Despite the video game industry posting strong sales numbers, Take-Two Interactive – best known for as the publisher of Rockstar’s Grand Theft Auto series – is falling on hard times. In its second-quarter financial report, it revealed that revenues dropped by 22.5 percent to $205.4 million.

Take-Two also recently announced plans to reduce fixed overhead costs by $25 million by end of FY2008. One such measure includes the cutting of jobs, says Take-Two executive Ben Feder: "While the decisions we are announcing today were difficult and will unfortunately require employee layoffs, we believe these necessary actions will improve the financial and operational performance of Take-Two, leading to greater value for our shareholders."

On top of lagging games sales, the software publisher is also under investigation for suspected stock option irregularities. Specifically, a Securities and Exchange Commission probe is focusing on whether Take-Two improperly backdated stock options.

Things may not be gloom for long, however, as both the market and company expect a turnaround with the release of Grand Theft Auto IV for Xbox 360 and PlayStation 3 this fall. According to the AP, shares of Take-Two Interactive Software rose $1.14 or 6 percent following analyst recommendations of moving the stock from a “sell” to “hold” rating.

Changing market conditions aren’t exclusive just to video game software companies. Perhaps in response to its biggest quarterly loss in four years, Sony Computer Entertainment recently cut jobs of employees in North American and European divisions.