THQ 2005 Annual Report Download - page 31

8
Marketing and Sales
Our marketing activities vary depending upon whether a video game title is based upon a licensed or an
original property. A licensed property has pre-existing brand popularity and thus often requires less initial
effort by us to promote. Our marketing efforts for titles based upon original properties begin well in
advance of a title’s release and focus on building positive awareness of our game concepts with consumers
and retailers alike. We conduct consumer and retail research which provide us with feedback to position a
title prior to its release. Our public relations promotional activities for original titles in fiscal 2005 included
coverage in broadcast, print and online media targeting enthusiast, lifestyle and major mainstream outlets.
Additionally, we continue to increase our corporate public relations efforts by establishing relationships
with leading technology and business reporters.
Our marketing efforts for products released in fiscal 2005 covered a broad range of media including,
national television, print, in-theater, radio, Internet advertising and promotional campaigns. Our products
shipped in fiscal 2005 that received television support included Fairly OddParents, Full Spectrum Warrior,
The Incredibles, MX v. ATV Unleashed, Power Rangers, Scooby-Doo!, The SpongeBob SquarePants Movie,
Tak 2: The Staff of Dreams, The Punisher, WWE Day of Reckoning™, and WWE SmackDown! Vs. Raw. Our
games were also supported by promotional activities such as trailers, demo discs, over-sized boxes,
standees, posters, pre-sell giveaways at retail stores, game kiosks at sporting and outdoor events, rebates
and contests with national packaged goods companies and fast food restaurants, and co-marketing efforts
with the hardware manufacturers. Our games are promoted to retailers by display at trade shows such as
the annual Electronic Entertainment Expo (E3) and select retailer specific trade shows. We also conduct
print and cooperative retail advertising campaigns for most titles and prepare a range of promotional sales
and marketing materials to increase awareness among retailers.
We strive to create global brand awareness for our products. Consistent with our strategy to build and
maintain franchise properties with global appeal, our international marketing efforts include localization
of products to conform to consumer preferences and languages in the countries in which each title is
distributed. This structure is designed to maximize market performance in all territories.
North American Sales. In North America, our products are primarily sold directly to mass merchandisers,
consumer electronics stores, discount warehouses and national retail chain stores. Our products are also
sold to smaller, regional retailers, as well as distributors who, in turn, sell our products to retailers that we
do not service directly, such as grocery and drug stores. Our domestic sales activities are led by our
national sales team whichhas representatives in most major markets in the United States. Since our
customers do not have written agreements or understandings that commit them to make purchases, our
sales team is responsible for negotiating shelf space for new titles and our existing catalog as well as in-
store marketing efforts, for every title.
We utilize electronic data interchange with most of our major North American customers in order to
(i) efficiently receive, process, and ship customer product orders and (ii) accurately track and forecast sell-
through of products to consumers in order to determine whether to order additional products from the
manufacturers. We believe that the direct relationship model we use in North America allows us to better
manage inventory, merchandise and communications. We ship most of our products to our domestic
customers from warehouses located in Canada, Michigan, Minnesota and Ohio.
The domestic retail prices for our titles currently range between: (i) $15 and $35 for Game Boy Advance;
(ii) $20 and $35 for Nintendo Dual Screen; (iii) $20 and $55 for the console platforms; and (iv) $10 and $55
for PC games. The domestic retail price for our wireless games currently range between $4 and $8for a
one time purchase and between $2 and $3 for a monthly subscription.
International Sales. Our international sales activities operate via our offices in the United Kingdom,
Australia, France, Germany, Korea and Spain. International offices market and distribute direct-to-retail
customers and through sub-distributors in both their home territories and to 70 additional territories.