The $250 Million "Grand Theft Auto" Gamble

Source: Rockstar Games.

Cheap just won't cut it for tentpole video game titles. Take-Two Interactive (NASDAQ: TTWO  ) is rumored to be spending more than $250 million on development and marketing costs for the new chapter in its Grand Theft Auto franchise. That massive budget would make GTA V one of the most expensive video games ever produced, rivaling the total spent on many blockbuster movies.

And it should be worth every penny. Take-Two has already sold close to 130 million units in the Grand Theft Auto brand, and accumulated enough awards to make it one of the industry's biggest critical hits as well. Analysts expect the winning streak to continue with this week's launch, with as many as 25 million copies of GTA V set to sell this year. That should power a 50% spike in revenue for Take-Two over last year's numbers.

Hits are becoming all-important to developers, so it makes sense for them to focus their limited budgets on a small number of games. Electronic Arts (NASDAQ: EA  ) , for example, is aiming to launch 11 major titles this year, versus the 36 it published in 2011.

But Take-Two isn't the only company betting on a Grand Theft Auto V hit. GameStop (NYSE: GME  ) expects major revenue growth this quarter, reversing a brutal nine-quarter slide in comparable sales. After enduring years of shrinking, the retailer is feeling optimistic again thanks to the stacked game calendar this fall that features big new titles from Disney, Electronic Arts, and Activision Blizzard -- in addition to this week's GTA V launch.

And console makers are hoping the game will help the current-generation systems go out with a bang. While all the attention is on the PS4 and Xbox One, Sony and Microsoft (NASDAQ: MSFT  ) actually intend to sell and support their current hardware for several more years. Microsoft even has plans for 100 new games for the Xbox 360 through 2016.

These systems are very profitable at the tail end of the hardware cycle, and a highly anticipated game like Grand Theft Auto V should give console makers a nice boost heading into the next-generation launch in November.

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  • Report this Comment On September 09, 2013, at 8:13 PM, speculawyer wrote:

    There is pretty much no gamble with GTA V. It is a solid investment.

  • Report this Comment On September 09, 2013, at 8:41 PM, TelsaRowe wrote:

    Seeing how the pre-orders have already made double what the games budget was there is absolutely no gamble involved here. Silly title.

  • Report this Comment On September 10, 2013, at 1:52 AM, phxphotog wrote:

    What's a gamble about a game that probably going to make at least a Billion dollars? I would call that an incredibly sound investment. Something the Motley Fool should know about.

  • Report this Comment On September 10, 2013, at 2:42 AM, throwintre wrote:

    The only way that GTA will ever decline in popularity is if the Houser brothers leave or if EA buys Rockstar.

  • Report this Comment On September 10, 2013, at 10:07 AM, breezious wrote:

    you mean if EA buys TTWO, which they already tried

  • Report this Comment On September 10, 2013, at 1:20 PM, throwintre wrote:

    Yes I know. TTWO could sell just Rockstar though. It doesn't change my point.

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