Take Two posts 4th quarter losses

[midorigreenwood]

Another symptom of the unsustainble nature of HD console development.

GTA4 sells 10 million copies and produces huge revenues but Take Two can barely break even.

Mario Kart sells 10 million copies and ....

well you know the rest >,>


http://www.forbes.com/feeds/ap/2008/12/17/ap5834707.html

Take-Two posts wider 4th-quarter loss

Video game developer and publisher Take-Two Interactive Software Inc. reported Wednesday that in its fiscal fourth quarter it lost more than twice as much money as in the same period last year. The company also issued guidance for the coming year far below Wall Street expectations.

The company announced a loss of $15 million, or 20 cents per share, for the three months ended Oct. 31, compared with a loss of $7.1 million, or 10 cents per share, in the year-ago period.

Excluding one-time costs, Take-Two said it recorded a profit of $1.6 million, or 2 cents per share, compared with the average analyst estimate of 5 cents per share, according to polling by Thomson Reuters. Analysts typically exclude one-time items from their projections.

Take-Two said revenue climbed 10.5 percent to $323.4 from $292.6 million, driven by sales of "Midnight Club: Los Angeles," "NBA 2K9," "Grand Theft Auto IV" and "Carnival Games." Analysts projected sales of $325.8 million.

For the first quarter ending in January, Take-Two forecast an adjusted loss of 70 cents to 85 cents per share on sales of $175 million to $225 million.

......................................................

On a positive note, Take-Two also said Tuesday it has signed long-term agreements to hold onto its Rockstar Games label, which makes the popular "Grand Theft Auto" series, a major revenue source for the company.

Take-Two said the deal involves a profit-sharing agreement with Rockstar and runs through 2012, but the company did not disclose any financial details.

Shares of Take-Two rose a penny to end Wednesday's trading at $12.07, but in aftermarket activity, the stock plunged $2.60, or 21.5 percent, to $9.47. Shares have traded in a 52-week range of $9.35 to $27.95.

 

[ShadowRunner]

Perhaps more importantly:

Fiscal Year 2008 Results

Net revenues were a record $1,537.5 million for the fiscal year ended October 31, 2008, compared to $981.8 million in fiscal 2007. Net income for fiscal 2008 was a record $97.1 million or $1.28 per share, compared to a net loss of $138.4 million or $1.93 per share in fiscal 2007.

Fiscal 2008 results include $40.4 million in stock-based compensation expense ($0.53 per share); $16.2 million in professional fees and expenses related to unusual legal matters ($0.21 per share); and $4.5 million in business reorganization costs ($0.06 per share). Results for fiscal 2007 included $17.3 million in stock-based compensation expense ($0.24 per share); $23.6 million in business reorganization costs ($0.32 per share); and $16.7 million in professional fees and expenses related to unusual legal matters ($0.23 per share).

Non-GAAP net income was a record $158.2 million or $2.08 per share in fiscal 2008, versus a net loss of $81.0 million or $1.13 per share in the comparable period of 2007. (Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on Non-GAAP items.)

Doesnt look all doom and gloom to me. I realy dont know the subject matter at all, but it looks to me like they posted a healthy profit this year. Please, sombody correct me if i am wrong.
Can you make a judgement about the state of HD gaming bassed on a loss over a single quatre, one in which no game of any relevance was released?

 

[midorigreenwood]

yearly profits of 97 million from 1.5 billion dollars in revenue is not a healthy situation.....

especially when the bulk of profits is on the back of one title that took an inordinate amount of investment.

The balance sheets of the majority of western publishers doesn't look much better.

 

[midorigreenwood]

wow, the Hauser brothers and co really have Take-Two by the balls - a profit sharing agreement and the ownership of intellectual property of any games they create?

www.variety.com/article/VR1117997582.html

The creators of "Grand Theft Auto" are sticking with publisher Take-Two in an unprecedented deal that includes a cut of the profits and full ownership of future games.

Ending months of speculation about whether top talent at Rockstar Games, the Take-Two label that makes the ultra-successful "GTA" and other franchises, would remain when their contract expires in February, the publisher has signed them to a new three-year contract through 2012.

Deal includes Rockstar co-founders Sam and Dan Houser and Leslie Benzes, president of the Scotland development studio that makes most "GTA" games.

................................................................................................

Compensation under the new contract comes primarily through profit sharing for the Rockstar label, which contributes nearly half of Take-Two's revenue. Though videogame creators typically receive royalties based on sales of specific titles they make, Rockstar talent are believed to be the first to get a major stake in overall profits.

Pact also includes an equity grant of Take-Two stock that will vest over three years.

Most significant part of the deal, however, is that the Housers, Benzies and other Rockstar team members will establish an independent company to develop new videogames that they will fully own. Take-Two has agreed to fund development in exchange for exclusive distribution rights.

Intellectual property ownership by creators is rare in the videogame industry and unprecedented for those who are employees of major publishers.

 

[obonicus]

Another symptom of the unsustainble nature of HD console development.

GTA4 sells 10 million copies and produces huge revenues but Take Two can barely break even.

Mario Kart sells 10 million copies and ....

well you know the rest >,>


http://www.forbes.com/feeds/ap/2008/12/17/ap5834707.html

Hey, Take 2 is one of the few companies with a hit out on Wii. Clearly, though, they need to expand and work on more variants of Carnival Games.

 

[Rangers]

Another symptom of the unsustainble nature of HD console development.

GTA4 sells 10 million copies and produces huge revenues but Take Two can barely break even.

Mario Kart sells 10 million copies and ....

well you know the rest >,>


http://www.forbes.com/feeds/ap/2008/12/17/ap5834707.html

If HD development was unsustainable, then there wouldn't be HD games being made. It's that simple.

On the contrary, there are more than ever being made.

Also, apparently take two has released 25+ games for the Wii so far, but they only amounted to 9% of it's revenue last Q.

So it's not like non-HD development on the Nintendo dominated Wii front has exactly helped there bottom line.

(Take Two Wii games) Released in the November 2007-October 2008 period:

Carnival Games: Mini-Golf
Major League Baseball 2K8
NHL 2K9
Go, Diego Go!: Great Dinosaur Rescue
Dora the Explorer: Dora Saves the Snow Princess
MLB Power Pros 2008
Top Spin 3
Bully: Scholarship Edition

Seems to me Take Two is in trouble though. For the simple reason I see that people are inevitably tiring of the GTA formula, and it's exactly that, a formula. Not too mention imo GTA4 was not a good game, all the paid off review 10's notwithstanding.

 

[midorigreenwood]

If HD development was unsustainable, then there wouldn't be HD games being made. It's that simple.

On the contrary, there are more than ever being made.

Its called a bubble...... like how in the US, unwitting folks thought house prices would continue to rise forever.

AAA game development used to be gambles funded by cheap capital...... but with the credit crunch..... who knows what is going to happen.

For instance ..... with Take-Two: around 3/4 of their revenue came from HD console development and only 10% on the Wii. The DS had also been left out till the announcement of the new GTA game.

A quick look at their financials showed that there were 9 straight quarters of unprofitability before 2 quarters of gains from GTA 4. Now they're back to losing money again.

 

[Rangers]

Its called a bubble...... like how in the US, unwitting folks thought house prices would continue to rise forever.

AAA game development used to be gambles funded by cheap capital...... but with the credit crunch..... who knows what is going to happen.

For instance ..... with Take-Two: around 3/4 of their revenue came from HD console development and only 10% on the Wii. The DS had also been left out till the announcement of the new GTA game.

A quick look at their financials showed that there were 9 straight quarters of unprofitability before 2 quarters of gains from GTA 4. Now they're back to losing money again.

Well, the cries of doom from devs about rising costs are nothing new, they just start afresh with each gen. Surely in the PS1 days, complaints were that it was far too expensive to develop these new 3D games. Of course looking back, that just looks silly.

It's a self correcting problem. If the games aren't profitable they wont be made. No reason to worry or cheerlead it.

As far as a bubble, considering with every gen the cries of "too expensive" have rang out and every gen passed fine, until I see many games being cancelled, I say show me the proof.

Also you ignored that Take Two has been trying on the Wii, but Nintendo has been squeezing them out, the same problem all publishers face on Wii. How exactly that's an advertisement to abandon HD development is beyond me. Take Two's demise would appear to be a result of not managing costs and making popular games across all platforms, not a HD specific problem.

I also see many HUGE projects out there ongoing right now. Killzone 2 leaps to mind. Heavy Rain. Resident Evil 5. Etc etc.

There seems to be a contingent at GAF claiming that this is somehow the result of Take Two not bringing GTA4 to Wii. I say nonsense, how much did the Wii versions of COD or Madden sell? Why would anybody think Wii GTA4 would do any better? What person in their right mind would buy GTA4 on the Wii?

 

[obonicus]

There's plenty of gloom and doom in the industry right now, but when people see news that say, Factor 5 or Free Radical are in trouble, they focus on their not developing for the Wii as the sole cause of their downfall. It's like gaming exists in a bubble, completely free from the rest of the world.

 

[Shifty Geezer]

It's a self correcting problem. If the games aren't profitable they wont be made. No reason to worry or cheerlead it.

It is self-correcting, but messily with the loss of jobs and serious stress for developers who tried the HD game thing and failed. eg. Free Radical has just gone under. Haze was a turkey - if they had developed that same equivalent turkey on PS2 or Wii, it would have lost them a lot less and perhaps they'd have enough to try something else, rather than be throwing their employees out on the street now?

 

[midorigreenwood]

I'm not saying that HD console development should be killed off (I own a X360 ;_; )

I'm saying that publishers are putting too many of their expensive eggs in HD console development basket. There has to be greater diversification especially with investment capital drying up.

like I mentioned in the coax third party thread

The Wii audience doesn't read game blogs or trawl around message boards arguing with fanboys about which console has the bigger penis.
When making a purchasing decision they rely on traditional forms of advertising like television, word of mouth, the cover art and the display presence at the store.

Nintendo understand this and targets their key demographics accordingly. They have plenty of traditional advertising on television .....just about all day every day (not a week before a game is released).

Carnival Games does seem to be a strange anomaly though. I'm only a puny australian......but I have never seen an advertisment for the game. Perhaps the marketing is different for overseas folk but I can only assume that it has spread through word of mouth (some people like mini-game collections) or it has awesome cover art that stands out in the display..... or maybe its really cheap.

 

[obonicus]

It is self-correcting, but messily with the loss of jobs and serious stress for developers who tried the HD game thing and failed. eg. Free Radical has just gone under. Haze was a turkey - if they had developed that same equivalent turkey on PS2 or Wii, it would have lost them a lot less and perhaps they'd have enough to try something else, rather than be throwing their employees out on the street now?

Well, maybe, but Free Radical's last 3 games had been flops. It's hard to blame it all on HD. Also, supposedly Free Radical has always decided to self-fund development, so they can own their IPs. Which might've been okay for Timesplitters, but not so much for Haze. That, plus a lack of credit and apparently a staff of 250 people... well, again, hard to blame that all on HD development.

 

[Shifty Geezer]

I agree, and Free Radical only came to mind as I waz just reading about it at GI.biz. Not the best example, but the principle is still the same - the less you spend, the lower the risks. If the gains are the same either way, it's better to go cheap. Though if HD successes have higher returns, that's a reason to pursue the riskier, costlier market.

 

[obonicus]

I'm not saying that HD console development should be killed off (I own a X360 ;_; )

I'm saying that publishers are putting too many of their expensive eggs in HD console development basket. There has to be greater diversification especially with investment capital drying up.

like I mentioned in the coax third party thread

There is; the problem is that this diversification means making games we don't care about. Carnival Games is an excellent example of portfolio diversification and at 3 million copies across 2 games is quite successful.

Would making, say, RE5 for Wii mean it'd sell more than making it for PC/PS3/360? I can't even say it wouldn't; the Wii audience is too much of a cypher, no one knows for sure what they'll buy. No one can even seem to figure out who's buying the damned things ('casual' PS2 owners? mom, dad and grandma? 'hardcore' gamers?). On the PS3/360 you at least have a better idea of who your audience is.

 

[midorigreenwood]

There is; the problem is that this diversification means making games we don't care about.

Not necessarily.

The DS has found a great balance with hardcore games, non-games, shovelware etc

it has everything

It has all to do with proper marketing imo.

 

[obonicus]

Not necessarily.

The DS has found a great balance with hardcore games, non-games, shovelware etc

it has everything

It has all to do with proper marketing imo.

Western publishers don't show much support the DS either. They're certainly on the shovelware end of that scale. Hell, from the Activision and DSi thing, I bet they won't be in any hurry to, either. But hey, Take2 is making a GTA game for the DS. Most of the variety on the DS comes from Japan, which isn't even that startling, given how the DS is by far the most popular system over there. So consider that; Japanese publishers have shored themselves on portable (mostly DS) games for a long time, now and still western publishers have looked at that figure (and assume, for a second, that publishers have far more information than we do) and not been convinced to direct major efforts at the DS. On the other hand, a great deal (if not most) of the 'diversity' coming from major publishers is directed at the DS.

 

[Cheezdoodles]

Blaiming "HD" games is silly imo.

Take Two had such bad results, because a large majority of their games except for GTA sold terribly.

If you make terrible games, you make no money and you may go out of business. Same case as it has allways been, HD or not.

 

[Refreshment]

Take-Two list the PlayStation 3 as its biggest revenue generator on the publishing side, with 35% of the quarterly take. That beats out the Xbox 360, which brought in 28% of its publishing dollars, and the Wii, at 11%.

Why is this the case? Because PS3 games are "ports"?, since i guess is quite safe to say that the 360 moves more software units.

Can someone explain?

 

[midorigreenwood]

Why is this the case? Because PS3 games are "ports"?, since i guess is quite safe to say that the 360 moves more software units.

Can someone explain?

In that particular quarter Bioshock(PS3) was released. As a publisher relies on shipped/"sold to retailer" figures, the revenue from that shipment probably bumped the PS3 to the top.

I think the X360 has a slight edge over the year.......but of course this is only about revenue and doesn't tell you anything about profitability.

 

[Readykilowatt]

A simple message to third party developers. Evolve or die.