Take-Two Investor Call: Less Money, Still No GTA V Release Date

After months spent stringing everyone along like a nation of jilted ex boyfriends, Take-Two Interactive used the occasion of today’s Q1 2013 investor call… to continue to string everyone along. Despite exploding rumors in the last 24 hours that Take-Two would use the call to finally announce the release date for Grand Theft Auto V, company management did the exact opposite, refusing to discuss the release date in real terms and sending signals that the game is far from finished.

Take Two first acknowledged that Q1 revenue projections were below plan. During the quarter, the company took in $226.1 million, a loss of around $110 million compared to revenues from Q1 2012. As a result, projected fiscal year revenues have been readjusted. The company now projects total revenues of somewhere between $1.70 and $1.80 Billion. Much of the earnings during the period, an impressive 26%, came from catalogue sales, particularly Grand Theft Auto IV, Red Dead Redemption and the civilization franchise.

The decline year over year was primarily due to Spec Ops: The Line and Max Payne 3 both selling below expectations. Max Payne 3 enjoyed a healthy 3 million units shipped, but it likely hasn’t sold that amount (Take-Two representatives never confirmed actual sales numbers, only shipped numbers). During the call, CEO Strauss Zelnik suggested that the lower than expected sales may be due to the approaching end of the current generation of consoles, saying that consumers were becoming much pickier about their purchases. The company still projects that they will remain profitable for the year, citing strong buzz for Borderlands 2, as well as for BioShock Infinite and for NBA 2K12. Based on the strength of Borderlands 2, it projects approximately $200 to $250 Million in revenues during the second Quarter, which ends September 30.

Of course, the elephant in the room is the highly anticipated Grand Theft Auto V. First announced last October, the game has only seen one trailer and, a few weeks back, 2 screenshots. Rockstar has otherwise refused to show anything to the public, and speculation about the release date has reached a fever pitch in recent months. While some analysts have pegged it to a Q4 2013 (AKA March, 2014) launch, a wider body of evidence has suggested that October, 2012 is more likely. Alas, during todays’ call, Take-Two said of GTA V only that it is ‘making progress’ and ‘strongly’ in development.

Take-Two deftly avoided saying anything else specific about the game during the presentation, which clearly didn’t sit well with some of the investors attending the call. IN the Q&A portion, one investor asked outright if continued refusal to announce the game’s release date may hurt its retail prospects. That’s a laughable concern, considering that the game is probably going to break 10 million sold within 4 months, but it did prompt Zelnik to reveal something tangible: his response to this question was “We just haven’t talked about a release date.”

If Rockstar and Take-Two haven’t even discussed a release date (assuming this comment wasn’t a misdirection), then the only logical conclusion is that it still isn’t complete enough to nail one down confidently. We can, therefore, probably rule out a Holidays 2012 launch. If this ends up being the case – though we ought to note Rockstar may well indeed be planning an announcement before too much longer – it makes recent Take-Two Interactive actions seem absurd. As of this writing, the only arguably AAA releases planned for the holiday season are NBA 2K13 which drops October 3, and XCOM: Enemy Unknown, which comes out October 9. Aside from some middling children’s games, Take-Two has nothing coming out until the February 26 release of BioShock Infinite. That is, to put it mildly, a staggering gap.

The gap is made more staggering by the fact that Take Two’s expects that the majority of their Q2 revenues (ending September 30) will come from Borderlands 2. While that game’s preorders are the third highest in company history (coming in only behind Grand Theft Auto IV and Grand Theft Auto: San Andreas), as one investor noted during the Q&A portion, preorders don’t necessarily translate into sales. Borderlands 2 is expected to do quite well, but for the company to meet its full fiscal year goal they’re going to need more than what it, and BioShock Infinite, are likely to bring in.

Interestingly, Take-Two still expects approximately 55% of its total year revenues to come from sales of Rockstar games. While this includes back catalogue sales, which are still very strong, it also includes Max Payne 3, which sold below expectations. The only possible way this projection is fulfilled is with the release of Grand Theft Auto V. At this late date, it’s unlikely that we’ll spend Christmas in Los Santos*, even if Rockstar continues to behave as though we will, but given these concerns, we can probably bet we’ll see it by March.

How Take-Two plans to reap the rewards of competing with itself, however, remains to be seen.

* Sorry, Doug Creutz, looks like you were right after all.

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