Take-Two Fiscal Year 2012 Financials Show Net Loss

Yesterday, Take-Two Interactive released their financial report for the fiscal year 2012. It revealed a 27.36% decrease in net revenue dropping from the $1,136.876 million reported last year to $825.823 million this year. This drop ultimately led to a net loss of $108.816 million, as opposed to the profit of $48.458 million the company managed to pull in last year. Diluted loss per share was 79₵ for GAAP loss and 60₵ for non-GAAP loss.


Take-Two is projecting a net revenue of between $1.75 -$1.85 billion for the upcoming fiscal year, over double the current year’s revenue. Likewise, they expect non-GAAP earnings per share to increase to between $2 and $2.25.

Take-Two noted that digital delivery was attributed with an increased percentage of their total net revenue: 13%, up from the 9% it accounted for last year. In addition, their high projected earnings is a direct result of their strong lineup for upcoming year, including Max Payne 3 (PC) and various DLCs, Borderlands 2, XCOM, NBA 2k13, and BioShock Infinite. They also noted that Max Payne 3’s console release has already sold 3 million copies during its initial launch.

Strauss Zelnick, Chairman and CEO, had the following to say in regards to the results of the past year and their take on the upcoming one:

Fiscal 2012 was a year of creative, operational and strategic achievement by our Company. We delivered groundbreaking titles, including L.A. Noire and NBA 2K12, which set new standards for excellence; grew our revenue from digitally delivered content and mobile offerings; made substantial progress on our online gaming initiatives; and bolstered our already strong liquidity through a convertible notes offering. While our financial results were disappointing, the decisions we made position Take-Two for growth and profitability both this year and over the long-term.

Fiscal 2013 kicked off with the successful launch of Max Payne 3, which received outstanding reviews and promises to be another hit for Rockstar Games. We have a fantastic lineup of upcoming releases for the balance of the year and the strongest development pipeline in the Company’s history.

Max Payne 3’s PC port is set to be released on June 1, and Borderlands 2 is slated for release on September 18, XCOM: Enemy Unknown on October 9, and BioShock Infinite on February 26 of next year.

Analysis: I had a discussion with our Editor-in-Chief, Christopher Bowen, about Take-Two’s perspective, as well as the role of investors and the stock market in the video game industry. One thing mentioned was that Take-Two seems more concerned with whether or not their releases are good than if they make a boatload of cash immediately. Chris said he found this “refreshing” and I strongly agree with him here. As we’ve seen with larger publishers pushing AAA titles, many of the big players in the industry are only concerned with profit. If it doesn’t immediately sell millions, they don’t want it. In Activision’s case, this is finely ingrained in every single one of their contracts with developers. While this can end up being very, very lucrative for development studios, it also stifles creativity. It’s nice to see a developer (and a publisher!) that really puts some thought and effort into creating entertaining software titles, regardless of whether or not they make an immediate profit.

The problem with this is that shareholders don’t like it. They would rather you shit out a no-brainer casual game that contains mechanics to make people spend money than see you develop good, thought-provoking games that take a little while to pull a large profit. It leads to great people being forced out of their companies. Investors are a great way to generate the revenue needed to make AAA titles, but once a company is opened up to the public, the developer no longer has 100% say in everything.

With most products, it’s relatively easy to put out a better product to gain a better profit. The idea behind mass-production is that all you need to do is minimize costs and improve quality to pull a profit. But this strict metric doesn’t quite apply for entertainment, especially video games. Quality in video games is purely subjective: what I like in a game may not be what you like. Chris put it this way:

So you try to put mass-production principles on things of that nature because hey, steady solid growth is the answer. But that doesn’t work with video games. It does to an extent, but you never hear someone bitching that they make the same mop every year. You do about video games (see: Madden).

So eventually, as we see with declining sales of COD games, you see diminishing returns, and people start to get antsy. You can stave that off by doubling down on marketing and the like, but it eventually becomes worse.

Ultimately, the subjective nature of entertainment leads to shareholders pushing for games that cater to larger markets, leaving niche markets out to dry. If a company gradually begins to show a decline in profits, the market jumps ship and screws over the company, the personal investors, and the consumer. This is bad for everyone involved except for those that are only in it for the money. Coincidentally, that’s also who the market is designed for.

Take-Two didn’t pull a profit this year. That’s a fact. But I actually agree with their CEO: Their decisions last year have indeed placed them in a position to pull large profits in the coming year. Max Payne 3 appears to be doing well, and Borderlands and BioShock Infinite are guaranteed to sell well based on their predecessors’ successes alone. We also can’t forget XCOM: Enemy Unknown, a throwback title which likely will do well. While doubling their revenue might seem ludicrous, I really do think it might be possible with this lineup.

Joshua Moore

About Joshua Moore

Joshua has been a gamer for a long time, starting back with the NES as a child. Since then his interests branched from game systems to general electronics; an avid fan of technology and computers, Joshua graduated with honors from the University of South Florida and now holds a degree in Electrical Engineering. His favorite games include Valkyrie Profile, BlazBlue, Left 4 Dead 2, and Ocarina of Time. Additionally, he attends various BlazBlue tournaments and tries to pick up other anime or air-dasher fighters whenever possible.