Rockstar Games
'Grand Theft Auto IV," along with 'Madden 08' and 'Halo 3," were expected to account for one-third of all game sales this holiday season.
By Games editor
msnbc.com
updated 8/3/2007 8:29:03 PM ET 2007-08-04T00:29:03

When Take-Two Interactive announced last week that it would delay “Grand Theft Auto IV” until 2008, Wall Street punished the company’s stock and sent a chill wind throughout the game industry.

The much-anticipated title, along with Electronic Arts’ “Madden 08” and Bungie’s “Halo 3,” was expected to account for one-third of all game sales this holiday season. And Sony and Microsoft were both counting on “GTA IV” to help sell PlayStation 3 and Xbox 360 consoles.

That was a fair bet. The gangster-adventure series, created by controversy-courting Rockstar Games, was critical to the success of the PlayStation 2.

So what does this mean for the consoles duking it out for supremacy? Or the rest of the games planned for the Christmas season? Can a delayed ship date from one game — from October to sometime in early 2008 — really take the wind out of the game industry’s revenue sails for 2007?

“It is a big deal from the point of view that this title was expected to be a driver of hardware — particularly PlayStation 3 hardware,” said Colin Sebastian, an analyst with Lazard Capital Markets. “But big picture, it’s more important for a title to be at a level of quality that’s expected.”

In a phone conference with reporters and analysts Thursday, Take-Two declined to state the specific reason for the game’s delay. Company executives from Take-Two and Rockstar would only say that the game represented a complete reinvention, and that it “pushed the hardware to its limits.”

The “GTA IV” delay is just the most recent bit of bad news for Take-Two, which announced in June that it would suspend distribution of its “Manhunt 2” game after a firestorm of criticism over the title’s violent content. The game received an “Adults-Only” rating from the Entertainment Software Rating Board — the kiss of death for retail sales — and was banned in Ireland and the U.K.

Much of Take-Two’s troubles, however, have come at the corporate level. In February, the company’s former chairman was convicted of backdating stock options. In March, a shareholder revolt resulted in the ouster of the company’s CEO and several board members. And in early April, Take-Two’s CFO resigned.

News of the “GTA IV” delay — and the company’s announcement that it would post a full-year loss — sent Take-Two’s shares down 12.5 percent on Thursday.

Despite the continued bad PR for the beleaguered company, industry-watchers agree that it’s more important for the company, and developer Rockstar, to get this game exactly right than to hit its original ship date.

“The Rockstar guys, they’re perfectionists,” said John Davison of game site 1UP.com. “They have a very specific vision about what the game should be. And Take-Two needs ‘GTA’ to be as perfect as it can be.”

Anyone who saw the game at E3 knows that it wasn’t yet perfect. Sure, the art reached new heights of detail, but the performance was noticeably sluggish. “Grand Theft Auto” games aren’t typically characterized by their speed, but the game sites were abuzz about the reason for poor frame rates.

Analyst Michael Pachter told Web site GamesIndustry.biz that he believes Rockstar has delayed the game because it is struggling with development on the PlayStation 3.

Sony denies this charge and said that the company has a dedicated team working with Rockstar on “GTA IV.” They say they're not that worried about the delay and would prefer that Rockstar take the time it needs to perfect the game.

“We’d love to have [it] out as soon as possible,” said Sony spokesperson Dave Karakker.  “But we’ve never had a single game make or break any of our platforms. That’s not how we built 100 million sales of [the] PlayStation 2, and that’s not how we’ll build 100 million in sales of [the] PlayStation 3.”

Um, yeah. But when you think about marquee franchises on the PlayStation 2, what do you think of? “Metal Gear,” “Final Fantasy,” “Gran Turismo,” and, of course, “Grand Theft Auto.”But nearly a year into the PS3’s life, not one of those critically important games have released yet for the console.

Even though the delay of “GTA” might hit Sony hardest, Microsoft might actually be taking the news harder. Although the company’s public reaction to the announcement was upbeat and included references to its other Very Important Title, “Halo 3,” —  this news is not good for Microsoft.

“Microsoft was very conscious about linking ‘GTA’ and Xbox,” says Davison. “With ‘Halo 3’ coming out in September, ‘GTA’ was like the one-two punch.”

(MSNBC.com is joint venture between Microsoft and NBC Universal.)

What’s more, Microsoft reportedly paid $50 million for the exclusive rights to “GTA IV” downloadable episodes — money that Take-Two has no intention of giving back, even though the title will miss the critical holiday season.

Still, most don’t think the loss of ‘GTA’ will stall the fast-moving train that is the game industry. If anything, it provides an opening for other developers to convince retailers to give them precious shelf space.

One title that stands to gain, says Sebastian, is “Call of Duty 4,” a shooter from Activision,that might temporarily quell the “GTA” fan’s need to blow things away.

“Retailers can buy that game with a lot of certainty that they’ll sell it,” he said.

IGN’s GamerMetrics sent out an e-mail on Friday with the list of titles it expects will be able to best capitalize on the absence of “GTA IV.” “Call of Duty 4” tops the list for both the PlayStation 3 and the Xbox 360 — as does Ubisoft’s “Assassin’s Creed,” a game that was well-received at E3 but got crowded out of the spotlight by the blockbuster sequels.

No matter what, it’s unlikely that a six-month delay will do permanent damage to the “GTA” franchise – or the game industry.  It’s better for everyone involved — console makers, Take-Two, Rockstar and gamers — that the title surpasses the high bar set by its predecessors. Better to wait a few months for a great title that has legs than to rush out a game that’s not ready — and suffer the wrath of the fan base.

So far, gamers are taking the news in stride. Davison says that when he and his staff combed the forums, they were surprised to learn that some fans were almost relieved that their favorite game was going to be late.

“That’s one less $60 game [gamers] have to buy this Christmas,” he said.  “With the titles planned for the next few months, you’re going to be hard-pressed to play everything that’s really good.”

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