There's nothing like a double. Invest $1,000 in a stock and then sell the position down the road for $2,000 -- nirvana, to be sure, especially if an investor can do it a bunch of times. There's also nothing like a double cheeseburger; those things rule (although they wreak havoc on the heart). Two for the price of one, two times the flavor, two times the pleasure -- and a wonderful marketing tool.
THQ (NASDAQ:THQI) knows the strength of such a branding paradigm. The video game publisher recently touted its "double pack" portfolio, communicating to investors its vision of profiting by promoting a value proposition that is sure to be welcomed by consumers. In this case, the targeted consumer is the parent, since we're talking about software based on kid-oriented properties.
Here's what's going on. THQ has had great success in competing with the likes of video game giants Activision (NASDAQ:ATVI), Electronic Arts (NASDAQ:ERTS), and Take-Two Interactive (NASDAQ:TTWO) by utilizing a licensing model geared toward major entertainment properties like Finding Nemo from Disney (NYSE:DIS) and Pixar (NASDAQ:PIXR), as well as Viacom's (NYSE:VIA) Nickelodeon titles. These games have done great on the gaming platforms, and they've been particularly appealing for Nintendo's Gameboy, which isn't surprising, since so many members of the younger set make up the vibrant audience for the portable device. In fact, THQ has made note of the importance of both the Disney and Viacom associations in past earnings reports.
What the company wants to do is release some previous titles in a way that confers a more-bang-for-the-buck allure. Best way to do that is with a two-for-one offer. So, Finding Nemo and Monsters, Inc. will be sold in one package, as will the Nickelodeon offerings SpongeBob SquarePants: Battle for Bikini Bottom and Fairly OddParents: Breakin' Da Rules. It's a way to squeeze out more sales success from software that already has done well -- differentiating these older titles from newer ones, thus breathing new life into them.
THQ has made previous attempts at the genre (such as the Power Rangers and Scooby Doo double packs), so it's obvious that the company is happy with the performance (other companies, like Majesco Sales, also use the strategy). So long as parents don't get too used to waiting for new games to come out in this format, THQ will have the benefit of distinct markets.
I honestly don't see a likelihood of these collections spoiling sales of fresh games. Most video games are expensive when they are initially released and then depreciate after many copies are sold, assuming they are hits to begin with, since depreciation can certainly occur as a result of failed launches. The industry has lived with this model for years. THQ is able to move two games at once with the double-pack idea, instead of selling each lower-priced game individually. Can't argue with the logic behind it.
Look for THQ to really exploit these properties come the holiday season. Value-hungry shoppers will appreciate the gesture. And, by the way, so will shareholders.
Explore more levels of the video game sector:
- Stephen Simpson takes a serious look at Activision.
- Rick Munarriz fights off an attack of consoles.
- W.D. Crotty recently wondered: Are video games losing power?
Do you think double packs will increase revenues at THQ, or do you think this is much ado about nothing? Don't keep your opinion to yourself. Let other Fools know what you're thinking on the THQ discussion board.
Fool contributor Steven Mallas owns shares of Disney. The Fool has a strict disclosure policy.
