Ever since the 1980s, video games have played an important role in entertainment, and Take-Two Interactive Software (NASDAQ:TTWO) has been among the most successful companies in producing hit video games in recent years. The success of Grand Theft Auto is what Take-Two is best known for, but other key franchises have powered growth for the game giant as well. There's plenty of room for growth throughout the industry, but Take-Two has gotten aggressive about taking as much of its available share as possible.

Coming into Thursday's fiscal first-quarter financial report, Take-Two investors wanted to see evidence of continued domination even in the light of successes from rival video game makers. Take-Two's results were stronger than most had expected, and many shareholders feel more confident than ever that they've chosen the right company to lead the industry forward.

Cover pages showing Take-Two's T2 logo.

Image source: Take-Two Interactive.

How Take-Two is looking to move forward

Take-Two's fiscal first-quarter results indicated considerable progress in the company's attempts to implement its long-term strategic vision. Revenue was down 7% to $388 million, but that was a far cry from the larger plunge on the top line that most of those following the stock were looking to see. Net income was higher by 19% to $71.7 million, and that resulted in earnings of $0.62 per share, easily surpassing the consensus forecast among investors.

Much of the issue for Take-Two's revenue declines came from the fact that the year-ago quarter was so strong, led by the release of the Gunrunning update for the Grand Theft Auto Online version. Net bookings were down by $60 million to $288 million, but that was still $30 million better than most investors had expected to see.

From a longer-term perspective, Take-Two's efforts to convert to a digital conversion model bore fruit. Digitally delivered net bookings represented fully 88% of total bookings, up from 81% in the previous year's period, as Grand Theft Auto, NBA 2K18, and other key franchises made the biggest contributions to the revenue source.

In addition, Take-Two has made a lot of progress in keeping costs under control. Software development costs were down by almost a third from year-earlier levels, and big reductions in internal royalties and licensing obligations helped push gross margin levels higher. Rising costs for overhead, marketing, and research and development ate into those savings, but lower tax rates helped to boost the bottom line as well.

CEO Strauss Zelnick was pleased with how things are going. "Fiscal 2019 is off to a solid start," Zelnick said, "with first quarter operating results that exceeded our expectations." He looked especially at Grand Theft Auto and the NBA2K 18 franchise in explaining the impressive performance.

Can Take-Two keep winning?

Take-Two also thinks that the future will bring some big wins soon. In particular, the launch of Red Dead Redemption 2 is expected on Oct. 26, followed closely by new releases in the NBA and WWE game series. Looking further out, Take-Two's development pipeline includes some potential new franchises to drive growth in the long run.

Take-Two made minor changes to its guidance, as although it still believes that fiscal 2019 revenue will come in between $2.5 billion and $2.6 billion, it changed its GAAP earnings projections to a range of $1.45 to $1.70 per share, down $0.08 to $0.10 per share from its previous forecast. For the fiscal second quarter, Take-Two sees revenue of $480 million to $530 million, with GAAP earnings of $0.43 to $0.53 per share.

In response, Take-Two investors celebrated the news, and the stock jumped 10% in after-hours trading following the announcement. Shareholders are signaling that they believe that Take-Two will be able to keep taking business away from the competition, and if that turns out to be the case, then Take-Two will be able to declare final victory over its rivals through rising market share and enhanced profit growth.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Take-Two Interactive. The Motley Fool has a disclosure policy.