Take-Two Interactive (NASDAQ:TTWO), like all video game publishers, is waiting for Microsoft's (NASDAQ:MSFT) Xbox 360, Sony's (NYSE:SNE) PlayStation 3, and Nintendo'sWii to gain firm traction in the marketplace sometime next year. When that happens, sales should soar for these software concerns. For now, though, Take-Two's second-quarter data suggests it might have liked a second take on the quarter.

Net sales increased more than 19% to $265.1 million. Don't get too excited about that double-digit increase, though; sales for the six-month period declined more than 27%, to $530.1 million. The operating loss for the quarter widened horrifically to $77 million, compared to a $12 million loss a year ago. The net loss also expanded, coming in at $50.4 million ($0.71 per diluted share) versus a net loss of $8.2 million ($0.12 per diluted share). Take-Two's pricing power remains weak, and co-published and licensed projects hurt margins (as opposed to higher-margin titles developed within the company itself).

These results include write-offs totaling $26 million for studio closures and assets relating to titles in development. In addition, the operating loss and net loss for the six-month period were $126 million and $79.5 million, respectively. That compared to firm profits in the year-ago timeframe. Even though this was a dire quarter, investors should remember that the new console cycle isn't fully here yet; the company is now marking time until each system has established a significant installed user base.

Take-Two may have shied away from the subject matter of the now-cancelled title Snow -- in which players would have vied become a major drug dealer -- but that doesn't mean that the publisher is giving up on edgy fare. It continues to grow its hot Grand Theft Auto franchise, moving on from a controversy involving hidden X-rated content that dealt the series a major public-relations blow. Take-Two's Rockstar subsidiary is releasing Grand Theft Auto: Liberty City Stories, previously available only on the PSP handheld, on the PlayStation 2. The PSP version of Liberty City Stories, along with the PlayStation 2 version of Grand Theft Auto: San Andreas, were cited as sales drivers. The Elder Scrolls IV: Oblivion, distributed to the PC and Xbox 360 platforms, was another big force this quarter, perhaps offering proof that Take-Two's strengths extend beyond games about stolen cars.

Then again, maybe not. Wall Street will probably always see Take-Two as the Grand Theft Auto publisher. Although the earnings missive does list many titles on the way, the ones that will get investors most excited are Grand Theft Auto: Vice City Stories, to be released later this year for the PSP, and Grand Theft Auto IV, scheduled for October 2007 for the PlayStation 3 and Xbox 360.

Take-Two has seen its challenges, but it should prosper over time from the new console releases and young gamers' continued fascination with its Grand Theft Auto juggernaut. I believe competitors Activision (NASDAQ:ATVI) and Electronic Arts (NASDAQ:ERTS) offer less risky ways of playing the coming video-game boom; I'd personally prefer their brand equities and product slates in my portfolio than Take-Two's.

Nevertheless, Take-Two has put the FTC issue behind it and expects to return to profitability by the fourth quarter, suggesting that the company, for all the drubbing its stock took in after-hours trading yesterday, should survive to fight another day on Wall Street.

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Fool contributor Steven Mallas owns none of the companies mentioned. The Fool has a disclosure policy.