Take-Two Interactive (NASDAQ:TTWO) and WWE (NYSE:WWE) recently inked a multi-year extension of their licensing deal for WWE's pro wrestling video game titles. This means that the WWE 2K series will continue annually after its most recent release, WWE 2K16, and that Take-Two will continue updating its mobile card-battling game, WWE SuperCard. Terms of the deal weren't disclosed.
Why WWE matters to Take-Two
THQ originally published WWE titles, but the company filed for bankruptcy in 2012 and was acquired by Take-Two, which subsequently signed a new licensing contract with WWE in Feb. 2013 Take-Two holds exclusive worldwide rights to publish all WWE games on all major platforms and distribution channels.
WWE 2K14 marked the franchise's transition to Take-Two and 2K Sports. Its sequels have been stable revenue generators for the company. Market-tracking site Vgchartz reports that WWE 2K14 sold 2.3 million copies, WWE 2K15 sold 3.06 million copies, and WWE 2K16 has sold 2.3 million copies since last October.
Take-Two doesn't break down revenue by game, but it stated that its largest contributors to non-GAAP net revenue last quarter from digitally delivered content were Grand Theft Auto, NBA 2K, Borderlands, and WWE 2K. Digital revenue rose 57% annually to $141 million during the period and accounted for 39% of the top line. The company also noted that WWE SuperCard was its most financially successful free-to-play mobile offering to date and has been downloaded nine million times on iOS and Android since its launch in Aug. 2014.
Why investors should care
By securing a new deal with WWE, Take-Two extends the runway for one of its top franchises, while supporting the growth of its 2K Sports titles. The WWE games won't offer the same explosive revenue growth as its blockbuster Grand Theft Auto V, which has sold nearly 52 million copies to date, but they should deliver stable returns for the company on an annual basis -- something that the irregular GTA releases can't do.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.