THQ Wrestles With Jakks Pacific – TheSixthAxis

THQ Wrestles With Jakks Pacific

It would appear not all is well in the THQ camp. Nor the Jakks camp. Nor the WWE camp. In fact, it appears that the three companies are in a ‘Triple Threat’ over WWE-branded games; so much so that in the past week, THQ have seen their shares drop by 12%. This doesn’t help when their shares have already fallen 14% since September.

Now, even if you aren’t into wrestling or the WWE-branded games, this is significant news for THQ. The joint venture that own the rights to WWE licensed games (THQ and Jakks Pacific) will see their current licensing deal end on December 31st 2009, which has been extended from November 1st by the WWE. Earlier in the year, Jakks announced that they will be wanting to renew the deal which will allow them to carry on until 2014. However, and this is where things start to turn a bit sour, THQ have said that they have yet to decide whether or not they want to renew.

It is in THQ’s interest to renew the license due to the fact that the WWE games made up a quarter of the publisher’s revenue in 2007 and despite their popularity dwindling, they still provide THQ with a massive financial boost. They have already managed to reduce Jakks’ percentage of the takings from 10% to 6% and now they look to be trying to oust Jakks altogether.

THQ are still awaiting answers on three issues that they submitted to the Los Angeles County Superior Court in July, which clearly hint at their intentions to go solo on future WWE-branded products. The three issues in question are:

  • Can Jakks renew the contract without THQ’s input despite the terms of their joint venture?
  • Is THQ obligated to renew the license?
  • If the license is not renewed, can restrictions on THQ publishing a wrestling-based game within a year, be enforced?

This sounds like THQ are basically wanting to get out of their partnership with Jakks and sign up with the WWE on their own. It’s worth mentioning that the WWE aren’t particularly happy with Jakks’ involvement either. Over the past few years the WWE have filed two lawsuits against THQ/Jakks Pacific for, what amounts to, bribery. Whilst THQ were named due to the joint venture, the bulk of the allegations were aimed at Jakks Pacific who alledgedly offered two WWE employees – Senior VP of licensing & merchandising and a WWE licensing agent – over $100,000 for the videogame rights, way back in 1998.

So why would THQ want to oust Jakks? Well it’s simple really…money. The 4% drop in Jakks’ percentage, that THQ successfully enforced, meant a $23 million saving for the publisher. Now, whilst revenue from the series may differ, using those figures would mean that THQ could recoup anything up to $50 million without Jakks on board and what with the Smackdown! Vs. Raw franchise being such a top earner, THQ are looking for more return on their efforts.

Sources: gi.biz, gamespot uk and joystiq