According to its Quarter 3 sales results, Rockstar publisher Take-Two went above and beyond its sales expectations thanks mainly to Red Dead Redemption 2 sales being extremely high.
Rockstar’s latest sold 23 million copies to retail and was the best selling game of 2018 despite launching in November. Amazingly, it also achieved the biggest opening weekend in retail regarding any and all entertainment releases as Red Dead Redemption 2 sales were absolutely insane.
For the quarter ending December 31st, 2018, Take-Two reported $1.57 billion in net bookings, beating out its expected $1.40 to $1.45 billion. This number is also up 140% year-over-year. It also founded $1.248 billion in revenue with projections of $1.1 to $1.15 billion. Overall, it profited $350 million.
While Red Dead Redemption 2 sales were a big push, the game’s online feature drove it even further. In fact, this mode is performing better than GTA Online did when it premiered. Take-Two CEO Strauss Zelnick commented on the performance:
"What's really exciting is that during December, combined monthly active users of Grand Theft Auto Online and Red Dead Online took Rockstar to a new record. We feel great about it. Obviously the experiences are a work in progress, and there will be a lot more content to come. But in terms of comparing where Grand Theft Auto Online was in terms of engagement at this stage of the game, versus where Red Dead Online at this stage in the game, Red Dead Online has more engagement, is doing better and has a lot more early traction. Which we think is very encouraging."Aside from Red Dead Redemption 2, titles like NBA 2K19 and Civilization VI for the Switch performed very well. As for its end-of-the-year projections, the company upped its forecasts. Now it expects between $2.66 and $2.71 billion in profits. This range is up from the previous $2.55 to $2.65 billion. Otherwise, it hopes for net bookings of $2.89 billion to $2.94, with income projections hitting $354 to $367 million.
However, despite these increased profits, Take-Two stock is down 13.83% because investors expected even more. That's right, the biggest opening weekend in entertainment history wasn't enough for investors. Instead, the consensus among investment predictions was that digital sales would report nearly $680 million (reality: just under $595 million), and retail would have an astonishing just over $800m, while in reality, Take-Two managed the positively dismal $654 million, both of which beat the companies announced predictions.
Industry analyst Daniel Ahmad made some clarifying comments in Twitter posts regarding the call. Take-Two claimed that AAA games will sell well as a paid title if users get what they want, thus the company is not worried about free-to-play games because they can deliver high-quality paid experiences.
The call also revealed that an unannounced game will launch in the fiscal year 2020. This could be Borderlands 3, an unannounced Bioshock game or a new IP. Otherwise, Ancestors: The Humankind Odyssey and The Outer Worlds are still coming this year. Finally, the monthly active user count for both Red Dead Online and GTA Online broke a new record for Take-Two, and both will see updates in the foreseeable future.
Also, when speaking to gamesindustry.biz, Zelnick commented on game distribution platforms. When asked if Take-Two would consider their own platform similar to Blizzard or Epic’s, he said that while they have no intention of launching their own, the addition of Epic’s store could be a good thing for business:
"From our point of view, we don't see another retailer as a disruption. We want to be where the consumer is, and if there's a competitive offering that benefits consumers, generally speaking, if the business model makes sense for us, we will support it. We see competition on the retail side to be a good thing. It just means more distribution."This question comes in light of Epic’s recent exclusivity period regarding Metro Exodus. Mere weeks before its release, the Fortnite creator nabbed exclusive distribution rights to Metro Exodus on its store. The reactions have been divisive, to say the least. Some fans are happy for competition, while others believe this practice is anti-consumer.
Do you think the expectations for Take-Two's stock were reasonable? Are you surprised at Red Dead Redemption 2 Sales? Let us know in the comments below!