Q&A: GTAIV - Big or huge?

Analysts Michael Pachter and Evan Wilson weigh in on just how successful Rockstar's latest open-world mayhem maker will be.

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Expectations were high when Microsoft and Bungie released Halo 3 for the Xbox 360 on September 25. It was only mildly surprising, then, when Microsoft proclaimed a day after launch that the final installment in Halo's story arc, begun in 2001 on the original Xbox, had set North American entertainment sales records, selling some $170 million in product within 24 hours. Not a bad tally, considering it had unseated summer box-office spectacle Spider-Man 3's record-setting $151 million domestic opening-weekend haul from earlier in the year.

Bungie wasn't given long to bask in its unequivocal success before analysts began to balk at Halo 3's feat. Within two weeks of Microsoft's announcement, Janco Partners analyst Mike Hickey was postulating that Bungie would soon find its sales crown swiped by the criminal masterminds at Rockstar Games. Were Grand Theft Auto IV to land a similarly eye-popping attachment rate on par with Halo 3's--at the time, in excess of 40 percent--he conjectured, the cross-platform status of the game could spike first-week unit shipments to 9.5 million worldwide, or $466 million in sales. Those figures would constitute a significant premium over Halo 3's reported 5 million-unit, $300 million international opening-week debut.

With Take-Two now reportedly measuring out global preorder demand at 6 million units--or $400 million--it has become a forgone conclusion that GTAIV will do quite well for itself when it launches tomorrow.

"There is no question that GTA will be huge," Wedbush Morgan Securities analyst Michael Pachter told GameSpot. "I think that the game will sell 11 to 13 million copies by calendar year end, with probably 4 million the first week and 6 million the first full month." While sales will initially favor the Xbox 360 edition of the game at a rate of three-to-two, Pachter predicted that as Sony's console continues to gain momentum, game sales will even out toward the end of the year to a roughly even split. By year's end, Pachter estimates 5 to 6 million PS3 owners will have picked up the game, yielding an attachment rate of 35 percent, and 6 to 7 million units headed to the Xbox 360 gamers, a 30 percent attach rate.

Pachter believes the game will have legs into next year, as well, as Microsoft and Sony continue to more deeply penetrate the market with their latest systems. "The attach rate is likely to slow a bit, so we should expect another 5 to 6 million units sold (unless the game is discounted)," Pachter said. "So I think lifetime sales will be 16 to 19 million."

While that may in fact constitute "huge," it would not best GTAIV's direct predecessor, Grand Theft Auto: San Andreas, according to Pacific Crest Securities analyst Evan Wilson. "I don't see any other game this year that has the sales potential of GTAIV. However, the real question is what console game can top San Andreas?" said Wilson to GameSpot. "San Andreas sold 21.5 million copies [globally]."

Regardless of whether GTAIV pulls a sales coup on its antecedent, Wilson believes gamers will flock in droves to GTAIV. Giving a quick and dirty rundown, Wilson told GameSpot, "Our initial assumptions for the game are 4.5 million worldwide in April. 8.5 million by the end of October. 10 million by the end of the year." In a note to investors this week, Wilson referenced the gushing nature of early reviews, and said he may have lowballed the actual year-end total by as much as 2 million units.

Certainly one of the biggest factors in Rockstar's corner is the substantially larger pool of customers GTAIV will enjoy over Halo 3. "In total, we estimate the US 360 installed base to be 3.5 million higher for GTA IV than it was for Halo's launch, or just over 50 percent," said Wilson. The PS3 adds another 4 to 4.5 million consoles to the GTA base." As such, though Wilson agrees with Pachter that the game will see a significantly lower attach rate than Halo 3--26 percent in the US, 20 percent globally in its first week--it will enjoy a superior opening-week sales tally of $550 million.

All said, Pachter believes that if GTAIV hits his sales estimate, Take-Two and Rockstar will see retail sales of roughly $720 million in 2008, assuming all games go for full price. That's a sizable slice of the pie, given Pachter's 2008 global gaming industry revenue estimates. "I expect US and European software sales to total $22.8 billion this year, so GTA represents 3.2 percent of all games sold."

As for when the next time a title will leave such a substantive imprint on the gaming industry, the prolific analyst was quite clear: "GTAV."

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