Take-Two has released its financial report for the first quarter FY2014. During a call to investors, the company discussed Bioshock Infinite sales (which hover over 4 million units) and the company’s ongoing efforts to establish permanent franchises.
On its financial report for Q1 2014, the American developer and Publisher reported a net operating loss of $61 million, which represents a 44.1% increase in net profit year-over-year (compared to a net loss of $110.8 million last year). The underperformance comes as a result of a 36.8% decrease in net revenue ($142.7 million, compared to $226.1 million year-over-year.) According to Take-Two, the results are better than expected.
However, it’s interesting to point out that revenue from digitally delivered content received a 128% boost Year-over-year and accounted for 52% of revenue. The largest contributors were Borderlands 2, NBA 2K13, Grand Theft Auto 4, and BioShock Infinite.
Strauss Zelnick, chairman and CEO of Take-Two expressed his opinion regarding the company’s performance.
“Our better-than-expected first quarter results demonstrate that the market remains strong for the highest-quality interactive entertainment,” he said.
“We continue to benefit from robust demand for our recent genre-leading releases, iconic catalog titles and growing portfolio of innovative digitally delivered offerings.
Looking ahead, we are well-positioned to capitalize on the opportunities presented by the upcoming launches of the next-generation consoles. We have an extensive development pipeline, highlighted by proven franchises and groundbreaking new intellectual property. As a result, we expect to continue to deliver profits in fiscal 2015 and for the foreseeable future.”
During an investors call, Zelnick explained the company’s strategy to develop and establish permanent franchises, which will allow them to capitalize on an IP by releasing new installments on the same franchise more regularly. Zelnick believes that releasing games that are based on an established IP with a Higher Frequency could lead to a better financial performance.
“…we’d like to see releases paced a little more closely together. I don’t really think next-gen is going to change the production approach sufficiently that, that will be the difference that makes the difference.”
Our competitors’ view is that our franchise will have a certain life, and at the end of that life, you move onto the next thing, so you better make hay while the sun shines. Our view is to the contrary. The best franchises are permanent franchises.”
The Report Highlights
- BioShock Infinite sold over 4 million units since it was released in March 2013.
- Grand Theft Auto 4 has moved over 25 million units since its 2008 release. Install base for current-generation consoles has increased three-fold since then.
- Take-Two expects 60% of revenue for the full year to come from its back catalog, 2K titles, and GTA 5.
- The firm closed out Q1 FY14 with revenue of $142.7 million down from $226.1 million year-over-year.
- Catalog sales accounted for 60% of net revenue led by the Borderlands, Grand Theft Auto, and Red Dead Redemption franchises