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Peter Moore bicep tattoos and a loads of cash helped to secure GTA on Microsoft’s Xbox 360
Grand Theft Auto “only on Xbox 360” to cost Microsoft $50 million

Grand Theft Auto carries an enormous fan-base as a game franchise  – one that Microsoft so desperately wanted to grab from Sony’s PlayStation 2 legion. Microsoft felt like it won a victory when it announced Grand Theft Auto IV would be launching on the same day as the PlayStation 3 version, though it wouldn’t stop there.

Word recently got out the Xbox 360 would be receiving exclusive episodic content, giving it the edge over PlayStation 3 version. Getting the exclusive content wasn’t cheap, however, as revealed in a recent Take-Two Interactive earnings call. There is a $50 million incentive to keep exclusive episodic content “only on Xbox 360.”

There will be two distinct episodic content packages related to Grand Theft Auto, each costing Microsoft $25 million, according to comments made during the conference. The $50 million may help Take-Two alleviate its recent financial woes.

“The first 25 is for the first episodic content package that’s supposed to go out and that is in March of ’08. That’s why it moved into current because it’s in the next 12 months,” Take-Two CFO Lainie Goldstein explained. “The second 25 will be for the second episodic, the episode, and that will be later in fiscal ’08.”

Despite the Xbox 360 exclusivity deal, Take-Two Chairman of the Board Strauss Zelnick believes the pull of Grand Theft Auto IV will still stir sales of the PlayStation 3. “We think that frankly, the release of Grand Theft Auto 4 is going to have a materially beneficial impact on the sales of PS3. Certainly if history is any guide, that’s going to be the case. We think this is a must-own title that will help the platform,” he said.

Zelnick also hints at differences between the Xbox 360 and PS3 versions, “Obviously we’ve episodic content coming for X-Box 360 for the title and because the consoles do differ, there will be some differences in the games. My kids actually have three game consoles at home and sometimes play the same titles on different consoles and they see some differences and they find that compelling. So there’ll be – these obviously are not going to be identical experiences but they are going to be very, very close.”

Grand Theft Auto IV ships to retailers on October 16 as both a regular and special edition.

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nice tat
By audiophi1e on 6/18/07, Rating: 0
RE: nice tat
By Schadenfroh on 6/18/07, Rating: 0
RE: nice tat
By therealnickdanger on 6/18/2007 1:17:05 PM , Rating: 3
Correction: boardroom tan.

Paying $50m for anything LESS than a full exclusive is dumb, IMO. Obviously they have an army of bean counters who believe otherwise.


RE: nice tat
By walk2k on 6/18/2007 1:47:07 PM , Rating: 1
$50 is nothing for MS, they can just add it to the $5 BILLION they have already lost on Xbox.


RE: nice tat
By greenchasch on 6/18/2007 1:59:48 PM , Rating: 2
Throwing good money after bad is never smart. I agree; they overpaid for this big time.


RE: nice tat
By omnicronx on 6/18/2007 2:43:06 PM , Rating: 1
MS has 50 million lying around ready to be used for kindling and to tissue paper..

50 million is nothing to them, why are you so worried about someone else's money, when all they are trying to do is give you a superior product.

i dont know why people always get so riled up about these things.. (such as sports athletes being overpaid) its not your money why do you care.. well unless that is if you invested in Microsoft.. then i take it all back.. you have reasons to be mad haha.


RE: nice tat
By porkpie on 6/18/2007 3:10:17 PM , Rating: 3
> MS has 50 million lying around ready to be used for kindling and to tissue paper..

So? No matter how much you have, overpaying is never a good idea. What matters is whether you make a PROFIT on the transaction. Will Microsoft bring in an additional $50M to the bottom line, just from a couple of extra GTA episodes? No way. A true exclusive for that price would have been a good deal, but this is just plain silly.

> its not your money why do you care?

I don't "care". I'm just expressing an opinion. Sort of the reason for an opinion board, eh?


RE: nice tat
By omnicronx on 6/18/2007 3:24:06 PM , Rating: 2
and thats when you have to remember.. its that in your opinion that they paid too much..

obviously theirs was different, and something gives me a feeling they have a lot more information/reasons to base their actions upon

i think the value of the GTA series is greatly underestimated by the public.

but then again.. thats just my opinion :)


RE: nice tat
By porkpie on 6/18/2007 3:30:00 PM , Rating: 2
>I think the value of the GTA series is greatly underestimated by the public

Its extremely valuable. An exclusive on the entire serious would have been a lot more than $50M. An exclusive on one title alone would have been worth that.

But a couple of extra "episodes"? Come on. Whose going to buy an XBox 360 just so they can play those?


RE: nice tat
By SigmaHyperion on 6/18/2007 3:44:05 PM , Rating: 2
You clearly underestimate the value of the GTA series.

An exclusive on a GTA title would run hundreds of millions of dollars. The royalties paid to Sony alone for GTA:SA were upwards of $250 million. For just one title. You're not going to buy that away from them for less than [i]twice[/i] that.

And you say "episodes" like it's an extra hour of gameplay. Right now we have no idea what an "episode" is, but you can bet that it's more than an extra hour of gameplay if MS is plunking down $50 million for it. For Half-Life 2, which has gone to an "episodic" content delivery, Episode 1 was about 5-7 hours and Episode 2 is said to be closer to 10 hours. That's a hefty chunk of additional gameplay. Particularly with the hugely rabid fanbase that GTA has. They want every morsel they can get. It's a HUGE deal when a new trailer comes out, or a new portion of a game's website is revealed.

And don't forget, this content is highly unlikely to be free. DLC costs money. So MS will get back most, if not all, of what it put into it.


RE: nice tat
By 9nails on 6/18/2007 8:36:47 PM , Rating: 2
I don't think it's a bad deal for Microsoft. Consider that the advertising budget for this would be in the millions anyway. And you've just been informed so this advertising scheme paid off.

It's a fairly large title with a huge fan base. Dropping $25 Mil per episode is a fraction of what MS would expect to earn if GTA's fan base comes through.


RE: nice tat
By FITCamaro on 6/18/2007 3:30:29 PM , Rating: 2
So you think Google overpaid for YouTube? Or any of the other companies they've bought?

I find that when Microsoft does something, everyone calls them an idiot. When another company does something just as dumb, they're heralded as pioneers.

I own a 360 so I'm happy with this decision. I don't doubt that GTAIV will help sell the PS3 though. It'll have like, what?, 2 maybe 3 good games then? I think MGS4 and FFXIII have a better shot at moving the system.

I mean if you desperately want to play GTAIV and don't have either console, are you going to spend $300-480 to buy a 360 or $600 to buy a PS3 just to play it. And if you already have either console, you're not going to buy the other just to play it on that one unless theres a reason to. The only reason would be to buy the 360 so you get the extra content, not the PS3.

And they'll easily make their $50 million back. You figure GTA: San Andreas sold, what?, 10 million copies? If the 360 sees even half of that for GTAIV and even half of that buy the episodes at $10-20, thats $25-50 million in sales for the episodes. Plus you'll have all those people who don't have either console and go out and buy a 360 now as an installed user base.


RE: nice tat
By porkpie on 6/18/2007 3:38:59 PM , Rating: 4
> So you think Google overpaid for YouTube?

Sure do.

Trying to paint me as some anti-MS zealot is way off base. It's simple numbers. Let's assume that, before the 360 dies, MS is able to eventually stop losing money and actually winds up making money on each one. Lets be optimistic and assume they make as much as $50 on each one, averaged over the entire life of the product. Given how much they're losing now, thats a stretch, but lets imagine it.

Now, to make up a $50M charge, you'd then need to convince one MILLION more customers to buy your product. Are one million people so enamored of GTA that they'll buy a 360 just to play a couple extra episodes? Just a small part of one title in the whole series? Don't make me laugh.


RE: nice tat
By SigmaHyperion on 6/18/2007 3:47:58 PM , Rating: 2
There are other ways to make profit than selling the hardware, you know. In fact, console makers often don't. As soon as MS is making a healthy margin on the 360 it'll cut the price down.

You're presuming that those 1 million people never buy another single game. Never buy another single piece of DLC (you're also presuming these episodes are free, when they won't be, so MS will be getting it's money back on the DLC cost). Never buy any of the profit-laden accessories or download any of the other profit-laden stuff available for download on Xbox Live.

There are dozens of addtional revenue streams that each additional console sold generates.


RE: nice tat
By porkpie on 6/18/2007 3:52:48 PM , Rating: 2
> You're presuming that those 1 million people never buy another single game.

Err, no. That would assume MS made $50 off each game sold, which obviously they don't. I'm assuming that those million people make MS an average profit of around $50, which assumes the total royalties from all their games purchased minus the net hardware loss of the console itself, averages to around $50 a head.


RE: nice tat
By SigmaHyperion on 6/18/2007 6:07:31 PM , Rating: 2
You're continuing to assume that MS needs to make back the whole $50 million on the increased sales alone. It doesn't.

MS will make at least half on the DLC proceeds. MS takes a 35% cut right off the top of all transactions. You start getting a few million downloads at $10-15 each, you start making some of your $50M back in a hurry.

You make it sound like $50/head is such an insurmountable goal. For one, we know that the 360 was breaking-even on hardware costs a good 6 months ago, so it's probably making a profit by now on hardware alone (not counting warranty, marketing, etc). But that withstanding, $50 profit is nothing.

Let's go through one of these GTA:IV purchasers and the money that MS would make right off the top. Let's be conservative and say the hardware is still a break-even even another 4 months in the future from now. So that's a wash.

MS makes a $10 cut right off the top as a royalty on the sale of the game. We'll be conservative again and presume it's not a Collector's Edition even though a person buying a 360 primarily based on the release of GTA:IV and it's episodic content would probably be buying that version.

MS makes $50 when they buy XBL Gold (which most gamers will and they'll have to to get the episodic content). Fair to say they make a LARGE margin on that one. It's not like bandwidth costs MS much. Let's say $25 margin on that though I admit I really don't know.

MS makes at least a $6 royalty on the 2 episode downloads.

MS just made $41 in margin right there on just selling GTA to that one gamer. It almost completely covered it's "losses". That's no other game purchases. No other accessory purchases (like play-n-charge, VGA cables, additional controllers, WiFi, etc, all of which have HUGE margins). No additional DLC purchases (like themes, gamertags, or any other XBL downloads).

And why you continue to presume that a measly 5% or so of GTA buyers would buy a 360 just to get access to the episodic content, I don't know.
Have you been a part of the gaming revolution we're seeing thesedays? Hell have you been a part of gaming ever? Gamers are crazy when it comes to their games, they always have been, and as they've gotten older have a lot of disposable income, and put down LOADS of money for a single title.

People shoot one another to get a console. Millions of people wait in lines at stores at midnight just to get a Halo title a few hours before anyone else. Tens of thousands of people are putting down $120 to get the Legendary Edition of Halo 3 so they can get a friggin' mini Master Chief helmet. Tens of thousands of people in a matter of hours put down $250 to get a little figurine for Starcraft 2.

There are a LOT of people out there who some may argue have more money than sense. But they're a huge marketing presence. There are a LOT of people out there (to the tune of about 90% of the gaming market) with a last-gen console sitting around not sure which console they want just yet and something like getting exclusive content for the biggest franchise in the world is going to sway them considerably. Whenever a GTA game came out in the past, PS2 sales spiked by hundreds of thousands of units in the months before and after the release.


RE: nice tat
By porkpie on 6/18/2007 6:17:22 PM , Rating: 3
> MS will make at least half on the DLC proceeds

I'm not sure why you're still not getting it. Had MS not spent this money, Take-Two would have still made the episodes, and 360 owners would have still downloaded them.

MS paid Take-Two to NOT make these episodes for the PS3. The only way they can recover that cost is for some of the people who OTHERWISE would have bought it for the PS3, to buy for the 360 instead. That's it. Finit. No other options.

> For one, we know that the 360 was breaking-even on hardware costs a good 6 months ago

You're confused. ISupply said 6 months ago the cost of the components was around $323. That may be roughly equal to the retail selling cost, but that doesn't count assembly costs, warranty costs, retailers markup, or a dozen other things. MS is still losing big on the Xbox 360.