Research analysts Jason Kraft and
Chris Kwak have determined an answer to the question, "What's Grand Theft Auto worth?"
Parent-company Take-Two has been rocked by some troubles
of late. With rumors that the company is for sale, and that Elevation Partners is browsing
around, the question has been on a lot of minds lately--ours included. First, they anticipate only two next-gen GTA games hitting the consoles in the next five years, versus the three current-gen titles. In the same period, they say "there is potential for up to six PSP titles (five, post Liberty City Stories) over the next five years," continuing, "Take-Two could develop unique PSP games between major next-gen console releases or ports of existing titles. Shorter development cycles on PSP enable Take-Two to release PSP titles more frequently. The regularity with which Take-Two releases GTA titles on PSP will be critical to the franchise’s revenue growth in the next-gen cycle and underlies our revenue growth forecast."
They also suspect console releases will either be released on multiple platforms, to capitalize on the larger install-base, or console exclusivity would place Take-Two "in a position to demand cash in return... in either scenario, Take-Two wins." They conclude that the Grand Theft Auto franchise is currently worth about $900 million, or $10-$13 per share. Removing the $1.52 per share of cash reserves, the remainder of Take-Two is worth $1.71-$4.71 per share. Those numbers show GTA as being worth 62%-81% of the company's total value! Will potential buyers be wary of placing all their eggs in the GTA basket?
Send an email to kraftandkwak [at symbol] sig.com for a copy of the report.
