A telling exchange during last week's Take Two earnings conference call may have revealed a sizable price tag for the Xbox 360's exclusive rights to Grand Theft Auto IV downloadable content. During the call, Pacific Crest Securities Analyst Evan Wilson inquired about a $25 million "deferred revenue chunk associated with the episodic content on Xbox 360." Take Two CFO Lainie Goldstein responded that the money was for "the first episodic content package that's supposed to go out ... in March of '08" and that another $25 million was being deferred for the second content pack, to be released later in fiscal '08.
Many news outlets are reporting that this revenue came from Microsoft to secure exclusive rights to these content packs, but this is not explicitly confirmed in the conference call or any other sources we could find. Take Two spokesperson Meg Maise would not comment on the matter, telling Joystiq the financial arrangements for the downloadable content were confidential.
Still, it seems highly likely that the money came from Microsoft. Deferred revenue is often used to account for money paid before a product is delivered, and Take Two deferring Microsoft's payment for downloadable content would be a prototypical example of the practice. It's hard to imagine where else Take Two would derive such sizable revenue before the product was released.
So was this a good move for Microsoft? Downloadable content is definitely a selling points for the Xbox 360 version of the game, but $50 million is a lot of money to pay just to get some additional content. If you're prepared to throw your money around, why not go all the way and secure the entire franchise as a system exclusive?