertainment Inc., a leader in the real-time
strategy genre. Relic is already working on our critically acclaimed Warhammer®40,000: Dawn of War™product as well as
future PC and next-generation console development. We will continue to evaluate additional opportunities to build our
internal development capabilities, both through acquisition and internal growth.
THQ boasts one of the most innovative marketing organizations in the industry. In fiscal 2004, we implemented a global
brand management strategy, which included the extremely successful launch of Disney/Pixar’s Finding Nemo in more than
40 territories worldwide. In fiscal 2005, we plan to build on this global brand focus to increase our international market
share. We broke new ground in the industry with the successful establishment of our new original property Tak and the Power
of Juju in collaboration with Nickelodeon. No other video game publisher and media company have collaborated to create
and market a new brand in the video game space first with the intent to leverage that property into television and movies.
We are increasingly excited about the growth prospects in wireless entertainment and have therefore ramped
up our investment in our subsidiary, THQ Wireless™Inc. THQ Wireless’ strategy is to provide a comprehensive wireless
entertainment solution, including games, ring tones, wallpapers, messaging and information services. We expect THQ
Wireless’ revenues to double in fiscal 2005. In addition, our May 2004 acquisition of a controlling interest in MINICK expands
THQ Wireless’ spectrum of applications to include one of the largest Short-Messaging-Service providers in the world.
I’d like to commend THQ’s employees across our global organization for their superb execution of our strategic
objectives in fiscal 2004. We have built some of the best franchises in the entertainment software business today. With our
leadership in mass-market brands and handheld gaming, our growing share of the core gamer market, our expanding
internal studio operations and our growing PC and wireless businesses, THQ is one of the strongest and best positioned
publishers in the industry.
In closing, I’d like to thank our stockholders and directors for their support over the past fiscal year as we began to
realize the fruits of our product development and global brand management initiatives. I'd also like to offer a special thank
you to Greg Ballard who's retiring from our board after several years of dedicated service. While we have doubled the size
of THQ in three years, we feel that in some ways, we are just getting started. We’ve made solid investments in THQ’s future
and are well positioned to post another record year in fiscal 2005.
Brian J. Farrell
President and Chief Executive Officer