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PS3 delay leads to publisher stock dip
Wall street reacted to yesterday's big news about the PS3's European delay and component shortages by lowering the stocks of some big video game publishers. Shares of Electronic Arts, Activision, THQ and Take Two fluctuated down one to four percent yesterday as investors and analysts took into account the delay's effect on near-term overseas profits. Despite the one-day drop, analysts are predicting that the delay will not affect the medium to longer-term prospects for the companies as they move resources to the next-generation of systems.
Take-Two looks to the PSP for comfort
Take-Two, the company behind the mega-popular brand Rockstar Games, is facing some troubles. Although the company has greater revenues this year than last, Take-Two is facing some serious issues. Firstly, the company has "received additional grand jury subpoenas issued by the District Attorney of the County of New York requesting documents ... regarding stock options and other equity based compensation." Also, Wall Street analysts think that the stock for the company is overvalued: "the current analyst consensus EPS estimates for its third quarter, and revenue and EPS [earnings per share ]estimates for its fourth quarter are too high."With plummeting stock prices, Take-Two looks towards the PSP for solace. The company speaks of the upcoming Grand Theft Auto: Vice City Stories and "a Rockstar PSP title based on a premier brand out of the fourth quarter" as upcoming releases that should more than move a few units. The company hasn't revealed what the mystery PSP title is, but it appears that all bets are on Sony's handheld for the company now.See also:TTWO shares drop on earnings warning, stock option investigation[Via Gamespot]
Rockstar loses many PR's, Marketers
Rockstar and their parent, Take-Two Interactive, have had a ton of hot coffee poured on their laps lately (pun intended) with the FTC investigating the sexy add-on to Grand Theft Auto: San Andreas, grand jury supoenas, closing of two corporate buildings, plummeting stocks and overall sadness. With all this junk going on, many people from Rockstar games have apparently dashed off in the night. Oddly enough, according to GameDaily BIZ who compiled a list of the employees that left, many were involved Public Relations or Marketing. The two are fairly related, the former more consumer oriented and the latter business, so what does this portend?Perhaps the end of Rockstar is nigh -- their "on the edge" style of gaming may finally have crossed the border and the employees know it. At least, those who have to talk to people outside of their walls. It will be harder to garner support for their games with all these issues arising, and these PR and Marketing people vacating is practically a guarantee that there is little support left for Rockstar. On a positive spin, perhaps Rockstar is cutting costs and eliminating shoddy employees. Will there be a GTA5? If the world backs off of gaming censorship, indeed.[edit: fixed an awkward sentence or two]
More heat coming down on Take-Two
Just when you thought this whole "Hot Coffee" mess was behind us, Take Two has been hit with more litigation. According to the Associated Press, Take-Two Interactive Software Inc. received two subpoenas from the Manhattan district attorney today over the Hot Coffee incident in Grand Theft Auto: San Andreas. The story goes on to say:"The documents subpoenaed date back to October 2001, and are connected to whether company officers and directors had direct knowledge of the secret scenes, commonly referred to as "Hot Coffee." The district attorney was also seeking compensation documents linked to current and former officers and directors as well as information about acquisitions in 2005, partnering arrangements and earnings results."Even once they are done in New York, Take Two is still facing possible action in North Carolina and Connecticut over the same steamy issue. Will it ever end folks?
NYTimes: games industry is taking a beating
The New York Times is running a doom and gloom piece on the current economic state of the big four publicly traded game publishers: Activision, Electronic Arts, Take-Two Interactive, and THQ. It's nothing we haven't heard before; higher next-gen development costs coupled with a console transition which have not only historically proven to be difficult, but the current one especially so. Activision CEO Bobby Kotick "acknowledged that there were challenges, including a growing need to produce games more efficiently. He said the industry would probably also focus more narrowly on games with hit potential (selling several million copies) as opposed to a scattershot approach of creating numerous games that sell one million copies or less." This blockbuster approach runs contrary to the XBLA success story, or quirky DS hits like Pheonix Wright. So basically, Activision doesn't subscribe to the long tail.Pretty damning evidence of this trend: following E3 in May, "Electronic Arts' shares have fallen to $42.30, from $56.80; Activision to $11.58, from $14.19; THQ to $21.49, from $25.63; and Take-Two to $13.10, from $17.05." Ouch! Well, that's my cue to go grab some TTWO and ATVI shares![Thanks, laserboyjc]
GamePolitics: Congress should grill Take Two
Dennis McCauley, the big cheese over at GamePolitics, is running an op/ed at industry-site Next-Gen.biz (the .biz is how you know they mean business!) about why, if he had his druthers, Take Two would be the ones in Congress' hot seat and not "intermediaries like [the ESA's] Doug Lowenstein and [the ESRB's] Patricia Vance."The idea is simple: Take Two and Rockstar Games are, by and large, responsible for the increasing backlash against violent games thanks to a little bit of wayward code we've all come to know and love. Yup, Hot Coffee. Point is, instead of extrapolating this one case out to represent the the entire gaming industry, Congress should isolate their investigation on this one instance. Even notable game designers like Warren Spector have called Rockstar out for their irresponsible behavior and Take Two's bungling of the controversy (lying ... eh, not such a great idea) only exacerbated the issue. McCauley's even made a list of questions for prospective congress-peoples just to get 'em started: Who conceived the Hot Coffee idea? Who created the animations? Who eventually decided to nix it from the final version? Why it wasn't removed from the disc entirely? Did insiders realize the active and highly-skilled GTA mod community would find the sex animations? Why did Rockstar and Take-Two lie about Hot Coffee when it was revealed? Why did they try to blame the mess on their biggest fans, the GTA mod community? Ouch! Those are sure to leave some bruises. So what say ye? Should Take Two and Rockstar be taking the beatings for all this anti-gaming hysteria?See also:ESRB: Lie to us, pay up to $1 million in finesTepid Coffee: Take-Two gets foreboding slap on wrist by FTCSpector clarifies GTA comments
Rockstar vets enlisted for GTA IV
According to IMDb, Rockstar President Dan Houser and GTA/Manhunt veteran James Worrall are the principal writers for Grand Theft Auto IV. Lazlow Jones, who wrote for GTA III & Vice City and did voice work for Liberty City Stories & San Andreas, is listed as a cast member, along with Navid Khonsari who has voiced characters in almost all of Rockstar's titles, including his role as Porn Host in Max Payne 2.Grand Theft Auto IV will debut October 16, 2007 for PlayStation 3 and Xbox 360. In addition, Rockstar will create downloadable episodic content for the Xbox 360 version.
Take-Two pledges support for Wii
According to Take-Two president and CEO Paul Eibeler, the publisher was impressed with Nintendo's E3 showing and is now committed to producing a range of titles for Wii beginning in late 2007.Eibeler focused on Wii's potential to expand Take-Two's 2K Sports series, specifically MLB. 2K is also responsible for a slew of non-sports titles, including BioShock, CivCity: Rome, Dungeon Siege, Family Guy and Prey, which may or may not find a home on Wii. Eibeler made no mention of the availability of current or future Rockstar titles for the Wii platform.
Hidden boobies incite Oblivion rating change [update 1]
The ESRB has changed the rating of the PC version of Oblivion from T (Teen) to M (Mature). The ratings board enacted the change because the game contains stronger depictions of violence than what were featured in the content that was submitted to determine the original rating. But more importantly, the new M-rating is a result of hidden (archived) topless skin files that can be accessed via a fan-created mod.At this time, it's unclear if a recall will be issued, but the new rating, along with the addition of a "nudity" warning, will be applied to copies of Oblivion that are still on store shelves. It's also possible that Take-Two will force Bethesda to remove the archived files and re-release the game, in turn, regaining the T-rating.Update: the Xbox 360 version has also been re-rated to M due to "Blood and Gore, Language, Sexual Themes, Use of Alcohol, Violence" [via ESRB]. [Thanks, Scott]
Take-Two shutters Indie Built dev studio
Bad news for fans of the Xbox 360 launch title, Amped 3, and the recently released Top Spin 2: game publisher Take-Two has closed down their Salt Lake City-based development studio, Indie Built. Indie Built, previously known as Access Software, was responsible for the popular Links series of golf games, as well as the CD-ROM Tex Murphy adventures (like Under a Killing Moon), before being acquired by Microsoft in 1999. Microsoft sold the studio to Take-Two in 2004 becoming part of their 2K Sports brand. The Gamasutra news piece hints that the closure might be due to the lackluster sales of Amped 3; sounds to us like another victim of the historically tumultuous generational transition. [Thanks, wheelsee and MumbleyJoe]
What investors think of Take-Two today
A picture is worth a thousand words. A graph, about 555 words, because there aren't as many pretty colors. This graph (modified after being taken from the latest issue of the Video Game Journal research report published by Susquehanna Financial Group analysts Jason Kraft and Chris Kwak) shows Take-Two's stock (Nasdaq: TTWO) performance since May of last year, when the company's shares were flying high on the release and success of Grand Theft Auto: San Andreas. The Hot Coffee scandal isn't the only thing that wiped out nearly a billion dollars in Take-Two share value. The launch of the Xbox 360 has reduced demand for the company's titles on older-generation consoles, resulting in a string of disappointing sales figures. Then there's the whole public spat with a member of the Take-Two board, lawsuits in California, and a Banc of America Securities report suggesting that the company was running low on cash. For context, we'll post the graphs for Electronic Arts, Activision, and THQ next.
3 doom and gloom scenarios for games
Layoffs. Missed earnings. Mergers. Cancelled titles. It's bad now, but it could get worse. Every transition between one generation of game consoles to the next generation of game consoles tends to temporarily hurt the games industry. Fewer games are sold during transition periods as gamers choose to delay current-gen purchases to hoard cash for expensive new consoles and games. Industry analysts Jason Kraft and Chris Kwak of Susquehanna Financial Group examine three disaster scenarios that could result in even more bad news for the games industry: The PS3 fails to launch on time. Though Sony hasn't budged from their "Spring 2006" mantra, there's plenty of reason to think that the complexity of the Cell processor and Blu-Ray drive could delay the console's release until next year. EA and Activision would take body blows in this scenario. Gamer appetite for Xbox/PS2/GameCube titles might fall even faster than expected. This scenario would nail Take-Two in the tender bits because Take-Two relies on revenues from these consoles the most. EA, Activision and THQ would also be hurt considerably. Publishers might choose to slash current-gen prices even more (see Microsoft's recent announcement that they plan to sell top Xbox titles for $9.99 each.) All of these events happen. A perfect storm could result in all three of these scenarios occuring at once, decimating the stock values of the biggest publishers. The result? Big drops in the value for public game companies and (presumably) attempts by those companies to staunch the loss of blood through layoffs, mergers, and bake sales. There's a lot of detail in the report, so send an email to kraftandkwak [at] gmail.com to request a copy.
More Grand Theft Auto speeding onto the PSP
Grand Theft Auto's publisher, Take-Two Interactive, gave PSP fans some joyous news this week as they reported on their lackluster financial results for Q4 and 2005.Among several ho-hum announcements (including, ironically, that a port of Liberty City Stories is in the works for the PS2), was the big news that PSP fanboys worldwide can expect another original Grand Theft Auto title in 2006. Additional details were sparse, but we'll take what we get when it comes to more portable GTA goodness.More info is expected at E3 later this year.
