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Friday, June 09, 2006

Take Two, the FTC, and episodic content

Take Two is taking a pretty decent hammering in the wake of an FTC settlement and having Oblivion re-rated:

"While their game portfolio for their fiscal 2007 period appears strong, their stock performance will most likely be hindered from Management's inability to quantify that strength," said Mike Hickey, analyst with Janco Partners, who rates Take-Two a buy. Hickey mentions that much of the sales for "Grand Theft Auto: Vice City" for PlayStation Portable will fall in early fiscal 2007, while "Grand Theft Auto IV" sales will come at its tail-end. The analyst also has high expectations for "Bioshock," "Bully" and the next version of "Red Dead Revolver."

In a bright spot, Eibeler said that he expects the price points for next-generation games to remain high throughout the year, with the average selling price of its 2K Sports titles to exceed around $45 per unit.
And as new online revenue streams take hold, Take-Two said that in its next quarter it will being deferring revenue for online content, in-game ads, and licensing of intellectual property. The company said that it has already received approximately $35 million of payments in its third quarter, and expects to receive additional payments this year.
Looking ahead, Eibeler was bullish on the revenue opportunity that downloadable, episodic content provides in extending the lifecycle of a game. In May, Take-Two's Rockstar Games division said that it would provide exclusive content for "Grand Theft Auto IV" for the Xbox Live online marketplace when the game launches for the Xbox 360 console in October of 2007.
Hickey speculates that the downloadable content for GTA IV, which might cost $5 per episode, could command margins of 50% per unit.

GTA still remains Take Two's tentpost, despite (or because) of it's controversy. And 50% margin on episodic content? Wow. Hopefully nobody takes one of those episodes and removes the clothes.

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