"We are looking forward to combining THQ's extensive marketing and retail expertise with our advanced technology and proven online game operating know-how to deliver a great new casual gaming experience for North American consumers," said Sun Tao, chief executive officer, ICE Entertainment. "We also look forward to working with THQ more closely to develop new games and explore future publishing opportunities in both markets."

The market opportunity for online casual gaming in North America is estimated to be $2.2 billion by 2013 (Source: DFC Intelligence). China's fast growing online games market was valued at US$1.7 billion in 2007 and reached more than 42 million online gamers. The market is expected to grow to US$4.2 billion by 2010. (Source: Niko Partners).

About Dragonica

Dragonica is a massively multiplayer online casual game developed by Barunson Interactive Co, based in Korea. Dragonica is free-to-play and players may choose to pay for additional content and features on a micro-transaction basis. Barunson Interactive spent seven years developing Dragonica, which brings cartoon side-scrolling action online games to a new peak. The game's totally 3D rendering design, fresh cartoon characters and scenery modeling, create a new visual perception of side-scrolling games. Dragonica skillfully mixes the elements of action and arcade, and creates various ultimate skills to enhance playability. ICE currently has the rights to operate the game in China and plans to commence its closed beta for that market in late 2008.

About ICE Entertainment

Founded in 2006, ICE is an online game operator based in Shanghai, China, with an established online technology platform and proven management team, including CEO Sun Tao, former vice president and chief technical officer of leading Chinese operator The9, among others, with many years of experience in the online game field. ICE is focused on the development and operation of massively multiplayer online games. More information about ICE Entertainment may be found at www.icee.cn.

About THQ

THQ Inc. (NASDAQ: THQI) is a leading worldwide developer and publisher of interactive entertainment software. The company develops its products for all popular game systems, personal computers and wireless devices. Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located throughout North America, Europe and Asia Pacific. More information about THQ and its products may be found at www.thq.com. THQ and its respective logo is a trademark and/or registered trademark of THQ Inc.

The statements contained in this press release that are not historical facts may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about the business of THQ Inc. and its subsidiaries (collectively referred to as "THQ"), including, but not limited to, expectations and projections related to THQ's joint venture with ICE Entertainment, the launch of Dragonica and the ability to expand its offering of online games, and are based upon management's current beliefs and certain assumptions made by management. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, business, competitive, economic, legal, political and technological factors affecting our industry, operations, markets, products or pricing. Readers should carefully review the risk factors and the information that could materially affect THQ's financial results, described in other documents that THQ files from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal period ended March 31, 2008, and particularly the discussion of risk factors set forth therein. Unless otherwise required by law, THQ disclaims any obligation to update its view on any such risks or uncertainties or to revise or publicly release the results of any revision to these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

SOURCE: THQ Inc.

THQ/Investor Relations 
Julie MacMedan, 818-871-5125 
or 
HighWater Group 
Media Relations 
Sheree Johnson, 212-338-0077 x311 
sheree@highwatergroup.com

Second Quarter Results

For the three months ended September 30, 2008, THQ reported net sales of $164.8 million, compared with $229.3 million in the prior year. On a non-GAAP basis, the company reported fiscal 2009 second quarter net sales of $151.6 million. Fiscal 2009 second quarter sales reflect a lighter new release schedule than the prior-year period, and included the international roll-out of games based on Disney/Pixar's WALL-E and initial global shipments of new original Wii(TM) title de Blob(TM).

For the three months ended September 30, 2008, the company reported a net loss of $115.3 million, or $1.73 per share, which included a non-cash charge of $1.21 per share related to a valuation allowance and the related tax effects for its deferred tax assets. In the same period a year ago, the company reported a net loss of $7.0 million, or $0.11 per share. On a non-GAAP basis, the company reported a fiscal 2009 second quarter net loss of $30.4 million, or $0.46 per share. This was below the company's previous guidance of a loss of $0.35 to $0.39 per share, primarily due to lower-than-anticipated international sales of WALL-E and higher-than-expected sales returns and allowances. In the same quarter a year ago, the company reported a non-GAAP net loss of $2.2 million, or $0.03 per share.

The company's income tax expense for the quarter included a non-cash charge of $80.5 million, or $1.21 per share, on a GAAP basis, related to a valuation allowance and the related tax effects for its deferred tax assets, in accordance with Statement of Financial Accounting Standards (SFAS) No. 109. Although this non-cash valuation allowance reduces the value of the net deferred tax assets on the balance sheet, the company expects to be able to utilize these assets to reduce tax expense in future profitable periods.

A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.

Fiscal 2009 Second Quarter Highlights and Recent Developments

-- The company continued to build the Saints Row(R) franchise, shipping more than two million units of Saints Row(R) 2 globally in its first two weeks and achieving a Metacritic rating above 80

-- THQ established a new, internally developed Wii franchise with de Blob, which achieved a Metacritic rating above 80

-- The company strengthened its portfolio of online games and enhanced its online business with the following announcements:

-- A new agreement to launch WWE®
Online (working title) in Asia in 2010
-- The formation of a joint venture with ICE Entertainment
("ICE"), an operator of online games located in Shanghai, China,
to launch Dragonica, a free-to-play,
micro-transaction-based massively multiplayer online ("MMO")
casual game scheduled for release in North America in 2009
-- The opening of a new office in Shanghai, China, from which THQ
will pursue new development opportunities and expand publishing
partnerships in the growing Chinese market

Strategic Plan and Business Realignment

The company has prepared a new strategic plan, which will be discussed on its conference call today. As part of the new plan, the company today announced that it is undertaking a significant business realignment to position THQ for future profitability and growth. As part of this realignment, THQ plans to focus on fewer, higher quality titles, and to align its organization and cost structure accordingly. The company is in the process of implementing its plan with the cancellation of several titles that were in development but had not been publicly announced, the closure of five studios and a reduction in product development personnel of approximately 250 people, or 17 percent of its studio staff, and the streamlining of its corporate organization to support the new product strategy.

The company has reduced its fiscal 2010 forecasted annual product development spending by approximately $100 million, a reduction of about $30 million below its estimated product development spending in fiscal 2009. The company will further reduce costs and streamline operations, and expects to reduce selling, marketing and general and administrative expenses on an annual basis by approximately $20 million. The company expects to incur significant charges as part of its business realignment, which will be excluded from the company's non-GAAP results. Most of the charges will be recognized in the remainder of fiscal 2009.

"We have made substantial progress in improving product quality and innovation, as evidenced by recent shipments of several well-reviewed games including de Blob and Saints Row 2," said Brian Farrell, THQ president and CEO. "We are aligning our business to be more competitive in key consumer segments and address the current business environment. We expect the combination of a much more focused and competitive product line with a more efficient cost structure to put THQ back on the path to growth and profitability in fiscal year 2010."

Fiscal 2009 Guidance

THQ issued initial guidance for the fiscal third quarter ending December 31, 2008, and updated its guidance for the fiscal year ending March 31, 2009. The primary drivers of the updated fiscal 2009 guidance are:

-- The company's decision to release original titles Red Faction(R): Guerrilla(TM) and Darksiders(TM): Wrath of War(TM) in the fiscal year ending March 31, 2010, instead of the previously scheduled fourth quarter of fiscal 2009 accounted for approximately $125 million in lower forecasted net sales

-- The significant appreciation of the US dollar accounted for approximately $80 million in lower forecasted net sales

-- The company's expectations for a more cautious retail environment and continued softness in sales of kids games accounted for approximately $70 million in lower forecasted net sales

As a result of these factors, THQ's new non-GAAP guidance is as follows:

-- For the fiscal year ending March 31, 2009, THQ expects net sales in the range of $875 million to $900 million. The company expects earnings to be approximately breakeven in the second half of the fiscal year.

-- For the fiscal third quarter ending December 31, 2008, THQ expects to report net sales in the range of $400 million to $420 million. The company expects to report net income per diluted share in the range of $0.05 to $0.15.

-- The company also expects to record severance and other expenses related to the business realignment announced today but has not yet quantified these amounts, which will be excluded from non-GAAP results.

Non-GAAP Financial Measures

In addition to results determined in accordance with GAAP, the company discloses certain non-GAAP financial measures that exclude the following: stock-based compensation expense, the impact of deferred revenue and related costs, business realignment expense, the other-than-temporary write-down on investments, the non-cash valuation allowance for deferred tax assets and the related income tax effects for each of these items. The non-GAAP financial measures included in the earnings release have been reconciled to the comparable GAAP results and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The company believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information to investors regarding the company's performance by excluding certain items that may not be indicative of the company's operating results. These non-GAAP financial measures also facilitate comparisons of the company's performance to prior periods.

Stock-Based Compensation. When evaluating the performance of its business, THQ does not consider stock-based compensation charges. Likewise, the company excludes stock-based compensation expense from its short and long-term operating plans. In contrast, THQ's management team is held accountable for cash-based compensation and such amounts are included in the company's operating plans. In addition, the stock-based compensation charges are subject to significant fluctuation outside the control of management due to the variables used to estimate the fair value of a share-based payment, such as, THQ's stock price, interest rates and the volatility of the company's stock price. Further, when considering the impact of equity award grants, THQ places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants.

Deferred Revenue/Costs. The company recognizes revenue and related costs from the sale of certain titles with significant online functionality over the estimated online service period. Although the company will defer the recognition of a significant portion of its net revenue and costs with respect to these titles, there will be no adverse impact to its operating cash flow. Internally, THQ excludes the impact of deferred net revenue and costs related to packaged games in its non-GAAP financial measures when evaluating the company's operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.

Business Realignment Expense and Other-Than-Temporary Write-Down on Investments. From time to time, the company expects to incur certain expenses that are not part of normal ongoing operations. The company believes that excluding the impact of these expenses from its operating results is important to facilitate comparisons to prior periods.

Non-Cash Valuation Allowance for Deferred Tax Assets. In accordance with FAS No.109, "Accounting for Income Taxes" (FAS 109), the company evaluates its deferred tax assets, including net operating losses and tax credits, to determine if a valuation allowance is required. THQ has had three years of cumulative US tax losses. Therefore, during the second quarter of fiscal 2009, the company recorded a valuation allowance against its deferred tax assets. Internally, THQ excludes the impact of the valuation allowance for deferred tax assets in its non-GAAP financial measures when evaluating the company's operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.

In the financial tables below, THQ has provided a reconciliation of the most comparable GAAP financial measure to each of the non-GAAP financial measures used in this press release.

Investor Conference Call

THQ will host a conference call to discuss fiscal second quarter results today at 2:00 p.m. Pacific/5:00 p.m. Eastern. Please dial 877.356.8075 or 706.902.0203, conference ID 69135276 to listen to the call or visit the THQ Inc. Investor Relations Home page at http://investor.thq.com. The online archive of the broadcast will be available approximately two hours after the live call ends. In addition, a telephonic replay of the conference call will be provided approximately two hours after the live call ends through November 7, 2008, by dialing 800.642.1687 or 706.645.9291, conference ID 69135276.

About THQ

THQ Inc. (NASDAQ: THQI) is a leading worldwide developer and publisher of interactive entertainment software. Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located throughout North America, Europe and Asia Pacific. More information about THQ and its products may be found at www.thq.com and www.thqwireless.com. THQ, Darksiders: Wrath of War, de Blob, Red Faction: Guerrilla, Saints Row 2 and their respective logos are trademarks and/or registered trademarks of THQ Inc.

All other trademarks are trademarks or registered trademarks of their respective owners.

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, the company's expectations for revenue and earnings per share for the quarter ending December 31, 2008, and the fiscal year ending March 31, 2009, statements about the expected impact of the business realignment on our future operations and for the company's product releases and financial performance in future periods. These forward-looking statements are based on current expectations, estimates and projections about the business of THQ Inc. and its subsidiaries (collectively referred to as "THQ") and are based upon management's beliefs and certain assumptions made by management. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive and technological factors affecting the operations, markets, products, services and pricing of THQ. Unless otherwise required by law, THQ disclaims any obligation to update its view on any such risks or uncertainties or to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect THQ's financial results, described in other documents that THQ files from time to time 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, 2008, 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 press release.

THQ Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
                                                                       Three Months Ended                             Six Months Ended
                                                                       September 30,                                  September 30,
                                                                       2008                 2007                      2008                 2007
Net sales                                                              $     164,816        $    229,349              $     302,394        $    333,834
Costs and expenses:
Cost of sales -- product costs                                         76,038               87,449                    136,046              131,164
Cost of sales -- software amortization and                             39,512               38,311                    66,512               50,909
royalties
Cost of sales -- license amortization and                              20,007               22,159                    32,931               35,830
royalties
Cost of sales -- venture partner expense                               899                  1,137                     2,354                2,034
Product development                                                    23,231               28,561                    56,780               53,193
Selling and marketing                                                  43,124               47,193                    72,175               69,996
General and administrative                                             16,971               17,638                    36,574               36,741
Total costs and expenses                                               219,782              242,448                   403,372              379,867
Loss from continuing operations before interest and other income,      (54,966         )    (13,099       )           (100,978        )    (46,033       )
net, income taxes and minority interest
Interest and other income, net                                         (2,438          )    2,569                     56                   9,925
Loss from continuing operations before income taxes and minority       (57,404         )    (10,530       )           (100,922        )    (36,108       )
interest
Income taxes (a)                                                       57,892               (3,491        )           43,640               (19,795       )
Loss from continuing operations before minority interest               (115,296        )    (7,039        )           (144,562        )    (16,313       )
Minority Interest                                                      36                   â??                       36                   â??
Loss from continuing operations                                        (115,260        )    (7,039        )           (144,526        )    (16,313       )
Gain on sale of discontinued operations, net of tax                    â??                  â??                       2,042                â??
Net loss                                                               $     (115,260  )    $    (7,039   )           $     (142,484  )    $    (16,313  )
Loss per share -- basic:
Continuing operations                                                  $     (1.73     )    $    (0.11    )           $     (2.17     )    $    (0.24    )
Discontinued operations                                                      â??                 â??                        0.03                â??
Loss per share -- basic                                                $     (1.73     )    $    (0.11    )           $     (2.14     )    $    (0.24    )
Loss per share -- diluted:
Continuing operations                                                  $     (1.73     )    $    (0.11    )           $     (2.17     )    $    (0.24    )
Discontinued operations                                                      â??                 â??                        0.03                â??
Loss per share -- diluted                                              $     (1.73     )    $    (0.11    )           $     (2.14     )    $    (0.24    )
Shares used in per share calculation --                                66,757               66,462                    66,655               66,695
basic
Shares used in per share calculation --                                66,757               66,462                    66,655               66,695
diluted

(a)    Income tax expense for the three and six month periods ended
       September 30, 2008 includes the deferred tax asset valuation
       allowance and related tax impact of $80,520 recorded in accordance
       with FAS No. 109, "Accounting for Income Taxes" (FAS 109).

THQ Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(Loss) (a)
(In thousands, except per share data)
                                                                        Three Months Ended                               Six Months Ended
                                                                        September 30,                                    September 30,
                                                                        2008                     2007                    2008                     2007
Net sales                                                               $    164,816             $    229,349            $    302,394             $    333,834
Changes in deferred net revenue (b)                                          (13,192   )         â??                          (29,696   )         â??
Non-GAAP net sales                                                      $    151,624             $    229,349            $    272,698             $    333,834
                                                                        Three Months Ended                               Six Months Ended
                                                                        September 30,                                    September 30,
                                                                        2008                     2007                    2008                     2007
Loss from continuing operations                                         $    (115,260  )         $    (7,039   )         $    (144,526  )         $    (16,313  )
Non-GAAP adjustments:
Changes in deferred net revenue (b)                                          (13,192   )         â??                          (29,696   )         â??
Change in deferred cost of sales:
Change in deferred product costs                                             3,366               â??                          7,268               â??
Change in deferred software amortization and royalties                       6,067               â??                          12,762              â??
Total change in deferred cost of sales (b)                                   9,433               â??                          20,030              â??
Business realignment expenses                                                669                 â??                          4,196               â??
Other than temporary impairment on investments                               4,561               â??                          4,561               â??
Stock-based compensation and related costs:
Cost of sales -- software amortization                                       1,152                    1,212                   1,728                    2,978
and royalties
Product development                                                          724                      1,135                   1,872                    2,172
Selling and marketing                                                        866                      795                     1,681                    1,510
General and administrative                                                   1,792                    3,822                   3,575                    6,331
Total stock-based compensation and related costs (c)                         4,534                    6,964                   8,856                    12,991
Deferred tax asset valuation allowance and related tax impact (d)            80,520              â??                          80,520              â??
Income tax adjustments (e)                                                   (1,705    )              (2,119   )              (1,823    )              (5,040   )
Total non-GAAP adjustments                                                   84,820                   4,845                   86,644                   7,951
Non-GAAP loss from continuing operations                                     (30,440   )              (2,194   )              (57,882   )              (8,362   )
Gain on sale of discontinued operations, net of tax                     â??                      â??                          2,042               â??
Non-GAAP net loss                                                       $    (30,440   )         $    (2,194   )         $    (55,840   )         $    (8,362   )
Non-GAAP loss per share -- diluted:
Non-GAAP continuing operations                                          $    (0.46     )         $    (0.03    )         $    (0.87     )         $    (0.13    )
Discontinued operations                                                 â??                      â??                          0.03                â??
Non-GAAP loss per share -- diluted                                      $    (0.46     )         $    (0.03    )         $    (0.84     )         $    (0.13    )

Notes:
(a)      See explanation above regarding the Company's practice on reporting
         non-GAAP financial measures.
(b)      Prior to the third quarter of fiscal 2008, the Company did not defer
         net revenue or the related cost of sales.
(c)      Stock-based compensation expense recorded under FAS 123(R) in fiscal
         2009 and fiscal 2008.
(d)      Deferred tax asset valuation allowance and related tax impact
         recorded in accordance with FAS 109.
(e)      Income tax associated with other non-GAAP adjustments.

THQ Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(In thousands)
                                                                September 30,                      March 31,
                                                                2008                               2008
ASSETS
Cash, cash equivalents and short-term investments               $       162,627                    $     317,504
Accounts receivable, net of allowances                          63,303                             112,843
Inventory                                                       63,811                             38,240
Licenses                                                        42,651                             47,182
Software development                                            203,990                            155,821
Deferred income taxes                                           7,503                              â??
Prepaid expenses and other current assets                       18,554                             24,487
Total current assets                                            562,439                            696,077
Property and equipment, net                                     45,711                             50,465
Licenses, net of current portion                                75,558                             39,597
Software development, net of current portion                    70,942                             25,369
Income taxes receivable, net of current portion                 8,381                              16,116
Deferred income taxes                                           â??                                61,710
Goodwill                                                        122,110                            122,385
Long-term marketable securities                                 37,760                             52,599
Other long-term assets, net                                     18,086                             20,002
TOTAL ASSETS                                                    $       940,987                    $     1,084,320
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'
EQUITY
Accounts payable                                                $       79,772                     $     61,700
Accrued and other current liabilities                           203,306                            202,102
Income taxes payable                                            12,020                             6,504
Deferred income taxes                                           â??                                29,266
Total current liabilities                                       295,098                            299,572
Other long-term liabilities                                     38,941                             44,179
Total liabilities                                               334,039                            343,751
Minority Interest                                               3,464                              â??
Total stockholders' equity                                      603,484                            740,569
TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'          $       940,987                    $     1,084,320
EQUITY

THQ Inc. and Subsidiaries
Unaudited Supplemental Financial Information
                              Three Months Ended September 30, 2008                                 Three Months Ended September 30, 2007
                              GAAP                                Non-GAAP(a)                       GAAP                                Non-GAAP(b)
Platform Revenue Mix
Consoles
Microsoft Xbox 360            $    19,978        12.1   %         $    10,016        6.6    %       $    44,418        19.4   %         $    44,418        19.4   %
Microsoft Xbox                â??                â??              â??                â??                 357           0.1                   357           0.1
Nintendo Wii                       30,504        18.5                  30,504        20.1                8,914         3.9                   8,914         3.9
Nintendo GameCube                  62            â??                   62            0.1                 1,801         0.8                   1,801         0.8
Sony PlayStation 3                 11,622        7.1                   11,622        7.7                 13,282        5.8                   13,282        5.8
Sony PlayStation 2                 13,836        8.4                   13,836        9.1                 62,667        27.3                  62,667        27.3
                                   76,002        46.1                  66,040        43.6                131,439       57.3                  131,439       57.3
Handheld
Nintendo Dual Screen               48,585        29.5                  48,585        32.0                51,559        22.5                  51,559        22.5
Nintendo Game Boy Advance          1,511         0.9                   1,511         1.0                 9,013         3.9                   9,013         3.9
Sony PlayStation Portable          11,233        6.8                   11,233        7.4                 16,888        7.4                   16,888        7.4
Wireless                           6,231         3.8                   6,231         4.1                 4,874         2.1                   4,874         2.1
                                   67,560        41.0                  67,560        44.5                82,334        35.9                  82,334        35.9
PC                                 21,254        12.9                  18,024        11.9                15,576        6.8                   15,576        6.8
Other                         â??                â??              â??                â??            â??                â??              â??                â??
Total Net Sales               $    164,816       100.0  %         $    151,624       100.0  %       $    229,349       100.0  %         $    229,349       100.0  %
Geographic Revenue Mix
Domestic                      $    76,502        46.4   %         $    69,272        45.7   %       $    77,803        33.9   %         $    77,803        33.9   %
Foreign                            88,314        53.6                  82,352        54.3                151,546       66.1                  151,546       66.1
Total Net Sales               $    164,816       100.0  %         $    151,624       100.0  %       $    229,349       100.0  %         $    229,349       100.0  %

                             Six Months Ended September 30, 2008                                  Six Months Ended September 30, 2007
                             GAAP                                Non-GAAP(a)                      GAAP                                Non-GAAP(b)
Platform Revenue Mix
Consoles
Microsoft Xbox 360           $    40,107        13.3   %         $    17,537        6.4    %      $    54,765        16.4   %         $    54,765        16.4   %
Microsoft Xbox               â??                â??              â??                â??                1,752         0.5                   1,752         0.5
Nintendo Wii                      53,808        17.8                  53,808        19.7               15,238        4.6                   15,238        4.6
Nintendo GameCube                 115           â??                   115           0.1                5,974         1.8                   5,974         1.8
Sony PlayStation 3                18,275        6.1                   18,275        6.7                13,282        4.0                   13,282        4.0
Sony PlayStation 2                33,688        11.1                  33,688        12.4               88,255        26.4                  88,255        26.4
                                  145,993       48.3                  123,423       45.3               179,266       53.7                  179,266       53.7
Handheld
Nintendo Dual Screen              75,875        25.1                  75,875        27.8               69,183        20.7                  69,183        20.7
Nintendo Game Boy Advance         3,130         1.0                   3,130         1.1                17,331        5.2                   17,331        5.2
Sony PlayStation Portable         21,613        7.1                   21,613        7.9                24,768        7.4                   24,768        7.4
Wireless                          11,378        3.8                   11,378        4.2                9,248         2.8                   9,248         2.8
                                  111,996       37.0                  111,996       41.0               120,530       36.1                  120,530       36.1
PC                                44,405        14.7                  37,279        13.7               33,640        10.1                  33,640        10.1
Other                        â??                â??              â??                â??                398           0.1                   398           0.1
Total Net Sales              $    302,394       100.0  %         $    272,698       100.0  %      $    333,834       100.0  %         $    333,834       100.0  %
Geographic Revenue Mix
Domestic                     $    151,352       50.1   %         $    136,379       50.0   %      $    143,896       43.1   %         $    143,896       43.1   %
Foreign                           151,042       49.9                  136,319       50.0               189,938       56.9                  189,938       56.9
Total Net Sales              $    302,394       100.0  %         $    272,698       100.0  %      $    333,834       100.0  %         $    333,834       100.0  %

Notes:
(a)      See explanation above regarding the Company's practice on reporting
         non-GAAP financial measures.
(b)      Prior to the third quarter of fiscal 2008, the Company did not defer
         net revenue.

SOURCE: THQ Inc.

THQ/Investor & Media Relations 
Julie MacMedan, 818/871-5125

China's online game developers are brewing an overseas expansion frenzy after taking the lion's share in the domestic market, which was once dominated by their South Korean peers. In 2007, Chinese online game developers managed to lift their combined share to 65% at home, leaving a slice of 20% to their South Korean peers.

China's Nasdaq-listed online game developer Perfect World Co., Ltd. (Nasdaq: PWRD), for instance, has launched its popular role playing game Perfect World II in more than 40 European countries in cooperation with a UK game operator.

Shanda Interactive Entertainment Limited (Nasdaq: SNDA), a peer of Perfect World, is working together with online game giant THQ Inc. (Nasdaq: THQI) to develop Company of Heroes Online. Meanwhile, Shanghai-based online game operator ICE Entertainment has formed a joint venture with THQ to bring casual game Dragonica to the US.

Some of the Chinese companies are trying to extend their turf to the global market via investments and mergers and acquisitions (M&A). Shanda acquired South Korea's Actoz Soft for USD 91.7 million in 2004. And The9 Limited (Nasdaq: NCTY) injected USD 38 million into T3 Entertainment for a 10% stake.

The boom of China's online game market, according to the report, is a result of the fierce competition and the modest protection from the local government. China tightened control on import of online games at the beginning of the new century, when China's online game market was in its infancy.

With the assistance from the government, the newborn online game developers in China snatched a large share in the domestic bourgeoning market amid the formidable competition.

Sohu.com Inc. (Nasdaq:SOHU), one of the four biggest portals in China, set foot in the blossoming online game sector and edged into the top six operators in the nation. In addition, telecoms service providers like China Telecom jumped into the sector.

China's online game industry saw a fast technical development, thanks to the aggressive investment in product R&D. In 2007, online game developers like Perfect World lifted its spending on R&D by 30%-plus from a year ago. As for Shanda, the No. One online game developer in China, said it poured as much as CNY 2 billion into R&D.

China's top five online game developers generated SKW 1.5397 trillion sales revenue in 2007, more than the SKW 1.2402 trillion sales of the South Korea's Big Five ones.

(SKW 1= USD 0.000828)

From www.hexun.com, Page 1, Tuesday, October 14, 2008
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