QUOTE AND NEWS
Market Intelligence Center  Sep 9  Comment 
After closing Monday at $23.36, Take Two Interactive Software Inc (TTWO) presents an attractive opportunity to get a 5.47% return in just 102 days, which is an annualized return of 19.56% (for comparison purposes only). To enter this trade, sell...
SeekingAlpha  Sep 9  Comment 
By Wesley Eddy: Originally published on Aug. 11 , 2014. Take-Two Interactive Software (NASDAQ:TTWO) publishes several series of hit video games that have loyal fan bases, including Grand Theft Auto and NBA2K, among others. On August...
StreetInsider.com  Sep 5  Comment 
UPGRADES Maxim Group raises IntelliPharmaCeutics International (Nasdaq: IPCI) from Hold to Buy and moves its price target from $3 up to $7. Click Here for more color. Goldman Sachs upgrades CIENA (NYSE: CIEN) from Neutral to Buy with a price...
TheStreet.com  Sep 5  Comment 
NEW YORK (TheStreet) -- Shares ofaTake-Two Interactive Softwarea were down -0.86% to $23.05 in pre-market trading Friday afteraSterne Ageeadowngraded the stock to "neutral" from "buy." The firm cited valuation, as the stock has gained 35%...
Benzinga  Sep 2  Comment 
Analysts at Goldman Sachs initiated coverage on Take-Two Interactive Software (NASDAQ: TTWO) with a Neutral rating. The target price for Take-Two Interactive Software is set to $25. Take-Two Interactive shares have gained 26.06% over the...
Benzinga  Aug 29  Comment 
In a note out Friday, Benchmark analyst Mike Hickey makes a case for Activision (NASDAQ: ATVI) preparing to acquire Take-Two Interactive (NASDAQ: TTWO). Hickey said, "For Activision, acquiring Take-Two Interactive would be a no brainer, in our...
Market Intelligence Center  Aug 26  Comment 
For a hedged play on Take Two Interactive Software Inc (TTWO) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Jan. '15 $22.00 covered call for a net debit in the $20.21 area. That is also the break-even stock price...
Cloud Computing  Aug 26  Comment 
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today announced that Karl Slatoff, the Company’s President, and Lainie Goldstein, the Company’s Chief Financial Officer, plan to present at the MKM Partners Entertainment...
SeekingAlpha  Aug 24  Comment 
By R.S. Analytics: Take-Two Interactive (NASDAQ:TTWO) shares are on a roll, up nearly 30% in 2014 and up a whopping 100% since the beginning of 2013. Even with these hefty gains the stock still trades at a discount to its peers, the broader...
SeekingAlpha  Aug 21  Comment 
By Amal Singh: Game publisher Take-Two Interactive (NASDAQ:TTWO) is riding the success of its latest games. The stock has gained an impressive 27% in 2014, and after robust first-quarter results, the company can get even better. Take-Two was able...




 

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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