Video Game Maker Take-Two Extends Rockstar Games Contract
The company reported weaker quarterly results, but also renewed its management agreement with CEO and chairman Strauss Zelnick's ZelnickMedia.
NEW YORK – Video game maker Take-Two Interactive Software on Tuesday reported a wider quarterly loss and said it has extended its employment agreements with key members of the creative team of publishing label Rockstar Games, which is responsible for its Grand Theft Auto and Red Dead Redemption hit franchises.
The company also unveiled a renewal of its management agreement with ZelnickMedia, the investment vehicle of its chairman and CEO Strauss Zelnick.
The company didn't detail specific terms of the Rockstar deal, but company executives said it had substantially the same terms as their previous deal. They also hinted that the collaboration would continue for several years.
Take-Two’s loss for the fiscal fourth quarter amounted to $22.4 million, compared with a year-ago loss of $9.7 million.
Revenue dropped 22 percent to $182.3 million as the year-ago period was buoyed by the firm’s latest Bioshock game release. But revenue exceeded Wall Street’s expectations. The company key sellers in the latest period were NBA 2K11, Top Spin 4, Major League Baseball 2K11 and continued sales of hit title Red Dead Redemption and GTA.
For the full fiscal year, profit from continuing operations amounted to $53.8 million, compared to a year-ago loss of $108.1 million. Revenue grew 49 percent to $1.14 billion.
For its new fiscal year that will end in March of 2012, Take-Two projected a profit of 10 cents to 35 cents per share on revenue of $1 billion-$1.1 billion, well below Wall Street’s average estimate. The company once again declined to say when the next GTA release may hit stores, but management said it expects profits for the next two years, including "substantial" profit growth in the year after the one that has just started due to a strong product pipeline.
Zelnick said on an earnings conference call that his team was pleased to have posted a profit for the latest fiscal year despite the lack of a major GTA release. He also highlighted that the firm has exceeded its revenue and profit guidance for six quarters now.
Zelnick declined to give sales data for the recent release of cinematic game LA Noire. An analyst on the call mentioned reports of 1.6 million units sold in the first week. Zelnick just said the game was “off to a very good start” and will be “another strong franchise” for the company.
LA Noire is also a major contender for the game of year award, he said. Asked about the recent PlayStation Network outage, he said it had no effect on the release.