Analysts Say Take-Two Takes Too Long to Make Games

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Analysts Say Take-Two Takes Too Long to Make Games

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In the wake of yet another big operating loss, industry analysts are once again saying that Take-Two Interactive makes great games but needs to crank them out faster if it ever wants to return to profitability.

Another day, another quarterly report, another multi-million dollar loss: Such is life at Take-Two. The company reported a net operating loss for its first fiscal quarter of $33.8 million yesterday, a considerable improvement over the $53.8 million it lost in the first quarter of fiscal 2009 but still an awful lot of money.

The publisher also revealed that Rockstar's newest game, Red Dead Redemption, had been delayed by three weeks, which analysts said was actually good news for the company in the short term but also symptomatic of its greater overall problem: An inability to get games done in a decent amount of time.

"Red Dead Redemption was delayed into Q3, which ironically we believe actually helps Q2 earnings as it is unlikely to be a profitable title given the over 3-4 years of development costs and very heavy marketing spending," Signal Hill analyst Todd Greenwald wrote in an investors note.

"While Take-Two's remaining line-up is chock full of highly anticipated, AAA titles, we remain concerned about the profitability of these titles," he continued. "Take-Two is still significantly unprofitable, even in a six month period which includes blockbuster releases like Red Dead Redemption, Mafia 2, Max Payne 3, L.A. Noire, Civilization V, and NBA 2K11."

Michael Pachter of Wedbush Morgan agreed with the assessment, saying that while Take-Two is definitely not a "one-hit publisher" as some critics claim - that one hit being Grand Theft Auto, of course - it can't turn a profit simply because it takes too long to make games. "The average Take-Two game takes far longer than the industry average of two years in development, and the company must amortize an additional year or more of development cost for each of its major franchises," Pachter noted.

"The continuing delays of Max Payne 3 (six years in development) and Mafia 2 (also six years) suggests to us that these games cannot be profitable, and until the company can streamline its average development time, leads us to the conclusion that it cannot deliver sustainable profits," he said. "If the company were able to compress the development cycles for its triple-A titles in financial year 2010, we believe that its development costs during the fiscal year could have been at least $60 million lower."

Can Take-Two make deep cuts in the development cycles of its biggest franchises without sacrificing quality in the bargain? From a gamer's perspective, production quality is paramount, but in the eyes of the investors who actually keep the company afloat, profits are the priority and ultimately, whether or not the publisher can cut times without cutting important corners simply may not be relevant.

Source: GamesIndustry

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What? Compared to Valve they release them weekly!

@DarkSaber - Valve is one company though. Take-Two is a publisher and owns/publishes a bunch of studios so they need to take a lot more money to be profitable. Don't forget that Valve also did Left 4 Dead 1 + 2 since the Orange Box.

@Story - That's a fair enough set of points, to be honest. It's been a long time since Max Payne 2 came out, and I would suspect a lot of interest has been lost in MP3. They need to really just look at themselves and their studios to see where it's going wrong.

coldalarm:
@DarkSaber - Valve is one company though. Take-Two is a publisher and owns/publishes a bunch of studios so they need to take a lot more money to be profitable. Don't forget that Valve also did Left 4 Dead 1 + 2 since the Orange Box.

@Story - That's a fair enough set of points, to be honest. It's been a long time since Max Payne 2 came out, and I would suspect a lot of interest has been lost in MP3. They need to really just look at themselves and their studios to see where it's going wrong.

In all fairness, Valve have ONLY done L4D 1 and 1.5 since the orange box. But that's getting off topic.

DarkSaber:
What? Compared to Valve they release them weekly!

Valve doesn't have the spotlight like Take Two does, so I don't predict a analyst caring about them right now. (You know I'm right Valve fanboys)

OT: Yes if they take a bit too long to make a game, but I'd rather have a game take a good long time and it be good, then have an average fast made game.

I understand that gamers want their games to come out ASAP so that they have something to play wether it be good or bad.
If some gamers actually understood what it takes to put a game together and make it phenomenal I think they'd be willing to wait, and maybe pay more... Now I'm getting off topic with this.

it is unlikely to be a profitable title given the over 3-4 years of development costs and very heavy marketing spending

Sure marketing is expensive, but most games don't buy TV time, they usually pay stores for a tiny little display that is barely noticeable... Multiply that over the stores across the globe...
Anywho, Sometimes Publishers don't need to pay for marketing because of news stories or you analysts doing stuff like this.
Free PR baby.

If the company were able to compress the development cycles for its triple-A titles in financial year 2010, we believe that its development costs during the fiscal year could have been at least $60 million lower.

But how would the final product of the game look?

Take 2 just need to return to giving after purchase support to build up their fanbase. After a number of unsupported games, all the love they'd had has been eroded. We're still waiting on Jagged Alliance 3, Patches for Colonization, etc.

Doesn't pretty much every publisher take too much time to release them?

I mean, it's cool if you have a strong financial backing like Valve and Blizz/Activision, so you can make the games perfect and take your time, but otherwise you are walking a tight rope when it comes to development and releasing titles.

I wish this silly race for most 'epicest' and 'prettiest' game would stop, better to have short ambitious titles like Zeno Clash to spice things up. Publishers need to find new strategies and maybe get into more contracts with smaller, indie studios otherwise the lay-offs will keep coming.

Brotherofwill:
Doesn't pretty much every publisher take too much time to release them?

I mean, it's cool if you have a strong financial backing like Valve and Blizz/Activision, so you can make the games perfect and take your time, but otherwise you are walking a tight rope when it comes to development and releasing titles.

I wish this silly race for most 'epicest' and 'prettiest' game would stop, better to have short ambitious titles like Zeno Clash to spice things up. Publishers need to find new strategies and maybe get into more contracts with smaller, indie studios otherwise the lay-offs will keep coming.

There si so much truth in this statement it makes my head hurt.

Saldly its logical and smart, and in buisness, logic and smarts don't exist much.

Frank_Sinatra_:

OT: Yes if they take a bit too long to make a game, but I'd rather have a game take a good long time and it be good, then have an average fast made game.

I understand that gamers want their games to come out ASAP so that they have something to play wether it be good or bad.
If some gamers actually understood what it takes to put a game together and make it phenomenal I think they'd be willing to wait, and maybe pay more... Now I'm getting off topic with this.

The thing is, gamers enjoying it, isnt that relevent. ITs gamers buying it enough to make it profitable. they can make the best game ever, but if it takes so long to make, and costs so muhc, it wont matter, the company will go under. So do you want epicly awsome games, that will never have sequals because all the companies are bankrupt, or slightly less awsome games, but still great, and the company stays profitble and keeps making games

Now I'm not a fancy big city lawyer, but I don't think you need an analyst to tell you they take too long. :P

Which they do, 6 years sounds like a lot of money down the drain.

psrdirector:
The thing is, gamers enjoying it, isnt that relevent. ITs gamers buying it enough to make it profitable. they can make the best game ever, but if it takes so long to make, and costs so muhc, it wont matter, the company will go under. So do you want epicly awsome games, that will never have sequals because all the companies are bankrupt, or slightly less awsome games, but still great, and the company stays profitble and keeps making games

Well in all honesty I want to go back in time and bitch slap every gamer from here to the ends of the earth.
I want us to shovel out good money for fantastic games to companies can take their time and make amazing games... Then again that's the inner "future game animator" talking in me, and he's a greedy bastard.

Anywho... Sure having a profitable great game is good, especially when it keeps the company alive to make a sequel...
However, I'm about to jump on the MW2 hate wagon.
I really, really loved CoD:MW, and when MW2 came out I loved it. There's no denying that MW2 is a fabulous game with loads of replay value. My gripe is that if you make a great original game, make shit tons of money, spend the money to make a sequel....

You know what? I'm getting off topic, and I forgot where I was going with that (stupid nachos)

You get my point yes?

Frank_Sinatra_:

If the company were able to compress the development cycles for its triple-A titles in financial year 2010, we believe that its development costs during the fiscal year could have been at least $60 million lower.

But how would the final product of the game look?

The problem is that as long as the game turns out "Good", there is some evidence suggesting that taking the time and effort to tweak the little things and make it "Amazing" might not make economic sense.
There seems to be a bigger correlation between marketing spending and sales than review scores. As long as the core idea of the game is executed well, the polish might not be necessary to reach sales numbers in the same region as the game would have if it was delayed for a year.

See, this makes me mad. You can't shell out a great game every six months. That is just impossible. Sure, a game every six months makes a profit, but hell, I don't want the games I love to become like Madden.

The way I see it is this: You can either release games sparingly and have them be excellent games, or you can shell a game out twice a year and have it be sub-par. Sadly, there is no real happy medium.

Pingieking:
The problem is that as long as the game turns out "Good", there is some evidence suggesting that taking the time and effort to tweak the little things and make it "Amazing" might not make economic sense.
There seems to be a bigger correlation between marketing spending and sales than review scores. As long as the core idea of the game is executed well, the polish might not be necessary to reach sales numbers in the same region as the game would have if it was delayed for a year.

Okay my animation professor just got out of the games industry to teach so I'll tell you what he told us.
"In the industry right now it's all about looks and substance. If you can nail those two, the reviews by the idiots who don't know what they're talking about will go up. If you can get the reviews up the sales will go up. When sales are up, friends tell friends, who tell friends. More profits, publisher is happy, your boss is happy. Take your time to make it look good, and make sure the game has substance."

(Not an exact quote, but it's the gist)

People like polish as much as they like the substance, so if you can nail both on the head you're going to (probably) make some massive sales.
Sure with economies in the shitter right now this may not be the best time to do this, and I'm not asking for an immediate change.
All I'm asking is us gamers be more patient with developers, and that if we allow them to make fabulous games we should be willing to pay a heftier price for them.

I'm also not asking for the death of the 2 year dev titles. Those have their place as a drug to get us through the longer waits for very good games.

Cranking out games is a surefire way to ensure crapiness becuase it means they were most likey rushed through QA

Frank_Sinatra_:

psrdirector:
The thing is, gamers enjoying it, isnt that relevent. ITs gamers buying it enough to make it profitable. they can make the best game ever, but if it takes so long to make, and costs so muhc, it wont matter, the company will go under. So do you want epicly awsome games, that will never have sequals because all the companies are bankrupt, or slightly less awsome games, but still great, and the company stays profitble and keeps making games

Well in all honesty I want to go back in time and bitch slap every gamer from here to the ends of the earth.
I want us to shovel out good money for fantastic games to companies can take their time and make amazing games... Then again that's the inner "future game animator" talking in me, and he's a greedy bastard.

Anywho... Sure having a profitable great game is good, especially when it keeps the company alive to make a sequel...
However, I'm about to jump on the MW2 hate wagon.
I really, really loved CoD:MW, and when MW2 came out I loved it. There's no denying that MW2 is a fabulous game with loads of replay value. My gripe is that if you make a great original game, make shit tons of money, spend the money to make a sequel....

You know what? I'm getting off topic, and I forgot where I was going with that (stupid nachos)

You get my point yes?

no not really, i think your point got lost

psrdirector:
No not really, i think your point got lost

I blame the nachos, and possibly this sandwich.

You know what? Screw you, 'industry analysts'. I've seen enough games ruined because they were rushed out to meet a deadline, and I'd rather wait an extra year for a great game than have a half-finished bugfest right now.

Sure, pooping out mediocre games at record pace might be more profitable than creating one brilliant game every few years, but flooding the market with crap will accomplish nothing but make the few actually good titles stand out more.

DarkSaber:
What? Compared to Valve they release them weekly!

this is a good point...episode 3 a waiting...please valve? Lol

I'd rather wait a good long time and have a game that is well thought out and put together rather than having a game that's pushed out the door so quick that it's infested with bugs and other nit-picky glitches and breaks.

Take Two = 2K, right?

DarkSaber:
In all fairness, Valve have ONLY done L4D 1 and 1.5 since the orange box. But that's getting off topic.

And you missed the point...

Valve = 1 developer, TakeTwo = 21 developers
Valve = private own, TakeTwo = public = angry investors.

Frank_Sinatra_:

If the company were able to compress the development cycles for its triple-A titles in financial year 2010, we believe that its development costs during the fiscal year could have been at least $60 million lower.

But how would the final product of the game look?

Answer that question with another question, would the "look" and profit directly correlate with time and money invested?

The article says 6 years for Max Payne 3. Knowing the franchise, I can tell you thats just dumb and an obvious loss.

Gaming is a hobby, making games is a business. You wanna go on the quest for the best game of all time, you'll end up like Duke Nukem....

SnootyEnglishman:
I'd rather wait a good long time and have a game that is well thought out and put together rather than having a game that's pushed out the door so quick that it's infested with bugs and other nit-picky glitches and breaks.

The company could go bankrupt, and you'd have no game at all. Is that the end result you'd rather have?

Ahem. Valve? 3D Realms? Silicon Knights?

DarkSaber:

coldalarm:
@DarkSaber - Valve is one company though. Take-Two is a publisher and owns/publishes a bunch of studios so they need to take a lot more money to be profitable. Don't forget that Valve also did Left 4 Dead 1 + 2 since the Orange Box.

@Story - That's a fair enough set of points, to be honest. It's been a long time since Max Payne 2 came out, and I would suspect a lot of interest has been lost in MP3. They need to really just look at themselves and their studios to see where it's going wrong.

In all fairness, Valve have ONLY done L4D 1 and 1.5 since the orange box. But that's getting off topic.

Touché, good sir, touché.

hansari:

Frank_Sinatra_:

If the company were able to compress the development cycles for its triple-A titles in financial year 2010, we believe that its development costs during the fiscal year could have been at least $60 million lower.

But how would the final product of the game look?

Answer that question with another question, would the "look" and profit directly correlate with time and money invested?

The article says 6 years for Max Payne 3. Knowing the franchise, I can tell you thats just dumb and an obvious loss.

Gaming is a hobby, making games is a business. You wanna go on the quest for the best game of all time, you'll end up like Duke Nukem....

I do believe I've already addressed that issue.

DarkSaber:
What? Compared to Valve they release them weekly!

AHEM

FUN FACT: "AHEM" was going to be published by Take Two.

Calumon: Why does it take people soooo long to just play?

So what I'm gathering from this is that the next gta will probably have the same bare bones launch with a goty that's (a little) more like a real gta game. I guess I'll rent that first one and buy the follow up like I did with SF4.
Last generation they were coming out with gta games almost every year and they still got increasingly better. Now they're going to take longer and be about the same at launch.
The thing is that investors like myself are just interested in the investment making money which is why I ditched my T2 stock a while ago. They're still making those big budget games but not as many people buy them now: the new consoles (except the wii which they ignore) aren't as saturated as last gen. Their main bargaining chip (R*) seems to have passed its peak.

So does this mean they take two long to make things?
...
...
...
Yes I know that was bad but somebody had to say it!

If they can't cut costs without cutting corners they may make more money in the short term, but over the long term people will leave there IP's. The reason people buy GTA in the truckloads is because they are amazing games, as soon as they are no longer of that quality, regardless of how often they turn them out, they will no longer make money. If they can keep coming up with new and profit spinning IP's thats not a problem...but can they?

Frank_Sinatra_:

Pingieking:
The problem is that as long as the game turns out "Good", there is some evidence suggesting that taking the time and effort to tweak the little things and make it "Amazing" might not make economic sense.
There seems to be a bigger correlation between marketing spending and sales than review scores. As long as the core idea of the game is executed well, the polish might not be necessary to reach sales numbers in the same region as the game would have if it was delayed for a year.

Okay my animation professor just got out of the games industry to teach so I'll tell you what he told us.
"In the industry right now it's all about looks and substance. If you can nail those two, the reviews by the idiots who don't know what they're talking about will go up. If you can get the reviews up the sales will go up. When sales are up, friends tell friends, who tell friends. More profits, publisher is happy, your boss is happy. Take your time to make it look good, and make sure the game has substance."

(Not an exact quote, but it's the gist)

People like polish as much as they like the substance, so if you can nail both on the head you're going to (probably) make some massive sales.
Sure with economies in the shitter right now this may not be the best time to do this, and I'm not asking for an immediate change.
All I'm asking is us gamers be more patient with developers, and that if we allow them to make fabulous games we should be willing to pay a heftier price for them.

I'm also not asking for the death of the 2 year dev titles. Those have their place as a drug to get us through the longer waits for very good games.

While the public profiles of highly rated games has risen considerably in recent years, you can't automatically assume that highly rated games are going to sell well. Just look at games like Psychonauts. Psychonauts got high ratings across the board, and even won a bunch of awards, but by the end of the first year that it was released, it had only sold about 100,000 copies. You can't just assume that good reviews means people are going to be climbing over themselves to buy a game.

The profile of high-budget games, like Red Dead Redemption, is a lot higher these days, as more and more money is put into marketing. But as much as I hate to admit it, without shorter development times, they simply won't make enough money to justify spending more than 3 or 4 years, at that, on a game. I want these games to be polished to a shine just as much as the next gamer; I don't mind how long I wait if the product is going to be extra awesome. But the fact of the matter is that companies like Take-Two can't afford to spend that long on a game, and if they lose money, they'll go under, meaning gamers would suffer just as much, as we won't be getting our awesome games.

Frank_Sinatra_:

DarkSaber:
What? Compared to Valve they release them weekly!

Valve doesn't have the spotlight like Take Two does, so I don't predict a analyst caring about them right now. (You know I'm right Valve fanboys)

If I get called a fanboy for saying you're wrong, so be it.

To be honest, i'm glad this has been delayed. They get to fix problems and i can buy some other games like DA:O's expansion and Metro 2033 until this comes out. SO MANY GOD DAMN GAMES THIS YEAR!!

In other news, Fish Swim, Tony Stark Drinks, and The Sky Is Blue.

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