from Blogs Dashboard:
Grand Theft Auto V is around the corner…or at least the trailer is
Shares of Take-Two Interactive surged 6 percent on Tuesday. But it had nothing to do with activist investor Carl Icahn, who owns a chunk of the company or any rumors about the company's earnings on Nov. 8.
What happened is that investors looked at the website of Rockstar games, the Take-Two-owned studio behind the Grand Theft Auto franchise. Its website had been replaced by a large Grand Theft Auto logo and a Roman numeral V wrapped around a banner saying "five."
Gamers have been salivating for GTA 5 since 2008, when the last game in the series came out, so much so that at least one analyst has said that the game could sell 25 million copies in its first year.
But the timing, price, features or any other details are not yet known. The only clue the company revealed is on its website: the trailer is coming out on Nov 2.
Dan Houser, one of its renown game developers, gave an extended interview to Gamespot last week to commemorate the 10th anniversary of the third version but was mum on new details about the newest game.
When the last version came out in 2008, it made over $500 million in its first week of release. The game has been criticized for glorifying crime, street violence and drunk-driving.
E3: Strauss Zelnick dishes on Wii U, Zynga and why foie gras tastes better than chewing gum
Take-Two Interactive occupies a massive booth at the Los Angeles Convention Center, where it’s showing off its new games and serving beer at the elaborate sports bar it constructed on the show floor. Under its CEO, Strauss Zelnick, Take-Two has been showing renewed financial health in recent quarters. In February, it posted its first profitable year in nearly a decade without a new release of its blockbuster video game franchise “Grand Theft Auto.” Zelnick sat down with Reuters for an in depth chat touching on everything from Nintendo’s new console to Zynga’s business model, and the difference between foie gras and chewing gum.
Reuters: Are publishers on board more than ever before with Nintendo on the Wii U?
Zelnick: Well, It’s hard to know, right? At E3, there’s always a great deal of enthusiasm, as there should be. It remains to be seen what the releases schedules look like. We do think it’s pretty interesting. What they are doing with one display in your hands and the other display that’s wireless in front of you and the ability to have them work independently as well as together, creates a lot of interesting creative opportunities and that’s what we’re looking for. We’ll see how our creative teams feel but right now it looks pretty interesting.
Reuters: Will the touchscreen appeal to the mass market?
Zelnick: It all depends on the execution. You can take that product and execute a kid’s game that’s simple or take that product and do something that’s very complex. It remains to be seen. And that was what was exciting about the Wii. We supported the Wii in the beginning. If you recall, we did “Carnival Games” for the Wii and we also did “Manhunt 2” for the Wii, so we did do an adults-focused title. As it turns out, the Wii turned out being more interesting from a family and kids point of view. It remains to be seen how the Wii U plays out but obviously it’s interesting. We support it. We love all our children equally and we support everyone.
Reuters: You launched a new franchise recently, “L.A. Noire” and a year ago you launched another entirely new franchise, “Red Dead Redempion.” How hard is it to launch new intellectual property in this landscape?
GlobalMedia-Ghosts of Atari haunt gaming sector dealmakers
The video game sector is often seen as being particularly ripe for consolidation, with some expecting old line media giants such as Time Warner to swoop in and scoop up a publisher to diversify their entertainment rosters.
But Strauss Zelnick, chairman of “Grand Theft Auto” publisher Take-Two Interactive, remains surprised by the lack of action on the consolidation front. “I think the legacy media companies have not been especially aggressive about interactive entertainment,” he said at the Reuters Global Media Summit in New York on Wednesday. His company, of course, fought off Electronic Arts’ hostile takeover bid in 2008.
“I have to admit there are times when I’m surprised they’re not more exposed.”
He said media world executives have long memories, which may explain in part their reluctance to buy a video game outfit. He said one name in particular, Atari, remains a cautionary tale. Warner Communications bought the iconic video game name in 1976 in what turned out to be a disastrous deal.
“The people who have run companies have all been around long enough to remember the Atari debacle that almost destroyed Warner Communications, and they just can’t get it out of their minds. Never mind that we’re not in the cartridge business anymore, never mind that was a licensed product, never mind that that it was badly managed situation. They just can’t forget that it almost tanked Warner Communications and actually changed the balance sheet of the company.”
That kind of skittishness isn’t warranted, he argued, maintaining the video game industry is “less volatile and less risky than their motion picture businesses.”
“If I were managing one of the old media business, heaven forbid, I would be integrating heavily into interactive entertainment because it’s a growth business.”
from Summit Notebook:
Mattresses and pillows, a diversified portfolio
With financial markets in turmoil and the U.S. economy in recession, we asked top entertainment and sports executives at the Reuters Media Summit for some investment advice.
Our question: "If we gave you $50,000, where would you invest?" One rule: They couldn't pick their own company. But then we thought $50,000 was too little for well heeled executives, so we switched it to $50 million. But that seemed excessive. After all, we're talking about personal investments -- so we settled on giving them a cool $1 million.
Here's what they said:
"In a pillow ... You might look at the energy sector, you might see what happens with gold. I've got cousins who work in the banking industry. When I asked them, they told me put it in my pillow. That is your answer." -- Havas's MPG Chief Operating Officer Steve Lanzano
"I would be in the most conservative mechanisms I could -- treasury bills, whatever, absolutely. The old trite bromide about cash is king? Well, that is true and more true today than ever before." -- Major League Baseball Commissioner Bud Selig
"I'd put 40 percent of it into exceedingly high-yielding senior debt securities in a diversified array of businesses. I'd put 30 percent of it with a pretty diverse array of fund managers who have a strong track record of navigating choppy times in an array of strategies. And then I'd take the final 30 percent and buy Time Warner stock ... I will tell you why I love Time Warner. OK, so it's trading at 50 percent of book, and these are people who, post AOL, were incredibly aggressive about writing down their book value. So it's trading at 50 percent of essentially tangible books, tangibles you are going to get for a media company. They are not especially exposed to advertising. A lot of their revenues are very sticky. They still own their cable assets. You are getting a free option on the value of whatever happens in the spin-off. They generate, I think, $13 billion in EBITDA right now, if I'm not mistaken. And all their debt obligations are laddered out well into the future so they have no particular financing risk. So if you figure we have three horrible years ahead of us -- and I don't believe we do, but if you do -- they are perfectly fine from a capital point of view for the next few years. And even after all obligations, all repayments, all capex, they still generate loads of free cash flow. Even if you don't think they are particularly well-positioned strategically -- they are currently yielding 2.7 percent, and I see no reason for the dividend to go down." -- Take Two Interactive Inc Chairman Strauss Zelnick
"If I had a knife, I would probably put it in my mattress. No, seriously, I think if somebody gave you $1 million today, I think my gut tells me that the market would probably be a good place to put it ... But there's a little bit of hesitancy there. Have you reached bottom yet? Who knows. Do you actually have to actually reach bottom before it's a good time to invest? Probably not. But this might be a good time to put money in the market if somebody just hands you $1 million ... I would avoid the financial stocks for now because I'm not sure all the bad news is out. You know, you would think as low as some of those stocks are, that there would be buys, but some of them may not be around at all. So I would stay out of the financial sector. I probably would steer more toward durables and things that people are going to need year in and year out. They can be a bit volatile too, but you know that they are going to be around for years to come. I don't think I would invest in domestic auto stocks today. You know, natural resources and products that are going to continue to be in demand, even some of the medical and drug companies." -- Regal Entertainment Group CEO Mike Campbell
I have my bucks in Wells Fargo and soon to pay off the house. I agree with Mel K. Hey Mel, lets keep satellite radio on the air, even if it means using XM 85W and 110W for the service and renting Sirius birds to some other usage. XM sounds very good and has a lot of terrestrial repeaters. Programming is excellent, recent changes are doing well.
from Summit Notebook:
Zelnick: Welcome to the emergency room
Strauss Zelnick, chairman of Take Two Interactive, has a bone to pick with the media: He doesn't like the two words "Financial" and "Crisis." At least not when they are used to describe the current state of economic affairs.
"I don't think we're in a financial crisis," Zelnick said at the Reuters Media Summit. "The use of the word crisis -- I'm loathe to be critical of the media since I'm every bit a part of the media -- but I don't think the word has been especially helpful. We're obviously in a recession and these are very very trying times."
If not a financial crisis, then what? Well, Zelnick offers up a hospital metaphor.
"We're still seeing the car crash, and the ambulences are still showing up at the scene. Maybe we're in the emergency room, but we're not even in the intensive care unit yet for a lot of these companies. But they will get there."
Call it what you like. Either way, It's not pretty.
(Photo: Reuters)
Take-Two takers?
Take-Two Interactive CEO Ben Feder told us yesterday the company is in formal discussions with a range of parties interested in its “strategic alternatives,” which could involve a sale.
But they didn’t say with whom.
The “Grand Theft Auto” game maker has been fending off the unsolicited advances of Electronic Arts‘ $2 billion offer since March. At the time, Take-Two management deemed the $25.74 per share offer too low, charging EA with low-balling the company ahead of the release of the latest from its hit criminal action franchise. Take-Two traded at $27.52 on Friday morning.
So, who else might be a potential white knight? Time Warner, which has made no secret of its ambitions in the games arena, would be a nice fit, although we’re hearing they’re not in this one. Just this week the company led a $40 million round of financing for online games developer Turbine Entertainment, on the heels of a $30 million investment in April in “Lara Croft” maker SCi Entertainment Group.
A deal to separate from its cable division, which is expected to net Time Warner about $9 billion in cash, frees up some capital for deals in the content sector. They’re competing with NBC Universal and a consortium of investors to buy Landmark’s Weather Channel.
Viacom would be another rational suitor having struck gold with its purchase of “Rock Band” and “Guitar Hero” developer Harmonix. But the company has all but taken itself off the market for big deals, repeating a mantra in recent months to grow its operations organically.
Beyond that a universe of domestic and foreign buyers, game developers and other media ventures could have expressed interested. Discuss.
Grand Theft Auto IV is cruising
That was fast. Already, in its first week, Grand Theft Auto IV sold more than 6 million copies globally, rocketing past expectations that were hardly modest to begin with.
So what is it with this game? Well, for one thing, it has been praised by gamers and critics alike who hail it as satirical and multi-layered, the equal of films like “The Godfather” or TV shows like “The Sopranos.”
Made by Take-Two Interactive Software”s Rockstar studio, the game also has its share of detractors, who say it’s too violent and sends the wrong message to kids and young adults. Given the big sales the first week, the criticism doesn’t appear to have hurt its popularity.
But the real question is what does more than $500 million of first week sales of GTA IV mean for Take-Two?
Silicon Alley Insider says this: “Take-Two management has long argued that Wall Street didn’t understand what a hit GTAIV would be. When they did, the argument held, they’d bid the shares up. Time to find out. ”
And the Wall Street Journal points out, “Depending on how the sales figures impact shares of Take-Two, they could strengthen the company’s argument that videogames rival Electronic Arts Inc. needs to raise its unsolicited bid for Take-Two above $2 billion. EA has launched a hostile tender offer of $25.74 for Take-Two shares, which Take-Two has rejected as too low.”
Keep an eye on:
“If Take-Two can exceed sales expectations on Grand Theft Auto IV, it has the potential to drive up the share price and force Electronic Arts to raise its offer,” The Times reported in an online article on Wednesday. As we just learned from the flameout of any Yahoo-Microsoft deal, however, the personal relationship between the key players can often be a critical factor for advancing a deal. Indeed, the close personal connections between the members of both EA’s and Take-Two’s Boards of Directors could serve to bring a deal to a satisfactory conclusion for both companies.
Grand Theft Auto 4, delivered
There were indeed fans lined up along the streets of New York City awaiting the launch of Grand Theft Auto IV on Tuesday morning. According to the experts, they will not be disappointed.
Even the New York Times lavished praise of a sort on the video game from Take-Two Interactive’s Rockstar studio: “‘Grand Theft Auto IV’ is a violent, intelligent, profane, endearing, obnoxious, sly, richly textured and thoroughly compelling work of cultural satire disguised as fun.”
Though the vast majority of gamer blogs were even more emphatic in their love of the game, there were bound to be many naysayers if only because “GTA” deals with such edgy content, in this case an Eastern European immigrant who runs drugs, shoots cops and beats up prostitutes. The Parents Television Council thinks retailers shouldn’t carry the game according to Variety magazine.
Keep an eye on:
- Rupert Murdoch’s $580 million bid for New York’s Newsday, the Long Island newspaper, puts the News Corp chief on a collision course with the U.S. regulators. (Financial Times)
- Clear Channel Communications said a Texas court dismissed a request by a group of banks to delay a trial over funding for the $20 billion buyout of the radio station operator. (Reuters)
- Blockbuster is in talks about taking a stake in a new Viacom-led premium television channel that plans to compete with HBO, Showtime and Starz. (WSJ)
