THQ 2007 Annual Report Download - page 16

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Additionally, we continue to increase our corporate public relations efforts by establishing relationships
with leading technologyand business reporters.
Our marketing efforts for products released in fiscal 2007 covered a broad rangeof media including,
television, print, in-theater, radio, internet advertising and promotional events. Most of our major new
releases in fiscal 2007 receivedtelevision support. Our games were also supported by promotional activities
such as trailers, demo discs, standees, posters, pre-sell giveaways at retail stores, gamekiosks at sporting
andoutdoor events, gamedemos and promotions with majorconsumer brands. Our gamesare also
promoted to retailers by display at select retailerspecific 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 andlanguages in the countries in which each titleis
distributed. This structure is designed to maximize market performance in all territories.
North American Sales. In North America, our productsare 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 areled by our
national sales team, which hasrepresentatives in most major markets in theUnited States.
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 thedirect relationship model we use in North America allows us to better
manageinventory, merchandise and communications. We ship all of our products to our NorthAmerican
customersfrom warehouses located in Canada, Michigan and Minnesota.
Thedomestic retail prices for our titles currently range between:(i) $15 and $35for handheld platforms;
(ii) $15 and $65 for console platforms; and (iii) $10and$55 for PC games. The domestic retail price for
our wireless gamescurrently range between $2 and $8 for a one time purchaseand between$2 and $4 fora
monthly subscription.
International Sales. Our international sales activities operate via our offices in the United Kingdom,
Australia, France,Germany, Korea, Japan, Spain, Austria, Denmark, the Netherlands and Italy.
Internationalofficesmarket and distribute direct-to-retailcustomers and through distributors in both their
home territories and to approximately 60 additional territories.
Our largest customers worldwide includeBest Buy, GameStop, Target, Toys “R”Us and Wal-Mart. We
also sell our products to other national and regional retailers, discount store chains and specialty retailers.
Our largest customer, Wal-Mart, accounted for 18% of our worldwide sales in fiscal2007. Asubstantial
reduction, termination of purchases,or business failurebyany of ourlargest customers could have a
materialadverse effect on us.
Seasonality
Theinteractiveentertainment softwaremarket is highly seasonal, with sales typically significantlyhigher
during the third quarter of our fiscal year, due primarily to the increased demand for interactive games
during the year-end holiday buying season.