THQ, a publisher renowned for providing equal doses of hardcore (Company of Heroes, S.T.A.L.K.E.R.) and kid-friendly offerings (Spongebob Squarepants, Ratatouille) has decided to expand their audience even further with the acquisition of Elephant Entertainment, a firm specializing in casual games.
THQ is also entering into a new agreement with a related company, Oberon Media, to prepare the Dream Day franchise (a series of romance-themed “hide-and-seek” adventures previously published by Elephant) and other upcoming casual titles for “major gaming platforms,” which most likely means home consoles.
Colin Sebastian, an analyst at Lazard Capital Markets, has been watching this action with some interest, and sent out a “buy” recommendation today for THQ stock. The relevant portion of his release reads:
Casual games are a natural fit with THQ’s mass-market portfolio.
We estimate that the market for casual games exceeded $1B in North
America in 2007 and was more than $2B worldwide (PC and online).
Importantly, as the video game market appeals to an increasingly broad
consumer audience, we believe casual games represent a key growth driver
for traditional publishers, such as THQ. In addition, we see casual
games as a natural fit with THQ’s existing mass-market product lineup
(e.g., Nickelodeon, Pixar, Bratz, etc.).
Stock valuation aside, we wonder if Microsoft might consider THQ’s casual titles for Xbox Live Arcade — if titles like Dream Day and Cake Mania 2 are as successful as they claim to be, this could be an opportunity to help turn around Xbox Live’s hardcore shooter image.
Full press release:
THQ Expands Casual Game Portfolio with Elephant Entertainment(TM) Purchase and Exclusive Retail Publishing Agreement with Oberon MediaAGOURA HILLS, Calif., Apr 01, 2008 (BUSINESS WIRE) — THQ Inc. (NASDAQ:THQI) today announced the acquisition of the Elephant Entertainment(TM) casual and online games business. In conjunction with this acquisition, THQ also announced an exclusive, worldwide retail publishing agreement with Oberon Media, the world’s leading cross-platform casual games company.
THQ plans to launch more than 20 new casual and online games on multiple platforms in 2008 under the Elephant Entertainment brand name. Elephant Entertainment President and COO Wim Stocks, an 18-year veteran of the interactive entertainment business, will continue to lead Elephant Entertainment and will report to Doug Clemmer, president of THQ’s ValuSoft casual games division.
Through the agreement with Oberon Media, THQ plans to bring Oberon’s owned and licensed content, including the successful Dream Day online franchise, to major gaming platforms. In addition, Oberon is scheduled to release best selling author James Patterson’s Women’s Murder Club: Death in Scarlet online this May, which Elephant plans to distribute at retail this fall. THQ and Elephant Entertainment will also provide retail support for the custom online casual game communities and download platforms created by Oberon Media for select retailers.
“The addition of Elephant Entertainment and our exclusive retail publishing deal with Oberon significantly expands the depth and breadth of our casual and online game offering,” said Doug Clemmer, president of ValuSoft, THQ’s casual games division. “These deals will allow us to expand our presence in this rapidly growing segment and deliver unique value to our retail partners through Oberon’s turn-key solution to deliver online games.”
“We are extremely excited to become a part of THQ,” said Wim Stocks, president and COO, Elephant Entertainment. “THQ is a leader in family and casual interactive entertainment and we are excited to help further grow THQ’s portfolio and pipeline in the casual and online game market.”
“The casual games segment is booming and this deal with THQ will allow us to strengthen our industry positioning and bring more games to market,” said Don Ryan, senior vice president of publishing, Oberon Media. “Both Elephant and THQ are led by very talented teams and I look forward to working more closely with them as we move forward together.”
In 2007, the worldwide casual game market totaled $2.25 billion and is expected to grow 20% year-over-year in established markets (source: Pearl Research, Screen Digest CGA.)
Terms of the transaction were not disclosed.
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