Take It or Leave It
Take-Two announced its earnings for the first quarter of its 2013 fiscal year
on Tuesday, and the news was not good: revenue was down by over $108 million
versus the same period a year ago, which is a 32% decline. Take-Two CEO Chairman
and CEO Strauss Zelnick admitted that
Max Payne 3 and Spec Ops: The Line both failed to meet sales expectations
for the quarter, which influenced the publisher’s weak performance.
The publisher continues to be confident that, starting with the release of
Borderlands 2 late in this sales quarter, revenue will begin to build towards
projections of $1.7 billion for the fiscal year. After one quarter, the company
is only at 13% of that projection, and despite one major release each from its
Rockstar and 2K Games labels. Take-Two did slightly revise its overall revenue
projections down from $1.75 billion, which it had disclosed back in late May.
While there are titles that will help Take-Two get closer to that number -
such as Borderlands 2, NBA 2K13, X-Com, and Bioshock Infinite - a total of
over 20 million combined sales units would likely be needed to hit the target.
That’s 5 million units apiece.
Grand Theft Auto V continued to be teased, but with no concrete facts. The
game is “making substantial progress”. That’s all that was said, and this set up
a terse Q&A session after the presentation ended that put Take-Two brass clearly
on the defensive. With so much uncertainty surrounding when the title will be
released, which platforms will see it, and the slow trickle of information about
it, analysts teed off on Strauss Zelnick and company. One analyst pointed out
Take-Two’s significant streak of declining revenue quarters, and Zelnick
admitted that the publisher needed to “take it on the chin” but that things
would turn around. The Q&A turned awkward late when a prank caller got through
screening and asked a rather rude question that asked Zelnick which of the
publisher’s games was the most professional one that had a “cock”.
Also of note from Take-Two’s presentation:
- It was quietly announced that a Wii U version of NBA 2K13 was slated for
release during this holiday season. No other Wii U titles were announced.
- The focus on the social and mobile markets for Take-Two was evident. Two
mobile releases - Max Payne
Mobile and Comedy Central’s Indecision Game - are already
available and four others were announced as TBA.
- Despite weaker than expected sales for Max Payne 3, there is still a
strong DLC slate ahead for the game. Four DLC packs will be released over
the next three months: the Disorganized Crime Pack hits in August, the
Hostage Negotiation Pack hits in September, and then the Painful Memories
and Deathmatch Made in Heaven packs are slated to hit in October.
- Digital sales were up 33% year over year and accounted for 14% of
Take-Two’s net revenue.
Share prices for Take-Two stock tumbled to $8.55 in after-hours trading,
which sets a new 52-week low and is the lowest number since August of 2010. It
will be interesting to see over the near-term how this number fluctuates.