N'Gai Croal
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Dec 18, 2008 01:00 AM
Grand Theft Auto IV, developed by Rockstar North and published by Rockstar Games
Yesterday, the stock price of Take-Two Interactive fell
after the company announced a fourth quarter loss of $15 million (up
from a loss off $7.1 million a year ago) even though its revenue of
$323 million (up from $293 million a year earlier) was greater than
expected. What's interesting is that in early November, according to Bloomberg, Zelnick all but declared Take-Two
recession-proof, stating "With entertainment products, if there’s
something you must have, typically consumers are going to buy it....So
far, we’re not seeing any negative influence of the overall economy on
sales of our titles.” Yesterday, however, Zelnick was siging a
different tune. "We too are influenced by a very difficult set of
economic conditions and the world looks a lot worse than it did just a
couple of months ago," he admitted.
The news wasn't all bad, however. For the entire fiscal year,
Take-Two is projecting a profit. And the best news of all was that the
core staff of the studio that's primarily responsible for those
profits--Rockstar Games' Dan Houser, Sam Houser, Leslie Benzies and
unnamed others--has signed new contracts with Take-Two through the year
2012. More interesting, however, than the fact that the new deal would
be "primarily based on a profit sharing agreement," was the following
paragraph:
In addition, Take-Two has agreed to
fund the future development of certain new intellectual property to be
owned by a newly formed company controlled by key Rockstar Games team
members and published exclusively by Take-Two.
In
other words, the Housers and their inner circle retain creative control
of the franchises they've created, including Grand Theft Auto. They
received a rich new deal. And they will also be able to create
brand-new franchises for a separate company that they control--note
that the release doesn't specify who owns the company, so Take-Two
could have a stake in it--with those new games being funded and
distributed by Take-Two. We were impressed when Bungie got to keep its
name upon departing from Microsoft during the Flight of the Killer B's,
but this strikes us as a far better and shrewder deal, with the Housers
and company having the best of both worlds: they get to strike out on
their own without ceding control of the house that they built.
For further analysis, we turned to Wedbush Morgan analyst, Michael Pachter. Here's what he had to say:
To read our Q&A with Pachter, click on the link below.
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