Take-Two not explaining GTA $50 million exclusive
by Alexander Sliwinski 
{ Jun 19th 2007 at 12:59PM }
Take-Two refuses to comment any further on Chief Financial Officer Laine Goldstein's "oopsie" that Microsoft may have paid $50 million for GTA IV's episodic content. Goldstein said during a conference call last week that they had been paid $25 million for the episodic content to be released next March and another $25 million for their next fiscal year. GI.biz, along with almost every other news outlet, contacted Take-Two for clarification and got nothing but the wall of voicemail and receptionists who just can't find someone to comment at the moment.Some questions remained previously about if the GTA IV episodic content was "exclusive" (the same way Haze is a timed exclusive) or if the Xbox 360 episodes were actually exclusive exclusives (that word really gets so muddy in this industry). Take-Two confirmed late last week that the episodes are actually only for Xbox 360. And at a price of $50 million dollars, if that's how much the episodes actually were, you better believe that the word exclusive means exactly that in this case. There is also the belief that the $50 million is an advance to Take-Two on what Microsoft believes their portion will be off of Xbox Marketplace sales. Although, $50 million dollars for two episodes is still a large sum of money ... an oddly large sum.
Reader Comments (Page 1 of 1)
Adam @ Jun 19th 2007 1:05PM
1200 or more point downloads confirmed.
T H @ Jun 19th 2007 1:05PM
I can't remember the name of the idiot who challenged me on this a couple of days ago but... told you so.
dvdguy @ Jun 19th 2007 1:05PM
Actually it's an even large sum.
Stevo @ Jun 19th 2007 1:07PM
I wonder how much Microsoft is going to put into marketing this exclusive content. Another $50 million?
Scott @ Jun 19th 2007 1:08PM
I'm hoping these episodes are on the scale of the Shivering Isles expansion for Oblivion.
That's the only way this sum of money makes sense I think.
copa @ Jun 19th 2007 1:16PM
Microsoft actually made off like bandits here. Take Two is in such a perilous financial position that they gave away their most treasured asset, exclusive platform availability, in exchange for a wad of cash up front.
As Michael Pachter explained, Take-Two is simply getting a $50 million advance on their 70% cut of the sales over XBox Live. The other 30%, of course, goes straight to Microsoft.
So in practice, it works like this (combining the two episodic content releases into one for simplicity):
- Microsoft gives Take Two $50 million (half will be in this fiscal year, which they so desperately need)
- For the first $71.42 million dollars of sales, Microsoft will keep 100% of the revenue, to pay back the advance.
- For every sale beyond that, Microsoft will keep 30% of the revenue for their cut of XBox Live Sales.
Clearly, if the expansions only sell $100 million, Microsoft does pretty well financially. Plus, they get the marketing advantage of the exclusive content.
San Andreas grossed about $700 million in revenue, so $100 million for the expansions is definitely in the realm of possibility.
copa @ Jun 19th 2007 1:18PM
"1200 or more point downloads confirmed."
As Scott mentioned, you are probably going to see $30 expansions a la Oblivion because of the large numbers involved.
gullum @ Jun 19th 2007 1:23PM
@copa
You forget that San Andreas had an enourmous install base with like a billion PS2 plus a couple of Xboxs and a few million PCs wich in no way compares to the numebrs of the 360.
Jon @ Jun 19th 2007 1:25PM
Hmm...their silence strikes me as very interesting. Maybe this years E3 will hold a surprise announcement of GTA4 being a timed exclusive for the 360. What If MS got them to hold off on releasing the PS3 version till January??? That would be an amazing slap in the face to Sony and PS3 sales this fall.
Stevo @ Jun 19th 2007 1:26PM
@ copa
They shouldn't be able to recognize that revenue until next year...unless the game is substantially completed before this fiscal year's end. Regardless of when they receive that revenue, they aren't allowed to recognize it on their financial statements until the performance is substantially complete...right?
Anyone know when their fiscal year ends? Is it the typical calendar year?
copa @ Jun 19th 2007 1:42PM
@gullum: Sorry, I wasn't clear, I was quoting PS2 sales only when I gave the $700 million figure.
$100 million in sales on the 360 isn't a gimme, but it's doable. $50 million in sales would be the break-even point for Microsoft since they keep 100% of that, and that seems quite likely.
@Stevo: Per Michael Pachter, they are planning to recongnize the revenue in March of '08, which is in their current fiscal year. So they expect the first expansion to be "substantially complete" by the end of March.
Chimuel @ Jun 19th 2007 1:48PM
Microsoft is obviously scared of what the PS3 can do. $50 million? Why? Why such a waste of money for a game? Sure, it's GTA, but Microsoft does not need to spend intrinsic amounts of money if they are so confident that their system is superior. I would definitely like to see what goes down at E3 this year and the announcements that come along with it.
Stevo @ Jun 19th 2007 1:50PM
@ copa
oh okay-- well, kudos to MS for prepaying to get this exclusive content. Everyone wins...well, except PS3 owners.
Trenchalicious @ Jun 19th 2007 1:52PM
I think Microsoft will not sell these at insane prices. I think what they did was just pay to stick it to sony. If this causes Sony to lose buyers, then Microsoft wins. Plus add in people buying the downloads, and new consoles and they win.
They did this knowing they will take a lose, a small one to get some of Sony's fans and to hopefully buy the franchise in the future.
Dale @ Jun 19th 2007 1:56PM
If they got GTAIV as an Xbox 360/Games for Windows exclusive, Sony would be fooked.
Sparkstalker @ Jun 19th 2007 1:59PM
What if..
Microstoft takes the opposite track of what everyone expects and gives away the DLC for free to Gold members of Live? They can afford it, and the enticement of free add-ons to what's going to be the #2 selling game of the year would be more than enough to give MS a huge kickstart to the holiday season...
Yeah, it's a pipe dream...
deaftly @ Jun 19th 2007 2:05PM
i could see the extra content being like libery city stories and vice city stories expansions for gta4, just another 10-20 hours of gameplay, judging at the price ms paid for this , either way, good for us 360 owners, ps3 is still in the shitter :\
Martez @ Jun 19th 2007 2:22PM
What's to explain?
Benjamin Heckendorn @ Jun 19th 2007 2:41PM
Microsoft could buy all the PS3's and Wii's on the market, dump them in the ocean to make the 360 win, and STILL have tens of billions left in the bank. For a division that's lost billions, 50 mil is a drop in the bucket.
Jake @ Jun 19th 2007 2:47PM
If they sell $50 million worth between the two episodes, they break even. They don't make any money directly, but don't lose anything on the deal either. And with the increase in GTAIV sales by multiconsole owners and the increase in 360 sales by hardcore GTA fans, it would be well worth it.
If the episodes are $10 each, then need to sell 5 million total or on average 2.5 million each episode. I think that is a bit optimistic and won't happen, but it isn't totally out of the realm of possibility at $10 each. I'd maybe get one, if the game is good.
People on these blogs need to learn something about pricing as well. You morons talk like "MS is greedy so they's sell at really high, like $30." All companies are greedy and do whatever they think makes them the most total money. MS will price the episodes at a point that they feel will make them the most money.
If they think they can sell 10 million copies at $5, but only 50,000 copies at $50, you better bet your ass they sell at $5. And it is BECAUSE they are greedy that they would sell that low, if of course their estimations showed that to be the sweet spot.
john @ Jun 19th 2007 2:53PM
Benjamin Heckendorn,
That would definitely hurt the PS3 by knocking down their attach rate for games, but Nintendo makes money off every Wii sold. I suppose it keeping units out of customers hands hurts in the long run, but it raises demand (if that's even possible) in the short term.
Joe Smith @ Jun 19th 2007 3:01PM
If the usual numbers that I have seen quoted apply to this content, if they sold each episode for $20 a piece -- which they might be able to get for GTA stuff -- they would keep around $5 per DL (Take 2 would keep around $15 per) and would need to sell something like 5 million of each download to break even. NOt bloody likely. But if you see it as a marketing cost, it looks better. Still stupid, but better. If I were a stockholder Iwouldn't be too thrilled.
fasty @ Jun 19th 2007 6:33PM
Are they going to sell nearly 2 million downloads at $30 a pop - TWICE?!?!? Once in March, once at a later date. This better be one KILLER APP. if that's going to happen.
AKM @ Jun 19th 2007 3:27PM
"well, kudos to MS for prepaying to get this exclusive content. Everyone wins...well, except PS3 owners"
...and 60% of 360 owners who happen to have Core.
tim @ Jun 19th 2007 3:38PM
@10:
take-two's fiscal year ends on halloween. which makes their decision to release IV mid-0ctober strangely precipitous. it falls just shy of the deadline to close the year in black. curious if senior mgmnt pushed hard to finish, just as microsoft took the whip to bungie for both halo launches...
JonnyBoy2U @ Jun 19th 2007 4:49PM
TH you know perfectly well that it was me who challenged you you dumbass. And I was proved right. No where in this article and for your information NO WHERE in THIS ARTICLE does it say that its CONFIRMED that we will have to pay for the downloadable content (if it is downloadable).
2nd if they do confirm that its going to be something you download then I for one don't have a problem with buying it. 800 points is NOT that serious. And GTA IV is going to be an awesome game. But I'm not going to buy the Collectors Edition. Its not that special that it requires me to put down 70 dollars for a special casing.
Anyways TH why not READ articles before mouthing off? It says that its a RUMOR. And yah that rumor MIGHT come true but until then you can't say, "Told you so" at all....
jp @ Jun 19th 2007 5:17PM
i'll wait for the user mod. to unlock them on the blue-ray :P
T H @ Jun 19th 2007 7:08PM
THERE'S the angry little boy!! Come on. If you haven't seen more than enough substantial evidence to the point, well... I'll refrain from further name calling, but, sheesh. The content is clearly going to be downloadable, as based on the reports of the size of the game, it's most likely coming on multiple DVDs for XBox360. You think Rockstar is then going to throw yet ANOTHER DVD up in there, especially when they haven't even completed this game yet? There's no way the episodic content is going to be anywhere near complete by the release date of this game. Besides the fact that extra episodes sound tailor-made for a service such as Live (or PSN.. :/)
Dude. You sound like you'd cut off your nose to spite your face.. you're clearly wrong.
And there's NO WAY IN HELL Microsoft won't be turning a profit off of extra content, expecially of this magnitude. Have you been living under a rock (on Mars)?