Investor Presentation February 2011
Forward-Looking Statements Certain statements made during this presentation may be deemed to constitute forward-looking statements. Such statements include but are not limited to THQ s discussion of video game console and software growth, financial guidance, estimated release dates, and the potential for online gaming. Actual results may differ materially from those expressed in such statements due to numerous risks and uncertainties, including without limitation, demand and competition for the Company's products, and other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K for the fiscal period ended March 31, 2010, and particularly the discussion of risk factors that may affect results of operations set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
THQ At A Glance Leading video game developer and publisher in growing global $50Bn market Positioned for significant growth in FY 2012 and FY 2013 Strong line-up of hit franchises New udraw Game Tablet Increasing digital online revenue, including MMO Lean cost structure and financial discipline to drive operating margin expansion
Our View of the Market Extended hardware cycle Majority of sales through 2014 from traditional gaming platforms PS3 and Xbox 360 key platforms for CY 11 Kinect for Xbox 360 and PlayStation Move should broaden mass-market audience Increasing digital migration Fastest growing market segments are online and wireless Emerging technologies may broaden market Consumers want greater control over content Social games and micro-transaction models are emerging
Growing Global Videogame Market Opportunity (SW $ Billions) $53.6 $56.5 $59.4 $64.7 $70.9 Overall 7.2% CAGR - Wireless/Online 11.2% CAGR Source: PriveWaterhouseCoopers LLP, Wilkofsky Gruen Associates
THQ Positioned for Significant Growth FY10 Turnaround Year FY11 Investment Year FY12E & 13E Significant Growth Years Higher net sales driven by more hit franchises Lean cost structure and increasing digital business to drive operating margin expansion Expect to generate significant cash flow
Robust Product Pipeline to Drive Growth Future Titles TBA CY 12 CY 11 CY 10 * Timeline not drawn to scale ** Representative key titles
Compelling setting and story Occupation USA in a near-future scenario Explores universal themes of freedom and resistance Written by John Milius (Apocalypse Now and Red Dawn) Intense single-player campaign Best-in-class 32-person multiplayer Target launch: March 15, 2011
Recent Press Coverage Homefront is shaping up to be a legitimate contender for your shooter playtime this March. Homefront s multiplayer action is absolutely superb, with excellent map design and clever mechanics such as Battle Points and Battle Commander. It s a game that seems to be trying and succeeding at breathing new life into the genre. Kaos Studios vehicular take on large-scale modern warfare feels frenetic and well-balanced.
Builds on quality Red Faction legacy 85 Metacritic Industry-leading destruction engine New story, weapons and setting Transmedia partnership with Syfy network Target launch: May 2011
Recent Press Coverage What Armageddon does right is the how. How you navigate the world. How you destroy it. How you kill the enemies. One week later and I still can t stop thinking about Red Faction: Armageddon. Specifically, the new weapons are just awesome. If you re looking for a game with destructible environments, it gets no better than Red Faction. The new weapons are wonderful in Armageddon... it s fantastic.
Third-person action shooter set in the Warhammer 40,000 universe Nearly 6 million Warhammer 40,000 PC game units shipped to date Developed by THQ s award-winning studio, Relic Entertainment Target launch: Summer 2011
Recent Press Coverage Even from our brief first look at the game running, we walked away impressed by the quality... Everything I ve seen so far indicates that this will be a great action game that could surprise us. Space Marine is looking like a supremely visceral shooter. Warhammer 40K Space Marine. The action game on steroids which will be huge in 2011.
Coming fall 2011 More than 6 million units shipped LTD Huge transmedia initiative
udraw GameTablet New Category of Play: First-of-its kind accessory for the Wii 1.7 million units forecasted for FY 11 International launch in March quarter Long-term revenue and profit opportunity
Recent Press Coverage In Nintendo tradition, it s certainly different and definitely innovative...compelling. The tablet works great...simple, responsive and easy to use....it s hard not to think of it as a Nintendo-made accessory. I tried the Tablet with the included udraw Studio with five children...none wanted to stop. The peripheral itself felt sturdy and polished. The stylus was comfortable and it felt natural to wield it as a paintbrush or pen.
Robust Product Pipeline to Drive Growth Future Titles TBA CY 12 CY 11 CY 10 * Timeline not drawn to scale ** Representative key titles
THQ Target Operating Model Long-term target operating margins: 8-12% Continue to build hit franchises Increase digital revenues Leverage cost structure
Investment Rationale Leading video game publisher in large and growing market Innovative products and increasing digital/online revenue Positioned for significant growth in FY 2012 and 2013