QUOTE AND NEWS
Market Intelligence Center  Apr 15  Comment 
MarketIntelligenceCenter.com's patented algorithms have selected a trade on Take Two Interactive Software Inc (TTWO) that returns 6.28% in 65 days for an annualized return rate of 35%. This diagonal spread pairs a short position in the Jun. '15...
Market Intelligence Center  Apr 14  Comment 
The option-trade picking algorithms behind MarketIntelligenceCenter.com's Artifical Intelligence Center have selected a covered-call trade on Take Two Interactive Software Inc (TTWO) that includes 10.71% downside protection. Sell one contract of...
Benzinga  Mar 11  Comment 
In a report published Wednesday, Cowen and Company analysts maintained their Market Perform rating on Take-Two Interactive Software Inc (NASDAQ: TTWO), with a price target of $32. In the report Cowen and Company noted, "We expect Thursday's...
Benzinga  Mar 11  Comment 
Pete Najarian said on CNBC's Fast Money Halftime Report that he wants to buy Abbott Laboratories (NYSE: ABT) because he noticed some trading activity in the name. Jon Najarian is a buyer of Take-Two Interactive Software, Inc. (NASDAQ: TTWO). He...
Motley Fool  Feb 20  Comment 
The Grand Theft Auto publisher crushed the market in 2014, but it wasn't all thanks to the incredibly successful series.
Benzinga  Feb 18  Comment 
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) came out with impressive fourth-quarter earnings February 3 on back of increased sales of NBA 2k15 and the Grand Theft Auto series. Strauss Zelnick, chairman & CEO of Take-Two Interactive, was...
Market Intelligence Center  Feb 13  Comment 
For a hedged play on Take Two Interactive Software Inc (TTWO) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Jun. '15 $27.00 covered call for a net debit in the $24.99 area. That is also the break-even stock price...
Benzinga  Feb 4  Comment 
In a report published Wednesday, Bank of America analyst Justin Post reiterated a Buy rating on Take-Two Interactive Software (NASDAQ: TTWO), and raised the price target from $32.00 to $36.00. In the report, Bank of America noted, "TTWO reported...
Benzinga  Feb 4  Comment 
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) shares gained after the company beat quarterly expectations and boosted its forecast on Tuesday evening. Shares of the New York-based game maker rose 7 percent recently, to $32 a...




 

Take-Two Software is a publisher of video games for platforms such as Playstation, Xbox, Wii, and the personal computer. The company publishes its games through two subsidiaries: Rockstar Games and 2K. Take-Two's most coveted franchise, Grand Theft Auto, has sold millions of units across multiple titles, and has been widely criticized (or celebrated, depending on the audience) for its focus on violent and criminal content. The company also produces other popular titles such as Midnight Club, BioShock, and Civilization. In 2009, the company generated $968 million in revenue but incurred a net loss of $138 million.[1]

Take-Two faces challenges during a slow global economy from the weakening demand of video games. In 2009, video game software sales reached $24.5 billion on 604 million units sold. However, estimates for 2013 show sales value dropping to below $17 billion on just 460 million units sold. If the video game market shrinks, Take-Two, along with all other video game developers, will have a difficult time sustaining growth.[2]

Company Overview

Take-Two is a developer, publisher, and distributor of video games. It also competes on a variety of gaming platforms, such as the PC, XBox, Playstation, Wii, and other portable devices. TTWO divides its financial reporting into Publishing and Distribution segments. For more information about these two segments, please see Video Game Industry.

Publishing (72.4% of net sales)[3]

  • Rockstar Games - Take-Two's internal development and publishing operation, responsible for franchises like Grand Theft Auto and Midnight Club.
  • 2K - Publishes other non-Rockstar developed titles, focusing on specific markets and opportunities:
  1. 2K Games - The primary publisher to externally developed games fitting in the traditional "hard-core" gaming segment, publishing titles such as Oblivion. Also markets some internally developed titles such as the Sid Meier games, Civilization, and BioShock.
  2. 2K Sports - The primary publisher of internally developed sports games, such as NBA 2K, NHL 2K, etc. This segment has secured long-term licensing contracts with properties such as the NBA, MLB, etc.
  3. 2K Play - The primary publisher of externally developed games fitting in the new casual gaming segment, which include TV-show tie-ins, such as Dora the Explorer, and other family-oriented gaming titles.

Distribution (27.6% of net sales)[4]

The distribution business handles logistics of distribution for published titles, and also helps distribute other companies' software and hardware through Take-Two's retailer network. The company is able to do this due to the retailer-relationships it has established over the course of many years of operations, selling its games across North America, and thus it is able to offer it as a service to third parties as well.

Business Growth

FY 2009 (ended October 31, 2009)[1]

  • Net sales fell 37% to $968 million, down from $1.5 billion in the previous year. Publishing sales decreased 43% on lower Grand Theft Auto IV sales as well as on other titles. Distribution sales decreased 13%.
  • The company incurred a net loss of $138 million compared to a gain of $97 million last year.

Trends/Forces

Despite Increasing Popularity, Video Game Demand Hurt By Sluggish Economy

The Entertainment Software Association (ESA) estimates that more than two-thirds of all American households play PC or video games, with an estimated 68% of heads of households playing games. They also estimate that the average gamer is 35 years old and has been actively playing for 12 years. ESA studies show that video game popularity has grown tremendously over the past couple of decades and the audience is widening. However, despite this increasing popularity, studies estimate that the market for video games will decrease over the next few years from the as an effect of the sluggish global economy. In 2009, video game software sales reached $24.5 billion on 604 million units sold. However, estimates for 2013 show sales value dropping to below $17 billion on just 460 million units sold. If the video game market shrinks, Take-Two, along with all other video game developers, will have a difficult time sustaining growth.[2]

Grand Theft Auto, the Crown Jewel of Take-Two, Must Keep Up Sales

Take-Two's Grand Theft Auto (GTA) franchise is one of the most coveted brands within the Video Game industry. It's games has an untarnished track record of both quality and sales. In 2009, GTA games accounted for 30.6% of the company's net revenue. In order to keep revenue stream from this title, Take-Two must continue to publish successful sequels or new hit titles to make up for any lost revenue. Because the GTA series is known for its violence and gore, many parents have decided not to buy these games for their kids (GTA games are rated 17+). Additionally, some countries have even gone as far as trying to ban the game because of its content. Take-Two must be careful not to cross the line with its content, otherwise it will face regulation. If the demand for GTA games falls, Take-Two's bottom line will suffer.[5]

Low Number Of Casual Games Exposes Take-Two To The Casual vs Hard-core gamer Dichotomy

Most of Take-Two's games fit within the traditional "hard-core" gaming category, catering towards the specific 18-35 year old male demographic. While this has fostered a devoted fan base, it has also limited the company's ability to expand beyond into the growing gaming demographics of younger children, females, and older males. Take-Two has taken various steps to address this flaw, establishing the "2K Play" publishing label, obtaining an exclusive license with Nickelodeon to develop games around "Dora the Explore" and "Go, Diego, Go", and creating the Carnival Games franchise.

Competition

  • Electronic Arts (ERTS) is the world's largest video game publisher. EA's major franchises include Rock Band, Need for Speed and a number of EA Sports titles, including John Madden's NFL franchise and FIFA.
  • Activision (ATVI) is one of the world's largest video game publishers and distributors. ATVI develops software for the PC and video game console markets. The company is home to the popular games: Guitar Hero, DJ Hero, Call of Duty, World of Warcraft, and Starcraft.
  • Konami (KNM) is a Japanese publisher, which has published hits such as the Metal Gear franchise.
  • THQ (THQI) is a developer and publisher which houses 16 development studios.

References

  1. 1.0 1.1 TTWO 2009 10-K "Selected Financial Data" pg. 30
  2. 2.0 2.1 TTWO 2009 10-K pg. 1-2
  3. TTWO 2009 10-K "Our Publishing and Software Development Business" pg. 4-6
  4. TTWO 2009 10-K "Our Distribution Business" pg. 6
  5. TTWO 2009 10-K "We Are Dependent On The Future Success Of Our Grand Theft Auto Products..." pg. 11
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