CNBC - SQUAWK BOX
THQ CEO BRIAN FARRELL
JUNE 12, 1998
Sports video games are nothing new. Golf, basketball, baseball, hockey have been
thrilling fans and making money for their creators for years. There's a new professional
sport though, getting a piece of the pie. Not a new sport itself, but new to getting a
piece of the pie. Wrestling. Interactive game maker THQ, in partnership with others,
is entering into a 10-year exclusive agreement with Titan Sports to publish World Wrestling Federation electronic
games. The WWF is already a top syndicated weekly program, on the USA Network, on cable. In the last few weeks, has
garnered higher ratings than the NBA playoffs. THQ saw its shares jump more than two points, on the news, to close at
25 3/4 yesterday. That is up some 177% from the low. Taking a look at some technical factors on the stock: the moving
average convergence divergence has turned bullish. The 50-day moving average has turned bullish. And Tradestation
experts that's the -- I'm sorry proprietary indicator on Omega Tradestation says the short-term and long-term trends of
both just turned up. So joining us now from Los Angeles to tell us more about the deal and his company is Brian Farrell,
CEO, at THQ. Good morning sir thanks a lot for being with us.
Good morning. Thanks for having me.
Mark: This really reminds me of a wartime slogan that they used to ask people
was this trip necessary. You already had a pretty good selling wrestling game didn't you?
Yes, we've been very successful with three games, one for the Nintendo 64 and two for the Sony Playstation. Based on
our current WCW license the World Championship Wrestling license and like many of the wrestlers we're now switching
leagues and beginning, in either late '99 or early 2000, we will be bringing our fans wrestling games based on the World
Wrestling Federation.
Mark: Okay, so this, you just simply perceive this as a better partner.
Well, I think both licenses are very good, but what we really like about this particular deal is it's a long-term deal a
10-year, deal which, in this industry, allows us to continue to sequel the games and get all the new platforms and all the
new gaming devices over the next 10 years -- including the Internet which we think creates value for the shareholders.
Jimmy Rogers: Mr. Farrell, this is Jim Rogers. Isn't the whole industry and technology changing to the Internet? Do you
need these games in the special systems anymore?
Well, that's one of the things we like about this deal. We have all electronic gaming rights over the next 10 years
whether it's over the Internet, satellite, PCs, handheld devices, we have electronic gaming rights. And the fact of the
matter is in our view games are here as a form of entertainment just like movies and TV.
Jimmy Rogers: But the people who have this huge investment and infrastructure the existing infrastructure won't they be
obsolete as everybody goes to the Internet?
Well the Internet has been the 64,000 dollar question, in this industry. There's been no business model yet because
there's a couple of real problems with the Internet for games currently. One is latency and that is the time it takes to
transmit the joypack controls over
phone lines and the other is bandwidth which is the ability to download the game or transmit the signals over the line.
Right now Internet gaming is still the thing of the future and again we have Internet gaming rights for the WWF and
perhaps, at the end of this term of 10 years, that will be the only medium, but for us whatever platform it is we're happy
to be doing wrestling games.
Mark: An awful lot of companies have lost an awful lot of money make electronic games. Yours is one of the few that has
made a lot of money doing this. I mean, you've seen -- your numbers all stand up under scrutiny. You're a real company
with real products making real profit. What do you do differently that these others have somehow failed to do?
Well, this company is all about execution. As you mentioned a lot of companies have struggled in this category. And it's
become an execution business. We run a very serious financial model. We run it as a business. We think our creative
people and our marketing people as are strong as anyone in the industry, but I think our point of difference is we
do run it as a business. And as a result we have been profitable over the last several years
and we think the future is very, very bright.
Mark: No longer quite as hip-driven as it used to be?
Well, no, hip-driven is still a part of the model, but our model, THQ's model, is to be able to make money even on
modest quantities. So manage for the downside and run with the upside.
Mark: Thank you very much. Appreciate your joining us.
Thank you.
Mark: Brian Farrell, CEO, at THQ. |
