GTA V: An Industry Waits
UPDATE - October 25, 2011 - GTA V has been announced - as we wait for more details on the game and when it'll be released, we invite you to check out our special feature on GTA V, published a couple months back.
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Rockstar co-founder Dan Houser has a love-hate relationship with movies.
"There was a sense that in some way movies were a higher art form and video games could aspire to be like them,” Houser said in a 2009 interview with The Telegraph. “They're just different and video games are capable of things that movies aren't."
Houser’s notion is at odds with Rockstar’s most successful releases, with Grand Theft Auto: Vice City and Grand Theft Auto: San Andreas showing heavy cinematic influences from movies like Scarface and Boyz In The Hood. Non-GTA games, like Red Dead Redemption and L.A. Noire, also owe a debt of gratitude to their celluloid inspirations in the spaghetti western and film noir genres.
Rockstar even butted up against the practice of most big budget games traditionally coming out in Q4 by pitting its biggest current-generation titles against the start of the summer movie season (Grand Theft Auto IV was released in late April 2008, Red Dead Redemption in May 2010, L.A. Noire in May 2011).
So, with gamers lacking choice in the usual spring/summer doldrums, and with the industry looking at its lowest numbers in several years, our eyes turn to the savior of many summers past, Rockstar, and the simple question: Where is Grand Theft Auto V?
Liberty City sized shoes to fill
The last major entry in the franchise, Grand Theft Auto IV, took four years to develop and cost well over $100 million, a huge sum for a video game, but a risk all parties involved were willing to take, and they succeeded. Take-Two and Rockstar sold 3.7 million units within the first 24 hours while raking in $500 million in revenue the first week; to date, GTA IV has sold in excess of 20 million copies.
Those types of numbers made investors swoon, and Take-Two’s stock soared.
“Consider the GTA IV E3 announcement from 2006,” said Asif Khan, CEO of Panoptic Management Consultants, Inc. “Take-Two’s stock moved from $16 to $27 a share between that announcement, the release of the game and the ultimate bid from EA to buy Take-Two.”
“The company beat earnings expectations by 35 percent in its 4th quarter of fiscal 2008 on the back of amazing GTA IV sales,” Khan said, “so the impact of a GTA release would most likely be tremendous.”
With this in mind, Take-Two and Rockstar should officially reveal the next iteration of the Grand Theft Auto franchise, the rumored Grand Theft Auto V. Even now, thousands of fans spend hours communicating on message boards, attempting to guess the game’s official location and making wish lists of what they’d like to see.
That said, there’s one slight problem: neither Take-Two nor Rockstar have said anything about this highly anticipated title.
A million little pieces
Here’s what we know. Rumors point to the game (codename Rush) taking place in Los Santos, which is Rockstar’s version of Los Angeles. Development is well under way, has already cost $80 million and the game will debut in 2012.
"Take Two may keep Grand Theft Auto V for the next generation consoles.”
Analysts and fans point to next year because of Take-Two’s expectation to exceed a net income of $2 per share in fiscal year 2013 (April 2012-March 2013). That's significant, since the last time the company achieved this figure was during the release of Grand Theft Auto IV, when the stock reached $2.08 per share.
There’s also a matter of a former Rockstar employee listing GTA V on his resume, further proving the title’s existence.
What’s more, the company will utilize developer Team Bondi’s impressive facial technology used in the most recent Rockstar crime drama, L.A. Noire.
In addition, the gaming community speculates that Rockstar’s five newly registered web domains suggest the game takes place in modern times. CashForDeadDreams.com, for example, sounds like a parody of Cash4Gold, while StopPayingYourMorthage.net points to the current housing crisis.
Finally, a recent casting list (also named Rush) includes stereotypical characters that some fans think perfectly fit the GTA mold, such as a swinging divorcee, a weed evangelist, a Chinese mobster, an unshaven female spiritualist and a wise cracking FBI agent, among others. One rumor even points to Oscar winning actor Robert De Niro voicing one of these characters.
Greed is good
That’s enough to get the community buzzing with rabid anticipation, but investors would prefer something more concrete, anything that’ll jumpstart Take-Two’s stock.
“Take-Two shares will appreciate dramatically when GTA is announced,” said Wedbush Securities analyst Michael Pachter. “We think that Take-Two's average earning power is higher than its current share price implies, hence our outperform rating and $19 price target.”
“Grand Theft Auto V,” Pachter continued, “is worth around $2.50/share in incremental earnings for a company that made $1 last year and is expected to make $0.35 this year, so the game is worth around four years of earnings."
That’ll be good news not only for the publisher, but also a video game industry that may lack star power in 2012.
Pachter added, “Keep in mind that overall industry sales are around $18 billion in the U.S. and Europe, and that Grand Theft Auto is likely to contribute around $1 billion to that figure. Other meaningful games, like Gears of War and Battlefield, come out every few years, so GTA has to make up for their absence next year.”
Even retailers may have something to gain from GTA V’s presence. GameStop, for instance, recently reported a sales drop of 3.1 percent for the second quarter, due in large part to a lack of new software releases, compared to the same period in 2010.
Makes sense, as consumers were busy purchasing copies of Rockstar’s Red Dead Redemption (released May 18, 2010), a game that as of August 2011 has shipped 11 million copies.
Worth the wait
Expecting the next Grand Theft Auto to be an industry cure all, however, is quite a tall order. One thing critics have trouble arguing against, though, is the series’ overall quality, and that means the franchise will never be annualized like Call of Duty.
“The Rockstar guys absolutely refuse to diminish the brand or game quality by releasing too frequently,” said Pachter. “The best one could hope for from GTA is every four years.”
Khan also believes this, and feels the next Grand Theft Auto may not be part five at all.
“If you look at the history of the franchise, Rockstar does not always follow a numbered title with another one. The success of Grand Theft Auto III on PlayStation 2 was followed by Vice City and San Andreas on the same system. Take Two may keep Grand Theft Auto V for the next generation consoles.”
On that note, don’t rule out Grand Theft Auto: Lost Santos, with part five appearing in 2016.
Said Khan, “Rockstar strives for excellence in each of its numbered GTA titles, and I am just not sure if it wants to put in all that work to showcase the same technology on old consoles.”
Regardless of which Grand Theft Auto the world receives, however, Take-Two has an excellent chance of beating part four’s sales.
Khan continued. “One thing that could help more units move off the shelves could be the appearance of the next GTA on the Wii U platform. If GTA V were to be released on PS3, Xbox 360 and Wii U, I wouldn't be surprised to see the game surpass the previous success of GTA IV's 20 million units sold.”
As much as Houser would have us believe in the differences between film and games, there are clear similarities that the industry must embrace if it plans to survive this current slump. The notion of the big summer blockbuster for video games must no longer be a guessing game, and Rockstar is poised to direct the action.
