THQ Bull's Rebuttal
David Haines ([email protected])

Let me address Bogey’s concerns one by one.

He states that in this industry smaller companies rise to fame riding one or two hit games only to crash and burn later.

Sheesh, do I need to list THQ’s broad and diverse product lineup again? THQ has hit games planned for all of the popular game platforms including two WCW games, three Disney games, Yoda Stories, Rugrats, Quest 64 -- over 30 games announced just for 1998! THQ is already announcing games for 1999 including RoadRash, Nuclear Strike, and Stephen Kings’ The Dark Half.

Bogey claims WCW accounted for almost 50% of THQ’s 1997 revenues. WCW actually only accounted for 39% of revenues. He claims THQ will be squeezed by Turner and other companies bidding on the license. THQ has already released three WCW-based games with two more planned for 1998. How many wrestling video games does this world need?

Bogey states that Acclaim’s WWF wrestling title will directly compete with THQ’s WCW offerings. All one has to do is look at the Nielsen ratings and see that WCW is the most popular cable TV show in America with 3.8 million viewers each week. WWF hardly even makes the top 20. All the better wrestlers (Hulk Hogan, Sting, Brett Hart) have left the WWF for WCW. I have seen the previews of Acclaim’s WWF and it looks like a weak game to me in terms of both graphics and gameplay.

Bogey questions the quality of THQ’s 1998 game lineup. I attended the E3 (Electronic Entertainment Expo) in Atlanta. THQ’s Quest 64 took my breath away. The graphics are reminiscent of Nintendo’s Super Mario 64. This will be the first fantasy role-playing game for the Nintendo 64 system. I expect it to sell a million units! Burger King just signed a multi-million dollar deal to promote Rugrats. It is the second most popular cable television show behind WCW. A Rugrats movie is set to be released during Thanksgiving when THQ plans to release the Rugrats video games. Both Nintendo and Sony are very excited about promoting THQ’s Rugrats titles as they see it as a way to sell their game systems to a younger audience.

Bogey questions THQ’s ability to compete in CD-ROM? Why is it, then, that THQ’s CD-ROM based titles (WCW Nitro) are consistently atop the TRSTS video game sales charts each week?

Lastly, Bogey calls THQ a “middleman.” Game developers are not very loyal. Rather than maintain a huge expensive development team --(which drove companies like Seventh Level <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEVL)") else Response.Write("(Nasdaq: SEVL)") end if %> and Microprose <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MPRS)") else Response.Write("(Nasdaq: MPRS)") end if %> into the ground -- THQ found it more profitable to contract out much of the development work. THQ owns Heliotrope Studios (creators of Pax) and has a 25% stake in Inland Productions (creators of the WCW games). Smaller game developers flock to THQ for their marketing and shelf space.

Bogey suggests looking for a good place to sell or short THQ. I have seen this kind of talk for two years over on the THQ message folder. The long-term holders of THQ have been handsomely rewarded. I expect THQ to continue to be an outstanding investment into the year 2000.

Next: The Bear Responds