Take-Two finally galloping to profit thanks to Red Dead Redemption
For nearly a decade, the biggest problem facing video game publisher Take-Two Interactive has been its inability to turn a profit in years when it didn't release a new Grand Theft Auto game.
Now a game described by many as Grand Theft Auto in the old West is poised to change that.
New York-based Take-Two on Thursday reported its financial performance for the quarter ended July 31 and changed its guidance for the full fiscal year from a net loss of between 10 and 30 cents per share to a net profit of between 60 and 70 cents per share. The company also increased its predicted revenue for the fiscal year from between $880 million and $980 million to between $1.05 billion and $1.1 billion.
The primary reason is Red Dead Redemption, which since its debut on May 13 has shipped 6.9 million units to stores worldwide. The last time Take-Two made a profit in a year that a Grand Theft Auto game wasn't released was 2000.
"This is something we’ve been hoping to accomplish almost from day one," said Chief Executive Ben Feder. "It will be the first time in a decade that we're profitable without GTA."
Like Grand Theft Auto, Red Dead Redemption was produced and marketed by Take-Two label Rockstar Games. Although the game is set in 1911, it uses much of the same technology as GTA and has a similar gameplay structure.
In addition to Red Dead, Feder said Take-Two has seen strong catalog sales of titles released last year including Borderlands and NBA 2K10, as well as 2008's Grand Theft Auto IV.
Along with the earnings report, the company confirmed that the Rockstar game L.A. Noire, which was scheduled to come out by the end of October, has been again delayed to the first half of 2011. L.A. Noire has been in production for six years and was originally scheduled for release in 2008.
"L.A. Noire is highly ambitious, and there's nothing else in the marketplace like it," said Feder. "As we showed with Red Dead Redemption, delivering a game before it's ready is not the answer." Red Dead took more than five years to make.
Take-Two stock surged 13% in after-hours trading on the good news. It closed at $8.85, up 3%, before financial results were released.
-- Ben Fritz
Photo: A scene from Red Dead Redemption. Credit: Rockstar Games