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More Marketing, Promos To Follow THX Spin-Off

THX will undertake more aggressive marketing and promotion programs, expand its licensee roster, and “become more visible to consumers” now that it has been spun off from Lucasfilm, said acting GM Mike Hewitt.

The company will also keep its THX Ultra and Select performance standards in place “for the time being” while the company determines whether the industry “needs more or fewer” THX certification standards, Hewitt said. Some of the questions that THX is asking itself are, he said, “What is it that we’re doing for the consumer? What message are we trying to deliver to the marketplace? Are we confusing the market?”

Under the spin-off, Lucasfilm becomes one of several investors in its former THX division, now called THX Ltd. Other investors include several unnamed individuals and Creative Technology. No investor has a controlling share.

The former parent company, Hewitt admitted, “was holding us back” because “the places THX should go and wants to go were outside the core area of concern for Lucasfilm.” As the division moved into home theater, PC multimedia and OEM car stereo, he said, “Lucasfilm became less and less interested in our progress and success there. It was outside the core domain expertise that Lucasfilm had or was concerned about.”

George Lucas formed THX 20 years ago to upgrade movie-theater sound systems so they would be able to reproduce soundtracks in the way that Lucas and other filmmakers intended them to be heard, Hewitt noted. “For the most part, the majority of theaters have high-quality sound. So in terms of the original charter, George says, ‘I succeeded.’ “

The spin-off enabled THX to attract more funding, Hewitt noted, because as a private company owned by a single investor, accounting issues prevented Lucasfilm from funneling outside investments toward a particular division. Although THX isn’t seeking additional investors, Hewitt noted that investors “are approaching us” and “opening a lot of new doors.”

Hewitt was hired by the THX board to set up THX as a standalone company, restructure it, hire additional personnel, and recruit a CEO who will succeed him as early as mid-July in managing the company. With 20 years marketing and management experience in technology industries, Hewitt said he has worked often for boards and venture capitalists to oversee startups, spin-offs and mergers.

During his latest assignment, Hewitt said he found that THX is “doing a B-minus job in the markets we’re in. Our goal is to get to a B-plus level in a year with more name brands and marketing air cover. Once we’re executing on all cylinders in our five categories, there are two to three others on our roadmap.” He declined to identify the categories or a timetable.

Before venturing into new product categories, the company plans to deliver a more consistent message across existing categories, take advantage of cross-category marketing opportunities that it has overlooked, and create more pull for the already well-recognized brand name, Hewitt said.

To those ends, THX has already realigned its engineering and sales departments into five self-contained organizations, each focused on a single industry:

  • THX Cinema (movie theaters);
  • THX Studio (mastering and reproduction industries);
  • THX Home (home theater audio and video, multimedia PC speakers, soundcards, and the like);
  • THX Mobile (autosound);
  • and THX Games (console manufacturers and game developers).

A single marketing staff will support all five groups to deliver a consistent message and “cross-pollinate the success” of each segment, Hewitt said. A new product manager has been hired, and the company is recruiting a marketing VP, he added.

To start cross-pollinating its successes, the company already revamped its dealer-training program.

Next, the company will rewrite its licensee contracts to provide more money for co-marketing with licensed suppliers, and it will significantly step up its consumer and trade advertising.

THX will also work directly with larger retailers to promote the THX brand. The effort will include store POP as well as in-store training for high-volume retailers, including regional chains, which sell THX-certified products in multiple product categories. A “critical mass” of salespeople at each of these stores will make in-store training efficient way, Hewitt said. Off-site training done for high-end shops will continue in San Rafael.

THX would also like to “aggressively grow” the number of licensees, he said. In the home theater market, THX said it has 46 licensees. Literature dated January 1995 showed THX had 45 licensees.

THX has dropped Lucasfilm from its company name and will drop the name from the front-panel logos of future licensed products, even though it has the option to use the name for four years.