Take-Two Interactive (TTWO 11.78%) has continued to ride the strong sales performance of Rockstar Games' Grand Theft Auto V (GTA V) -- a title that is almost eight years old and comprises a significant portion of the company's annual bookings.
There is a risk that the game's sales could flatten out at some point and cause Take-Two's revenue growth to decelerate. But with no clear indication that Take-Two will be releasing the next installment in the series anytime soon, it is moving forward with plans to release a remastered version of GTA V for the new game consoles from Sony and Microsoft that just launched in the fall.
However, an upgraded version of GTA V for next-gen consoles may not be all the company has in the works. The franchise is more than 20 years old and now has a rich history of content that Take-Two could bring back to grow sales in between new installments in the series.
Remasters are in demand
Remakes and remasters of older games have been popular in recent years. The difference between the two is that a remaster typically involves a simple graphics upgrade for new gaming hardware, while a remake is a completely redesigned version of the original release.
GTA V is going on its second remastered version. The game was originally released in 2013 on Sony's PlayStation 3 and Microsoft's Xbox 360. It was then upgraded with new enhancements for PlayStation 4 and Xbox One in 2014.
However, Take-Two is known to go the extra mile with its development efforts, especially its remastered games. In addition to a simple graphics upgrade, the company also adds other enhancements and features to make the game play better. Take-Two's commitment to perfection is one reason GTA V continues to grow across console generations.
Take-Two recently did a remastered version of the Mafia trilogy, which the company credited, along with sales from GTA and Red Dead Redemption, for driving its performance in the December-ending fiscal third quarter.
A wealth of content
Interest in remastered versions of older GTA titles could be huge. Activision Blizzard did a remastered version of Call of Duty: Modern Warfare 2 Campaign last year that reportedly sold 3.4 million copies, but I believe releases of older GTA titles could sell far more copies.
Rumors are circulating that Take-Two may already be working on a remaster of GTA 3 (2001) and GTA: Vice City (2002). A community of fans created their own modded version of GTA 3, which Take-Two recently shut down, fueling speculation that the company has something up its sleeve. Obviously, the fact that fans are going to this much trouble shows that there is high interest in Rockstar Games' catalog of GTA content.
It's not surprising given the growth of the franchise over the years. Grand Theft Auto has sold a cumulative 270 million copies going back to the original release in 1998. The current installment has more than doubled the cumulative sales of the series, with more than 140 million units sold since 2013. That means there are millions of new players to the franchise who have never played the previous releases in the series.
There have been 14 releases total, including Grand Theft Auto Online, which serves as the multiplayer companion to GTA V. That's a rich history of content that Take-Two could monetize.
During Take-Two's last earnings call, MKM Partners analyst Eric Handler pointed out the high demand for GTA content right now and asked management what its perspective is on remastering previous games in the franchise. As is usual with questions about potential release plans from Rockstar Games, CEO Strauss Zelnick declined to comment, but he seemed to agree with the opportunity when he said: "It's a great and encouraging question. I'm kind of inclined to leave it more as a statement than a question."
Past content has value to new players
The company has said it has the most diverse pipeline of games ever. While that bodes well for long-term growth, management expects net bookings from Rockstar Games to make up 35% of total bookings in fiscal 2021 (which ends in March), which shows how dependent Take-Two is on the success of Grand Theft Auto and Red Dead Redemption.
Every release in the GTA series has raised the bar. The ability of Rockstar Games to tell immersive stories through each release is only getting better as technology advances, making the action in the game come alive like watching a movie.
With GTA V's player base reaching such a high level, there will be tremendous demand when GTA VI releases. Until then, Take-Two has a great opportunity to generate extra sales by introducing new players to characters and storylines they haven't experienced before.
The ability of Take-Two to potentially tap into its deep catalog of content speaks to the long-term value of this top video game company.