Microsoft is paying an unprecedented $50 million for exclusive rights to publish two episodes of the forthcoming game, Grand Theft Auto IV, on its Xbox 360 games console, according to statements from a senior executive at GTA IV publisher, Take-Two Interactive.
Take-Two has already recorded the payments in financial filings as deferred revenue, explained Lainie Goldstein, Take-Two's newly appointed CFO, in a conference call with analysts.
First Xbox episode in March 2008
Microsoft is paying $25 million each for two separate downloadable packages that are expected to expand the Xbox 360 version of GTA IV with new play areas and features exclusive to Xbox 360 owners. The first will be released in March 2008, Goldstein said. Details of pricing have not been announced.
“The first 25 [million] is for the first episodic content package that's supposed to go out and that is in March of 08”, Goldstein said. “The second 25 [million] will be for the second episodic... the episode. That will be later in [the] fiscal year, fiscal 08”
While Goldstein did not specifically refer to GTA IV, Take-Two's most recent financial filings provide a list of forthcoming publications. The only episodic content listed is for GTA IV.
Remarkable scale of exclusive deal
The unprecedented scale of the $50m deal is indicated by the fact that it exceeds Take-Two's average quarterly revenue of $43 million received from all its Xbox 360 titles combined.
Take-Two subsidiary Rockstar, which is developing the game, plans to release GTA IV in on October 16, 2007. The initial release is expected simultaneously for both Sony's PS3 console and the Xbox 360.
Transcript of Take-Two comments
Goldstein made her comments on downloadable content in response to a question from Evan Wilson, a senior research analyst with Pacific Crest Securities' software team, during Take-Two Interactive's Second Quarter Fiscal 2007 Results Conference Call (link to streaming audio, requires free registration). The remarks come toward the end of the conference, at about the 40 minute mark. Here is Texyt's transcript of that section.
Evan Wilson, analyst: "And as it relates to the deferred revenue chunk associated with the... episodic content on Xbox 360, [I] can see that [unintelligible, assumed to be 25] million of that moved into short term deferred. Can you give us any sense of when that's going to hit the P and L [profit and loss statement], and will we see 25 million at one time and then the second 25 million or will [there] be a slow bleed onto the P and L?"
Lainie Goldstein, Take-Two CFO: "The first 25 is for the first episodic content... package that's supposed to go out and that is in March of 08; and that's why its moved into current, because its in the next 12 months. And the second 25 will be for the second episodic, [unintelligible] the episode, and that will be later in [the] fiscal year, fiscal 08."