01—Abstract
Summary
Summary of the 10-K filed December 19, 2008. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) reported its fiscal year 2008 results on December 19, 2008.
The company is a global publisher, developer, and distributor of interactive entertainment software and hardware. A significant driver of their performance was the blockbuster release of 'Grand Theft Auto IV,' which accounted for a substantial portion of their net revenue in fiscal year 2008 and set entertainment sales records. The company is strategically focused on leveraging its internally developed intellectual property, expanding its portfolio across various genres and platforms, and capitalizing on the growing demographics of video game players.
They are also actively pursuing new revenue streams like downloadable content and in-game advertising. Despite a challenging economic environment, Take-Two demonstrated robust revenue growth, driven by strong performance in its publishing segment, particularly from its Rockstar Games label. The company's distribution segment has undergone operational streamlining to improve margins.
02—Key points
Key Highlights
- The release of 'Grand Theft Auto IV' was a major success, significantly boosting revenue and profitability, accounting for 46.2% of net revenue in fiscal year 2008.
- Take-Two is strategically diversifying its revenue streams by publishing titles across four labels (Rockstar Games, 2K Games, 2K Sports, 2K Play) targeting distinct market segments and demographics.
- The company is investing in developing titles for current-generation consoles (PS3, Xbox 360, Wii) while continuing to support prior-generation platforms where economically viable.
- Significant investments are being made in R&D, with a focus on proprietary intellectual property and expanding into emerging revenue streams like downloadable content.
- The distribution segment, through its Jack of All Games subsidiary, has undergone asset sales and outsourcing to improve operational efficiency and focus on core purchasing and sales activities.
- The company is actively expanding its international presence, particularly in the rapidly growing Asia Pacific markets.
- Take-Two faced significant legal and regulatory scrutiny, including ongoing investigations related to historical stock option granting practices and various lawsuits, which pose potential financial and reputational risks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Take Two Interactive Software Inc kept $0.08.
- Revenue$1.23B100.0%
- Cost of revenue−$709.7M57.6%
- Gross profit$521.4M42.4%
- Operating costs−$410.4M33.3%
- Operating income$111.0M9.0%
- Interest, other & tax−$13.9M1.1%
- Net income$97.1M7.9%
Where FY2008 revenue went
$1.23B- Cost of revenue: $709.7M, 58% of revenue
- Other operating costs: $346.4M, 28% of revenue
- Net income: $97.1M, 7.9% of revenue
- R&D: $63.9M, 5.2% of revenue
- Interest, other & tax: $13.9M, 1.1% of revenue
Kept 7.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed December 19, 2008Financial Statements
05—Questions
Frequently Asked Questions
What was the primary driver of Take-Two's financial performance in fiscal year 2008?
The primary driver of Take-Two's financial performance in fiscal year 2008 was the highly successful release of 'Grand Theft Auto IV.' This title achieved record-breaking sales and contributed significantly to the company's net revenue, which was a substantial 46.2% of total net revenue for the year.
How is Take-Two diversifying its product offerings and revenue?
Take-Two is diversifying its product offerings and revenue through a multi-label strategy, with distinct brands like Rockstar Games (action/adventure), 2K Games (various genres), 2K Sports (annual sports titles), and 2K Play (casual/family games). They are also developing titles for current and prior generation consoles and handhelds, and exploring new revenue streams such as downloadable content and in-game advertising.
What are the key risks highlighted in the filing?
Key risks include the heavy reliance on the success of major franchises like 'Grand Theft Auto,' dependence on key personnel, the competitive nature of the video game industry, the cyclicality of hardware platform transitions, the potential impact of legal proceedings (including those related to stock option practices), and risks associated with international operations and currency fluctuations.
What is the company's strategy regarding current-generation versus prior-generation gaming platforms?
Take-Two is increasingly focusing on developing and releasing titles for current-generation platforms (PS3, Xbox 360, Wii) due to their expanding installed base and higher price points for software. While they continue to support prior-generation platforms (PS2, DS) where economically feasible, they are reducing the number of titles in development for these older systems as the industry transitions.
06—Continue