Spilled “hot coffee” takes toll on Take-Two Interactive
Take-Two Interactive, mega-publisher of such controversial titles as the Grand Theft Auto series, has finally released it’s 2005 financial report. And while financial reports aren’t actually the funnest things to talk about, there’s some pretty interesting information to be gleamed from the report. (for gamers anyway)
First off, the GTA: San Andreas “Hot Coffee” scandal had huge consequences for Take-Two, who already had been under fire for it’s violent Grand Theft Auto series, which has steadily gained in popularity since the third installment originally hit the Playstation 2. Take-Two has no less than three class action lawsuits/complaints filed against them, and amazingly, that’s only the beginning of the legal chaos Take-Two now finds itself entwined in.
The three class-action complaints are in New York, Pennsylvania, and a similar complaint in Illinois. There is a lawsuit against them filed by the family of two slain police officers, as well as a recently filed suit by the city of Los Angeles, and that’s in addition to an ongoing investigation by the Federal Trade Commission Division of Advertising Practices. In addition to all of this, the Delaware Chancery Court is looking to compel Take-Two Interactive to turn over books and records regarding Grand Theft Auto: San Andreas. What’s interesting is that two more state attorney generals are also asking the same thing, for Take-Two to turn over documents relating to GTA: SA, both in North Carolina and Connecticut.
While nothing seems to be rosy for Take-Two in the legal sector, they have been making some really interesting acquisitions in the game industry, expanding their portfolio of 2nd-party developers exponentially. 2005 saw the publishing giant snap up no less than 4 video game companies. Those companies include: Irrational Studios, Gaia Capitol Group, Visual Concepts and Firaxis Games.
Irrational Games, maker of the upcoming System Shock sequel, Bioshock, was acquired for nearly $11.8 million, in a mix of cash, stock, development advances, incentives, and deferred consideration. They then acquired Gaia Capital Group (which it currently has working on the next Top Spin title) for a sum of $11.4 million. That payout was a mix of cash, development advances, and deferred consideration. Continuing the trend, the publisher picked up the developer of PC hits like Civilization and Sid Meier’s Pirates, Firaxis Games, for $26.7 million in cash, stock, development advances, with almost $11.3 million of that figure coming in the form of possible considerations based on future product sales. However what is considered their biggest ticket of 2005 was the first company they scooped up, back in January of 2005, Take-Two purchased Visual Concepts from Sega for a reported $24 million, but in its annual filing, the total cost of the studio adds up to roughly $32.2 million. By doing some quick math I was able to calculate the amount of total dollars Take-Two Interactive spent to acquire these four developers. They spent a whopping $82.1 million dollars in 2005! Makes my head spin thinking how much they actually spent on development costs for all their games combined . . . .
We’ll wait and see as to whether all those acquisitions are able to keep the company afloat amidst all the scandals and lawsuits. Money has to be flowing in, and to do that they need to keep pumping out AAA games, something Take-Two can be hit or miss on. Luckily for them, all that Hot Coffee has done nothing but increase the sales of Grand Theft Auto titles. Something I don’t think any politician is willing to admit they’ve contributed too.
