The vidgame biz got a shock on Thursday as publisher Take Two delayed the release of the highly anticipated “Grand Theft Auto IV” from October until March or April of next year.
In a conference call with Wall Streeters, Take Two chairman Strauss Zelnick blamed technical problems in the development of the title.
“We felt that delivering a product that doesn’t meet our standards wasn’t in our best interest,” he explained. “We will not choose expediency over the long-term success of the ‘Grand Theft Auto’ franchise.”
Pushing “GTA IV” out of its current fiscal year, which ends October 31, caused Take Two to slash its guidance. After previously predicting revenue of $1.2 billion-$1.25 billion, it’s now expecting $950 million-$1 billion. It also warned investors that it will lose between $1.25 and $1.35 per share. In June, company said it would break even for the year.
News sent Take Two stock plummeting by 19% in after-hours trading.
While the delay is painful to Take Two, it will also have a big impact on the entire videogame biz. Wedbush Morgan industry analyst Michael Pachter estimated that consumers would have spent $250 million at retail on “GTA IV” this year.
About 20% of that money, he said, may be lost to the industry this year. But some $200 million is now up for grabs, and the publishers of other games aimed at young men, such as “Halo 3,” “Call of Duty 4,” “Rock Band,” “Assassin’s Creed” and “Guitar Hero 3,” are already salivating at the prospect.
The title “was going to be incredible competition,” said Activision CEO Bobby Kotick, whose company is publishing “Guitar Hero 3” and “Call of Duty 4.” “There is now a big void in the market in that category.”
“GTA IV” will be released on Sony’s PlayStation 3 and Microsoft’s Xbox 360. Both companies were counting on the game to help drive sales of their consoles. However, industryites said Sony may suffer more, since the only other action game expected to sell as well as “GTA IV” is “Halo 3,” a 360 exclusive.
In addition, since “Halo 3” is published by Microsoft, it could make up some of what it loses in console sales through higher game sales.
“GTA IV” delay is the latest in a string of bad news for Take Two. It also had to indefinitely delay the release of “Manhunt 2” after the violent game got a preliminary rating of Adults Only, which would essentially prohibit its release in the U.S., and was banned by censors in the U.K., Ireland and Italy. That also played a small role in the guidance change.
Zelnick, CEO Ben Feder and other execs took over Take Two earlier this year when a new board was voted in following an accounting scandal involving the previous management team. Former CEO Ryan Brant was sentenced on Wednesday to five years’ probation for falsifying business records related to stock options.
Pachter predicted, and other industryites agreed, that the delay likely won’t hurt sales of “Grand Theft Auto IV” when it does come out. The larger reason that Take Two stock took a beating on Thursday, he said, was that investors fear that all future “GTA” sequels will now come later than expected.
The last “GTA” game for consoles, “San Andreas,” was released in November 2004. Investors are undoubtedly hoping that the next installment won’t be another 3½ years away.