Take-Two blames GTA-less quarter for slipping sales
Publisher's revenues sink, but loss narrows alongside announcement of casual and family-friendly 2K Play label, Nickelodeon publishing deal.
Take-Two Interactive's financial fortunes have run hot and cold since the announcement of a delay for Grand Theft Auto IV. Disappointment at the publisher's biggest game being pushed back into next year was offset partially by news that Rockstar Games' Manhunt 2 had been cleared for a North American release next month and an avalanche of glowing reviews for 2K Boston's BioShock.
Today the publisher announced its financial results for its fiscal third quarter, which ended just days before the GTAIV delay started the stock's roller coaster ride. For the three months ended July 31, Take-Two posted revenues of $206 million, down from $241 million from the same period of 2006. However, the company's losses narrowed nearly as much, with Take-Two losing nearly $59 million for the quarter, a significantly better showing than the $91 million it lost in last year's third quarter.
As for why sales were down, Take-Two blamed it on tough comparisons against the previous third quarter, when Grand Theft Auto: Liberty City Stories launched on the PlayStation 2. Partially offsetting that were a line of new releases including The Darkness, Fantastic Four: Rise of the Silver Surfer, The BIGS, and All-Pro Football 2K8. Combined new releases brought in $44.5 million more than the new releases take for last year's third quarter (minus Liberty City Stories), which consisted of Prey, The Da Vinci Code, and Rockstar Games presents Table Tennis.
The company also gave its preliminary expectations for its 2008 fiscal year, which runs from November 1, 2007 to October 31, 2008. Take-Two expects to pull in between $1.1 billion and $1.4 billion for fiscal 2008, compared to the $950 million to $1 billion it projects to tally by the end of its current financial year.
It wasn't all numbers for Take-Two today, as the company also announced a new deal with Nickelodeon and the formation of a family-friendly and casual-gamer-focused publishing label. 2K Play will launch this fall with a pair of games based on the Nick Jr. shows Dora the Explorer and Go, Diego, Go!. The new label will also play host to future installments in the company's Carnival Games and Deal or No Deal brands.
Take-Two did not specify the full range of properties for which it can make games, but it appears to be limited to those targeting children under the age of 6. Rival publisher THQ has had an "exclusive worldwide partnership [with Nickelodeon]...to publish games based on all existing and future animated TV and movie properties targeting kids ages 6-14 across all viable game systems" for years.
In a postearnings report conference call with analysts, Take-Two executives also talked about BioShock, L.A. Noire, and Beaterator. The publisher touted 2K Boston's latest shipping figures and declared its intention to turn it into a strong franchise with new installments created as frequently as every other year. At the same time, it announced that Rockstar's seedy crime actioner and Timbaland-fronted rhythm game have been delayed to Take-Two's 2009 fiscal year (which runs from November 1, 2008, to October 31, 2009).
On the 2K Sports front, the publisher said the label will turn a profit for the first time in fiscal 2009, and addressed the future of its All-Pro Football franchise. Despite sluggish sales, Take-Two intends to ship it again next year, "although we are looking at it carefully." Specifically, the company is looking at different price points and release dates as potential ways to make it more successful than this year's installment.
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