Mattel and THQ Team Up - Analyst Blog

Mattel Inc. (MAT) recently inked a licensing agreement with THQ Inc. (THQI) to develop video games based on its top brands including Barbie, Hot Wheels and Fisher-Price. Financial terms of the deal were undisclosed. The companies are targeting to release the new games by the next holiday season.

The companies said they would also jointly expand videogames for newer properties such as Monster High and popular brands like Rock 'Em Sock 'Em Robots, Masters of the Universe, Polly Pocket and more.

It is a multiyear alliance in which THQ will extend the use of new games across a number of platforms, including game consoles, handheld devices, mobile phones, personal computers, social networks and Web-gaming portals.

Mattel believes that the deal will widen the reach of its toys. Entertainment software developer THQ targets kids and family audience through this agreement.

We believe the deal will boost the sale of both the companies, but the benefits will not be reflected before the end of 2011. With a broad array of alternatives including video games, computers and other electronic devices, the toy manufacturer will be able to give tougher competition to its peer companies.

THQ already has an agreement to license Mattel's Pictionary game, which is offered on its popular uDraw game tablet and plans to offer other Mattel-branded games also on uDraw.

One of its competitor, Jakks Pacific Inc. (JAKK)  signed a licensing agreement with Microsoft Corp. (MSFT) in November 2010, to design and manufacture interactive plush toys beginning with King Cheetah and Maltese Tiger that integrate with the ‘Kinectimals' video game for Kinect for Xbox 360 entertainment system launched worldwide.

Mattel currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

 
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