Take2 Financial Analysis

[Jimbatron]

It has been known for a while that Take2, the owners of R* and ultimately the GTA franchise have made a big promise to their investors of $2 per share for the fiscal 2013 – the period from April 2012 to March 2013:

 

http://www.marketwatch.com/story/take-two-...2013-2012-07-31

 

(Note they have revise this downwards slightly in the link to a $1.75-$2.00 following losses in Q1). The only time Take2 has delivered such a return was with the release of GTA IV, so it was reasoned by many of us, V had to be being released by March 2013 at the latest.

However, I started to wonder if it was as straightforward as that. There are two complicating factors.:

1) R* and Take2 do not generate their revenue from us, the consumers. They generate it by selling the game to the retailers who sell it to us. The retailers obviously have to place their orders some time in advance, so they will certainly get some money coming in before the official release – the question is, how far in advance, and how much comes in?

 

2) How many of the sales come in the early release, and how strong do sales stay in the months after?

 

I’ve done some digging, and I believe we can narrow the release date down substantially now.

 

Some of you may find looking at financial reports boring, but if you stay with me they are quite revealing. You can download Take2’s financial statements here for free:

 

http://ir.take2games.com/phoenix.zhtml?c=8...l-reportsAnnual

 

The one you want to look at is the 2008 Annual Report – of course, the year of GTA IV’s release. See that they even have Niko on the cover – there is no hiding what is bringing the money in!

 

It is lengthy, but the page you want to look at is 95, which has their revenue per quarter. Note it is the year ending 31st October, so Q1=Nov – Jan, Q2 = Feb – Apr, Q3 = May – Jul, Q4 = Aug – Oct. First look at the 2007 performance in the Net Revenue row. Revenue stays between $200-£300m.

 

Now compare this to 2008. Net Revenue is $240,442,000 in Q1 – comparing to 2007, that is normal performance. Then comes the big surge in 2008 Q2, where Net Revenue jumps to €539,810,000 – that is the impact of GTA IV. Remember this period is Feb – April 2008, the three months leading up to the release. However, Net Revenue also stays remarkably high at $430m in Q3, the three months after the release. This must be the tail of sales for GTA IV.

 

Now look at the diluted earning per share row. For Q2 it is $1.29 and for Q3 $0.69. Adding these two together get pretty close to the magic figure of $2 per share. However, one thing that is very striking is that the quarter running up to the release is not sufficient to capture enough sales to hit the Take2 promise to share holder. The three months after the release are also necessary to generate enough profit.

 

Also note, if you look at the 2012 report, Take2 changed the accountancy period to run from April to March (see page 27).

 

So, what do we know from all this? Take2 need to deliver a big revenue burst by March 2013 to produce earnings of €2 per share. However, based on GTA IV, they will need at least three months of sales after the release date to do this. It therefore looks likely that a release Jan-Mar 2013 would not give them enough time to deliver the promise.

 

The conclusion is simple. Unless Take2 slash their earnings per share promise very soon, GTA V is coming before Christmas 2012.

 

EDIT - Note from here:

 

http://ir.take2games.com/phoenix.zhtml?c=8...0531&highlight=

 

That first quarter loss on shares was $1.16. So to hit a minimum $1.75, they will need earnings per share of $2.91. There are other titles being released, but their chances of hiting this without GTA V look dire. IV delivered $1.29 for the quarter prior to release, and $0.69 following, so a total of $1.98 over six months.

 

EDIT 2 - Now I think we can narrow it down further:

 

http://www.rockstargames.com/newswire/arti...s-calendar.html

 

GTA IV event is being held on the 29th of November, so it seems highly unlikely V will be released before then. Why would you have an event for your old game just after releasing the new one.

 

However, unless we get a share earnings warning from R*, I think they still need to release in 2012 to hit the share earnings forecast. Therefore it points to December. A final IV event in November would be a nice prelude to the release.

Edited September 4, 2012 by Jimbatron

[ThirstyHyena]

Wow man, that's great! Everything you wrote seems relevant, so december it seems

[Finn 7 five 11]

 

The conclusion is simple. Unless Take2 slash their earnings per share promise very soon, GTA V is coming before Christmas 2012.

That's all i wanted to hear haha.

Funny how this thought didn't occur to me or anyone else much/at all, now that you pointed it out it seems like a slap in the face.

[Gangsta-NL]

It's almost September. GTA 5 is a big game. They have lots to show off and the official website hasn't even been launched yet.

 

Dude. January-May 2013.

 

If it comes before christmas 2012, I'll run naked across town and post it on GTAForums.

[Jimbatron]

It's almost September. GTA 5 is a big game. They have lots to show off and the official website hasn't even been launched yet.

 

Dude. January-May 2013.

 

If it comes before christmas 2012, I'll run naked across town and post it on GTAForums.

Dude! 3 months ain't enough to get the sales in to hit their targets for March 2013. Do you know what happens to CEOs who make big promises to share holders and don't deliver? They kind of get the sack.

[Trund]

That's a great summary you wrote there.

 

It's been pretty sure for a while now though that the game has to be released by march next year.

Considering Max Payne 3 did so poorly, T2 would have had to change their outlook, but considering they still expect quite a win it's 99% sure that the game has to come until march, as there's no other game besides GTA V in the pipeline that could create enough revenue.

 

But, considering R* is smart, and they have been working on this game for a long time, I still believe a release before Christmas is very possible. The boost in revenue would increase considerably if they still released the game this year.

[Gangsta-NL]

 

It's almost September. GTA 5 is a big game. They have lots to show off and the official website hasn't even been launched yet.

 

Dude. January-May 2013.

 

If it comes before christmas 2012, I'll run naked across town and post it on GTAForums.

Dude! 3 months ain't enough to get the sales in to hit their targets for March 2013. Do you know what happens to CEOs who make big promises to share holders and don't deliver? They kind of get the sack.

That's why again, I said January-May 2013. They are tons of sh*t coming between october and december already.

3 months till December is not enough. Hell they need to make advertisements, release the box art etc. etc. and release more trailers. Why rush it up in a short period of time?

[Finn 7 five 11]

 

It's almost September. GTA 5 is a big game. They have lots to show off and the official website hasn't even been launched yet.

 

Dude. January-May 2013.

 

If it comes before christmas 2012, I'll run naked across town and post it on GTAForums.

Dude! 3 months ain't enough to get the sales in to hit their targets for March 2013. Do you know what happens to CEOs who make big promises to share holders and don't deliver? They kind of get the sack.

That's why again, I said January-May 2013. They are tons of sh*t coming between october and december already.

3 months till December is not enough. Hell they need to make advertisements, release the box art etc. etc. and release more trailers. Why rush it up in a short period of time?

Well they can't really release in May unless they want to half/greatly reduce their share price for this Fiscal year, it won't be until August next year when most of V's profits roll in.

 

They'll want to release this fiscal year so their shares and profits look good while they boom with multiple releases.

[Dragonjack]

I know people will get GTAV because we are back in San andreas. But anyway...I kind of respect your post on this, I really do! In my opinion a christmas release would be great but what i've just seen in the Official Rockstars website we have seen few screenshots on GTAV R* last comment in the "business" newswire, Saying... "We'll be back for some more in a few weeks or so" I can't see a christmas at all or is it R*?

[Raynos]

Hmm, you theory indicates that GTA V will release late march or after march.

Stay with me.

GTA IV's release date Q2, April 29th 2008

Sale for Quater 2 = $539K

 

Therefore, GTA IV only need a couple of days.. But wait.

Like you said, the preorders, the retailers purchase the game from Taketwo prior to release.

Therefore, they made $539K from preorders and day 1 sales.

 

Now, GTA V will obviously sell better than GTA IV, therefore, according to your theory, GTA V will release March 29th and still meet their expectations.

They will be able to take advantage of GTA V for 2 fiscal years, very smart move Taketwo.

 

Edit. They could release it 21st March 2013 and still meet their expectations.

 

 

Take-Two Interactive announced today day one and week one sales of Grand Theft Auto IV, revealing that the game sold approximately 6 million units globally with an estimated retail value of more than $500 million in the first week. The game sold approximately 3.6 million units on its opening day with a retail value of approximately $310 million globally.

 

Source: http://news.teamxbox.com/xbox/16438/Grand-...Week-One-Sales/

Edited August 26, 2012 by Raynos

[dimitrispgr]

Nice OP !!!

 

I have a question.

 

What is the difference between Announcemens of Release Dates and Actual Release Dates in Rockstar Games and generally?

 

I dont know lets assume that Rockstar announces in September that the game will hit the stores in December. Isnt that a small margin? I mean IV was delayed, and even then the release date was announced 3 months before release.

 

[MosquitoSmasher]

It all makes alot of sense and December would be absolutely awesome. But We are already almost in September..a December release is kinda like Rockstar saying 'Ok people, here it is, it's for sale now' . They already said they will be back in a few weeks with more to see, could be more screenshots or finally a second trailer. But to me it seems like the real marketing has only just begun, i just don't see it happening anymore this year. Within those months we should be getting some magazine/site previews and what not....all that in four months? We'll have to see.

[a3HeadedMonkey]

I have been looking at this too, but all we can assume is that the game will be released before the end of their fiscal year, which is May 2013. So GTA V will be out by then. An Oct release would be great, but hopeful. I think May 2013 is more likely.

[Doomsdayer]

It's almost September. GTA 5 is a big game. They have lots to show off and the official website hasn't even been launched yet.

 

Dude. January-May 2013.

 

If it comes before christmas 2012, I'll run naked across town and post it on GTAForums.

Dude! 3 months ain't enough to get the sales in to hit their targets for March 2013. Do you know what happens to CEOs who make big promises to share holders and don't deliver? They kind of get the sack.

That's why again, I said January-May 2013. They are tons of sh*t coming between october and december already.

3 months till December is not enough. Hell they need to make advertisements, release the box art etc. etc. and release more trailers. Why rush it up in a short period of time?

Maybe it's all ready to go? We know R* is quiet about almost everything..

[Raynos]

I have been looking at this too, but all we can assume is that the game will be released before the end of their fiscal year, which is May 2013. So GTA V will be out by then. An Oct release would be great, but hopeful. I think May 2013 is more likely.

Hmm, May would be after fiscal 2013, which ends on 31st March.

However, it could happen, as the OP said, the retailers purchase the game from take2 prior to release, maybe 2-3 weeks before. Thus those sales will still count in fiscal 2013.

 

A late March release is my bet.

 

Btw, thanks OP for making things slightly clearer.

[MosquitoSmasher]

When is the next conference call by the way? Cause if they change things there, then we will know enough. We'll at least know that we wont have to expect it this year or even before March.

[Frantz Fuchs]

Hmm, you theory indicates that GTA V will release late march or after march.

Stay with me.

GTA IV's release date Q2, April 29th 2008

Sale for Quater 2 = $539K

 

Therefore, GTA IV only need a couple of days.. But wait.

Like you said, the preorders, the retailers purchase the game from Taketwo prior to release.

Therefore, they made $539K from preorders and day 1 sales.

 

Now, GTA V will obviously sell better than GTA IV, therefore, according to your theory, GTA V will release March 29th and still meet their expectations.

They will be able to take advantage of GTA V for 2 fiscal years, very smart move Taketwo.

 

Edit. They could release it 21st March 2013 and still meet their expectations.

 

 

Take-Two Interactive announced today day one and week one sales of Grand Theft Auto IV, revealing that the game sold approximately 6 million units globally with an estimated retail value of more than $500 million in the first week. The game sold approximately 3.6 million units on its opening day with a retail value of approximately $310 million globally.

 

Source: http://news.teamxbox.com/xbox/16438/Grand-...Week-One-Sales/

This. Even if rockstar release it on the last day of their fiscal year, they'll get the money from preorders from retailers. 31st March, 2013. Count me on it.

[Raynos]

When is the next conference call by the way? Cause if they change things there, then we will know enough. We'll at least know that we wont have to expect it this year or even before March.

Might be on their website, but I'd estimate December?

[The__Phoenix]

"Take2 need to deliver a big revenue burst by March 2013 to produce earnings of €2 per share. "

 

Yes

 

However, based on GTA IV, they will need at least three months of sales after the release date to do this. It therefore looks likely that a release Jan-Mar 2013 would not give them enough time to deliver the promise.

The conclusion is simple. Unless Take2 slash their earnings per share promise very soon, GTA V is coming before Christmas 2012.

 

Wrong.

 

Rockstar doesn´t needs to sell $650 million in games, they only need to ship to retail stores the number of copies necessary to reach these $650 million.

 

GTA IV did more than $500 million in a week with a potential target(number of consoles in the market) much lower.

Call of Duty: Modern Warfare 3 did more than $775 million in five days and $1bn just 16 days after its release.

 

Rockstar only need one week or two to make these $650 million,so your assumptions are wrong.

At this point a launch by Feb-March is more realistic and believable than a release date for this year.

Edited August 26, 2012 by bud23

[MosquitoSmasher]

When is the next conference call by the way? Cause if they change things there, then we will know enough. We'll at least know that we wont have to expect it this year or even before March.

Might be on their website, but I'd estimate December?

Hmmm yeah, probably.

 

Something about all this feels just weird to me. We now have a total of 12 screenshots and because of that we all seem to believe Rockstar is almost ready to release the game. To me it only feels like the very beginning of the marketing and that could last quite awhile. Look at what happened with GTA IV. Lots and lots of screenshots first, previews, trailers and finally the release. But then again...the way things have been going for GTA V are quite different from how they went for GTA IV. And personally for me...if it wasn't for Take Two's predictions, i wouldn't believe in a 2012 for a second, it really is the only reason to believe 2012 is still possible. Rockstar saying 'We will be back with some more to see in a few weeks or so.' sure doesn't help much either, it's nice to not see them say 'soon' or whatsoever, but 'some more to see' sounds like more screenshots to me, which is great. But i for one has seen enough, i already knew i need to get this game, now just some information would be great, some clarity on certain things. But to me right now it sounds like...they'll have more screenshots, no info and after that..more waiting.

[Raynos]

"Take2 need to deliver a big revenue burst by March 2013 to produce earnings of €2 per share. "

 

Yes

 

However, based on GTA IV, they will need at least three months of sales after the release date to do this. It therefore looks likely that a release Jan-Mar 2013 would not give them enough time to deliver the promise.

The conclusion is simple. Unless Take2 slash their earnings per share promise very soon, GTA V is coming before Christmas 2012.

 

Wrong.

 

Rockstar doesn´t needs to sell $650 million in games, they only need to ship to retail stores the number of copies necessary to reach these 650% million.

 

GTA IV did more than $500 million in a week with a potential target(number of consoles in the market) much lower.

Call of Duty: Modern Warfare 3 did more than $775 million in five days and $1bn just 16 days after its release.

 

Rockstar only need one week or two to make these $650 million,so your assumptions are wrong.

At this point a launch by Feb-March is more realistic and believable than a release date for this year.

Well bud, OP pointed out that Q2 sales were 539K

Q2 ended April 30th

GTA IV released April 29th.

That's $539K sales for take2.

 

This fact alone points to a late march release.

 

Therefore the OP is right in suggesting A late march release.

[ivor1977]

Im pretty sure R* could be confident enough to announce a release date 3 months before release. I have a feeling that the next chunk of info will be a date, a bunch of MP info trailers (like they did with RDR) and a protag reveal trailer. Then we cam all make our excuses for skipping xmas dinner for a spot of ultra-violence.

[ThirstyHyena]

It all makes alot of sense and December would be absolutely awesome. But We are already almost in September..a December release is kinda like Rockstar saying 'Ok people, here it is, it's for sale now' . They already said they will be back in a few weeks with more to see, could be more screenshots or finally a second trailer. But to me it seems like the real marketing has only just begun, i just don't see it happening anymore this year. Within those months we should be getting some magazine/site previews and what not....all that in four months? We'll have to see.

possible scenario: September 2nd it is revealed that GTA V will be on GI october's cover, mid september: R* releases 5 - 10 more screenshots and announces a 2nd trailer for late september after that GI comes out and throughout october and november R* starts fully marketing GTA V, TV commercials, posters in larger cities, Epsilon twitter and youtube account, R* newsire little updates and some screenshots until they release a pre-launch trailer in December when the game comes out.

[Northeern]

They are expecting about $650 million from GTA V this fiscal year.

 

GTA IV made $500 million in one week.

 

 

 

Make of it what you want ...

[MosquitoSmasher]

It all makes alot of sense and December would be absolutely awesome. But We are already almost in September..a December release is kinda like Rockstar saying 'Ok people, here it is, it's for sale now' . They already said they will be back in a few weeks with more to see, could be more screenshots or finally a second trailer. But to me it seems like the real marketing has only just begun, i just don't see it happening anymore this year. Within those months we should be getting some magazine/site previews and what not....all that in four months? We'll have to see.

possible scenario: September 2nd it is revealed that GTA V will be on GI october's cover, mid september: R* releases 5 - 10 more screenshots and announces a 2nd trailer for late september after that GI comes out and throughout october and november R* starts fully marketing GTA V, TV commercials, posters in larger cities, Epsilon twitter and youtube account, R* newsire little updates and some screenshots until they release a pre-launch trailer in December when the game comes out.

That would be awesome. But they didn't say they would have any kind of information or announcements in a few weeks, just 'more to see' . Ah well, we'll have to wait and see, there's not much else we can do.

[Liberty2k7]

It all makes alot of sense and December would be absolutely awesome. But We are already almost in September..a December release is kinda like Rockstar saying 'Ok people, here it is, it's for sale now' . They already said they will be back in a few weeks with more to see, could be more screenshots or finally a second trailer. But to me it seems like the real marketing has only just begun, i just don't see it happening anymore this year. Within those months we should be getting some magazine/site previews and what not....all that in four months? We'll have to see.

To be fair, Rockstar announced GTA IV's release date in late January 2008, which was roughly four months before the game was scheduled to release. With hype for V heating up due to the release of the new screenshots, and promise of more to come, I think if when Rockstar return in a few weeks they do it with a new trailer, and a possible release date at the end of the trailer, a release in December/January could still be possible. The first trailer was released nearly a year ago so the game is obviously close to completion by now. Anyway, Rockstar could announce the release date a week before it happens and everyone will still buy the game, its the new GTA! Anyways, maybe I'm being a bit optimistic, but I think we could possibly see the game released in late December, in time for Christmas. Who knows, I could be wrong and the game might not release til March 2013, but I don't really mind because Rockstar will take as long as they need to make sure we all get the best game possible.

[Finn 7 five 11]

They are expecting about $650 million from GTA V this fiscal year.

 

GTA IV made $500 million in one week.

 

 

 

Make of it what you want ...

To paraphrase Raynos.

 

"They are only forecasting $650 million worth of profits for THIS fiscal year (FY13) the remaining profits will drizzle over to the next fiscal year (FY14) providing a boost for next year"

 

Which means a late March release.

[Raynos]

 

To be fair, Rockstar announced GTA IV's release date in late January 2008, which was roughly four months before the game was scheduled to release. With hype for V heating up due to the release of the new screenshots, and promise of more to come, I think if when Rockstar return in a few weeks they do it with a new trailer, and a possible release date at the end of the trailer, a release in December/January could still be possible. The first trailer was released nearly a year ago so the game is obviously close to completion by now. Anyway, Rockstar could announce the release date a week before it happens and everyone will still buy the game, its the new GTA! Anyways, maybe I'm being a bit optimistic, but I think we could possibly see the game released in late December, in time for Christmas. Who knows, I could be wrong and the game might not release til March 2013, but I don't really mind because Rockstar will take as long as they need to make sure we all get the best game possible.

Where are you getting your information from?

 

 

On 2 August 2007, Take-Two announced that Grand Theft Auto IV would miss its original release date of 16 October 2007 contrary to their previous statements, and would be delayed to their second fiscal quarter (February–April) of 2008

 

Source: http://en.wikipedia.org/wiki/Grand_Theft_Auto_IV

[lh1]

Remember when they said "more to come this week" and "more to come later this week". Then, out of nowhere, Leisure screens are posted and people weren't expecting that. If anything, the "some more to see in a few weeks or so" indicates the media, screens and probably trailer. This means Rockstar will most probably do some announcements regarding the platforms and release date and maybe pre-order too in early September or maybe next week. Sure, they have another Max Payne 3 DLC coming in September, but I believe they won't be talking about that until late September or maybe the DLC is being used to fill the gap between the news of GTA V.

[Andreas]

To be fair, Rockstar announced GTA IV's release date in late January 2008,...

Wrong. GTA IV was announced in May 2006 on the E3 during the microsoft conference for a release in October 2007. The game was delayed on a finance conference in 2007 from October 2007 to April 2008.