Geek Gestalt

'Grand Theft Auto IV' broke the all-time records for single-day and one-week entertainment industry sales. It looks like it could be tough for any forthcoming game to knock GTA IV off the top of the hill.

(Credit: Rockstar Games)

Though Halo 3 held the all-time entertainment industry record for single-day sales for eight months, it could be a long time before anyone bests the record-shattering sales achieved by GTA IV.

On Wednesday, Take-Two Interactive, which owns GTA IV developer Rockstar Games, announced that the new game had raked in all-time records of $310 million on its launch day of April 29 and $500 million during its first week. The single-day figure shattered the previous record, set last September by Halo 3, of $170 million.

And given how quickly Bungie Studios' Halo 3 was reduced to second place, it stands to reason that even the monstrous pile of cash GTA IV has earned so far--it has already sold more than 6 million copies, Take-Two said--could be in danger from some game already in the pipeline.

Among the games that are set to be released in the next few months that seem like potential contenders: Electronic Arts' Spore, Blizzard Entertainment's StarCraft II, Konami's Metal Gear Solid 4: Guns of the Patriots, EA's 2009 version of Madden football, LucasArts' Star Wars: The Force Unleashed, Activision's next Guitar Hero offering, Harmonix's next Rock Band version and Nintendo's Wii Fit.

And since we're talking the entire entertainment industry, there's also the small matter of the forthcoming Indiana Jones and the Kingdom of the Crystal Skull from Paramount and LucasFilm.

But according to several industry experts contacted for this story, none of those titles seems likely to score the kind of cash in a single day or single week that GTA IV did. So while one of those games, or possibly another one not listed might some day best GTA IV in total sales, it seems that its short-term sales records are safe for the foreseeable future.

"If you measure in terms of one-day sales," said Michael Pachter, a video game analyst with Wedbush Morgan Securities, "there's likely nothing (that can break the record) until the next GTA."

In large part, Pachter said, that's because the GTA franchise has the significant advantage of being perhaps the world's most popular video game title that is available on multiple video game platforms. Indeed, many analysts have said that the game is not only selling well on its own, but is also driving sales of the consoles it can be played on, Microsoft's Xbox 360 and Sony's PlayStation 3.

By comparison, Halo 3 is only available for the Xbox 360.

"The special thing about GTA is that it's a cross-platform title and can leverage the install bases of both" consoles, said IDC games analyst Billy Pidgeon. "The fact that you could only play Halo on the Xbox 360 made a difference."

And beyond the cross-platform versus single-platform issue, there's also the small matter of the miniscule selection of full-fledged AAA games that simply attract huge audiences.

"Halo and GTA are fairly unique properties in the interactive entertainment world," said Colin Sebastian, a senior analyst for Lazard Capital Markets, "so it's difficult to say if anything in the next couple of years will reach these (early sales) levels."

That said, there's no reason to think that GTA IV will set or hold any kind of long-term sales numbers. While it's certain to make gigantic amounts of money and sell many, many millions of copies, it's not necessarily the kind of game that will sustain its sales over the long haul. Rather, it's the kind of game the attracts hard-core gamers, most of whom want to get it right away.

"If you measure in terms of lifetime sales, I think Wii Fit," Nintendo's forthcoming exercise game, could break sales records, said Pachter. "I think it's going to attach about a one-third rate to all Wiis, and globally, that means (since there have been 20 million Wiis sold), it'll pass GTA IV by the end of next year."

Some people are expecting Spore, the next game from The Sims creator Will Wright, to be a big winner for EA, particularly because The Sims became the best-selling PC game of all time and recently passed 100 million total units sold, counting all its expansions and sequels.

"Personally, I think Spore is going to be a huge influence on the games industry," Pidgeon said. "And I think it's going to do well. I don't know if it's going to be another Sims, but I think it will be broadly popular."

But Spore presents a couple of problems, at least in terms of whether or not it could be an all-time best-selling game. First, it is a PC--and Mac--title, not a console game. And secondly, according to Pidgeon, it doesn't seem an obvious choice for endless expansions like The Sims franchise is.

Another set of titles that could contend for the all-time sales records, though probably not the short-term records, are the Guitar Hero and Rock Band franchises, since they will likely have an endless supply of expansions and accessories. And they have long-term potential that even GTA probably can't match.

"Guitar Hero and Rock Band (are) franchises where, when you add the numbers up, they're just spectacular," said Pidgeon. "You see them played in bars, and (they present) a really interesting growth opportunity. There's a lot of room for exciting growth in that sort of product. That's the sort of thing you don't see with GTA.

And while none of the analysts interviewed for this article could see any already announced game topping GTA IV's short-term records, that doesn't mean it won't happen.

In fact, the timing of the GTA IV launch itself could eventually be why it gets surpassed.

"Part of this is also where we are in the hardware cycle," Pidgeon said, explaining that GTA IV was published when the Xbox 360 and PlayStation 3 have only been out for a couple of years. Over time, as millions more gamers bring those consoles home, "it'll be easier for some blockbuster title to sell big."

Uh-oh.

For all the champagne toasts that are no doubt going on over at Take-Two Interactive and its subsidiary Rockstar Games over the grand launch day of Grand Theft Auto IV, there's a bit of a dark cloud brewing.

According to a post on CNET News.com sister site GameSpot, there's a brouhaha afoot in GTA IV forums all over the Internet because of some players' complaints that the game is freezing up on them.

As GameSpot's Brendan Sinclair points out, it was only a month ago that another one of Rockstar's games, Bully had freezing-up problems. Now, with reports of crashes with GTA IV, mostly on the PlayStation 3, but also on the Xbox 360, one has to wonder if perhaps there's someone in Rockstar's QA department that's not doing their job.

Other recent hit games, of course, have also had quality problems. You might recall that some players of Guitar Hero III had problems with their guitar controllers.

So one thing that will certainly help Take-Two and Rockstar get through this relatively unscathed--assuming the reports of GTA IV freezing up are real--is if they react quickly and solve the problem and reach out to their users. If they don't, it won't look good.

'Grand Theft Auto IV' could break the all-time entertainment industry record for first-day sales. That record is currently held by 'Halo 3,' which earned $170 million in its first day last September.

(Credit: Rockstar Games)

Executives at Electronic Arts have to be kicking themselves right about now.

It appears that Take-Two Interactive, the video game publisher EA has been trying to buy for the last couple of months, has a potentially record-breaking hit on its hands with Grand Theft Auto IV. And EA isn't pocketing the cash.

While it's too early to know exactly how many copies of GTA IV sold Tuesday, the game's launch day, anecdotal evidence suggests it will likely be one of the most successful launches in the entertainment industry's history--if not the most.

"We are saying that the launch of this game is tracking to be one of the top three best-selling games," said Chris Olivera, vice president of corporate communications for GameStop, "not of just this year, but the top three games in (our) company's history."

The latest title in what was already one of the most blockbuster game franchises of all time, GTA IV hit store shelves Tuesday morning with midnight madness events nationwide. The game had sparked controversy, with some politicians and critics calling for retailers to avoid selling it, but that didn't seem to dissuade consumers.

"Thirty-five hundred of our stores nationwide did midnight launch events," Olivera said. "One thing was constant through all of it, that there were lines around buildings and down mall corridors" wherever GameStop's stores were.

Last year, Microsoft took the unusual step of releasing first-day sales figures for its mega-hit Halo 3 because that game set the all-time entertainment industry record for launch day sales, $170 million.

'Halo 3' earned $170 million on its first day of sales. But Take-Two's 'GTA IV' looks poised to break that record and become the single highest-earning entertainment product in history, including movies.

(Credit: Bungie)

While we may not know if that's true until industry analyst firm The NPD Group reports April sales early next month, there's reason to believe the Halo 3 record will be short-lived.

Partly, that prediction stems from reports that GTA IV publisher Take-Two said it had worldwide preorder demand of 6 million copies of the game--or about $360 million worth at the game's $60 price tag.

There are also comments, like those expressed to CNET News.com sister site GameSpot by Wedbush Morgan Securities analyst Michael Pachter: "There is no question that GTA will be huge. I think that the game will sell 11 (million) to 13 million copies by calendar year end, with probably 4 million the first week."

On the other hand, suggested NPD analyst Anita Frazier, if GTA IV breaks the Halo 3 record, Take-Two might find a reason to release the game's first-day sales numbers itself.

The console factor
One interesting difference between the launch of GTA IV--which was released for Xbox 360 and PlayStation 3--and its predecessor, the hugely popular GTA: San Andreas, is the install base of the consoles the games are available on.

Frazier said that when GTA: San Andreas was released in 2004, there was already an install base of 25 million PlayStation 2s, the only console that game was initially released on. By comparison, GTA IV is coming out earlier in the release cycles of the Xbox 360 and PlayStation 3.

"The combined install base of the PS3 and Xbox 360 now sits at 14 million," Frazier said, "and surely huge hardware numbers will be driven by the release of GTA IV.

Olivera concurred.

"This (game) is definitely drawing people into (GameStop) stores to also pick up hardware," Olivera said, "both the Xbox 360 and the PS3."

Another metric of the intense interest in GTA IV: statistics from Gamespot's Trax service, which measures site traffic for specific games.

According to Gamespot Trax, Gamespot users did 70,441 searches for "Grand Theft Auto IV" in the 30 days prior to its release, vs. 20,772 for Halo 3 and 10,598 for Guitar Hero III, another one of the best-selling games of all time.

So, as Take-Two's executives are no doubt popping champagne and toasting the massive initial success of their new game, one has to wonder what the thinking is over at EA and whether it will have to modify its $2 billion bid for Take-Two.

As Lazard Capital Markets analyst Colin Sebastian told me Monday, "The expectations for GTA were already justifiably very high. EA understood that when they made their bid...Every day that passes, they're (going to be) losing out on GTA revenues, so they're likely to lower their bid over time...But if GTA massively exceeds their expectations, that could be a scenario where EA might have to raise their bid."

In the meantime, stay tuned to see if Take-Two issues any press releases about GTA IV Wednesday. If it does, I'm willing to bet that will mean Halo 3's record will be history.

Many critics started complaining about the violence and sexual content in Rockstar Games' 'Grand Theft Auto IV' before even seeing the game.

(Credit: Rockstar Games)

To many in the video game industry, the two words "Jack" and "Thompson" engender horror and disgust.

Thompson, a self-appointed uber-critic of the industry, has spent the last few years railing away at games he deems too full of sex or violence. Never was he out in more force than during 2005's so-called "Hot Coffee" scandal, in which the monster hit Grand Theft Auto: San Andreas was discovered to have hidden, but easily uncoverable, animations that mimicked sexual activity.

In the lead-up to the midnight Tuesday release of Rockstar Games' follow-up game, Grand Theft Auto IV, Thompson was at it again. (See GameSpot's review here: Grand Theft Auto IV (PlayStation 3).)

According to online technology news site Softpedia, Thompson wrote an e-mail to Take-Two Interactive CEO Strauss Zelnick's mother (Take-Two is Rockstar's parent company).

"Your son last week was reported to have said the following about Grand Theft Auto IV," the letter allegedly began. "'We've already received numerous reviews, and to a one, they are perfect scores. My mom couldn't write better reviews...' Taking your son's thought, I would encourage you either to play this game or have an adroit video gamer play it for you. Some of the latter gamers are on death row, so try to find one out in the civilian population who hasn't killed someone yet."

In an e-mail to CNET News.com Monday, Thompson confirmed that he wrote the letter, but said he sent it to Strauss' attorney and not to his mother.

"I sent it to Strauss' attorney to make the point that if you drag your mother into your porn business pimping," Thompson told me by e-mail, "you had better be prepared for blowback."

There can be little doubt that the release of GTA IV will be one of the biggest events of the year in video games, both from a business and entertainment standpoint--and from the perspective of politicians, organizations, and individuals like Thompson seeking to derail the game due to what they expect to be an overabundance of violence and sex.

For example, California state Sen. Leland Yee (D-San Francisco/San Mateo), recently put out a press release in which he exhorted parents not to buy GTA IV for their kids.

"Unfortunately, the makers of Grand Theft Auto have a history of deceiving the ratings board and the public on the true content of their games," Yee said in the statement.

Indeed, Take-Two and Rockstar got into pretty serious trouble over the "Hot Coffee" scandal because Grand Theft Auto: San Andreas was originally rated "M," meaning 17-year-olds could buy it. After the scandal broke, the publishers were forced to re-rate the game as "AO" for adults only. And in June 2006, Take-Two reached an agreement with the Federal Trade Commission promising to accurately depict the contents of its games.

Last week, the Parents Television Council issued a release demanding that retailers not sell GTA IV or, at least, not make it available to children.

Some say that even the violence in 'GTA IV' comes with an accompanying message: commit the crime, do the time.

(Credit: Rockstar Games)

But after sifting through all these press releases, e-mails, statements, and demands that the world's retailers and parents run screaming from GTA IV, it's striking that none of the people behind these missives has seen the game, and thus couldn't possibly know its full contents.

Part of the problem, said Aaron Muszalski, a visual effects artist formerly with Industrial Light & Magic who teaches at the Academy of Art University in San Francisco, is that critics of games like those in the GTA series pass judgment on a very small sample of the whole game.

"When it was reported that, in earlier GTA games, it was possible to have sex with prostitutes and then beat them to death," Muszalski said, "people who lacked a grasp of 'sandbox' gameplay were likely to have interpreted that news to have meant that to 'win' at GTA, one had to perform such tasks, perhaps even that they were a recurring stage in the gameplay.

"Of course, such a perception is grossly flawed, as anyone who has actually played GTA...will quickly tell you," Muszalski continued. "Many of the aspects of GTA that were most covered in the press were things that, in the actual course of gameplay, many people would never need nor choose to do."

Of course, no one denies that there is sexually suggestive or violent content in GTA and other games. And Rockstar Games didn't help its cause in its slow response to the "Hot Coffee" scandal, nor does it now with its reaction to critics who accuse it of serving up games that are harmful to children.

"We don't have any comment on that," Rockstar spokesman Steve Hahnel told me Monday.

Sen. Clinton takes a bye
But perhaps the more measured approach to the GTA situation evinced even by some of the series' more vocal critics might be a more fair way to go.

For example, Sen. Hillary Clinton, who was one of the loudest members of the anti-GTA: San Andreas coalition in 2005, has decided to sit this round out.

"We are not planning to issue a statement at this point," Clinton spokeswoman Sarah Gegenheimer wrote in an e-mail.

And the National Organization for Women, which, according to the International Game Developers Association took GTA III to task for "encourag(ing) violence toward and the degradation of women (and) glorifies violence and degrades women," has also decided to remain calm. For now.

"We would really like to see the actual game before we comment on it," said Mai Shiozaki, NOW's press secretary. "But it's not like we're going to go out and buy it."

To be sure, there's little doubt that the controversy over the release of GTA IV is music to Rockstar Games' ears, no matter how shrill the criticism from the likes of Thompson, Yee, the Parents Television Council, and others.

Promotional screenshots for 'GTA IV' are dominated by scenes of one character or another wielding guns or being near explosions. But is this game any worse than dozens of other titles that go unnoticed by critics?

(Credit: Rockstar Games)

After all, as they say, any publicity is good publicity.

"It's their leading franchise, and it's the driver of the vast majority of their profits," said Colin Sebastian, a senior video game analyst at Lazard Capital Partners, "and so the game needs to sell very well, and I think it will. It's one of the few blockbuster franchises you can count on, in terms of sequels and follow-ons."

Sebastian said that because of the game's huge existing fan base, plus solid early reviews and the fact that it's coming out initially on two platforms--Xbox and PlayStation 3--he expects GTA IV to live up to or even exceed the sales numbers of its hit predecessors.

Analysts predict that GTA IV could break Halo 3's entertainment industry record of $170 million for first-day sales.

What GTA means to EA's takeover bid
One major component to the GTA saga is the game's role in the ongoing merger discussions between would-be buyer Electronic Arts and Take-Two.

What's clear in that dynamic, especially now that the game is being released, is that its success could impact the amount that EA is willing to pay for Take-Two.

"The expectations for GTA were already justifiably very high," Sebastian said. "EA understood that when they made their bid....Every day that passes, they're (going to be) losing out on GTA revenues, so they're likely to lower their bid over time....But if GTA massively exceeds their expectations, that could be a scenario where EA might have to raise their bid."

None of this, of course, matters to critics like Yee or the Parents Television Council, both of which cited the oft-reported history of violence in GTA as reason behind their statements.

"We've seen a number of clips of the game," said Yee spokesperson Adam Keigwin. "From the clips alone, and based on GTA and Rockstar's history, (Yee) thought it very appropriate to issue a statement urging parents not to purchase the game for their children."

Similarly, Gavin McKiernan, the national grassroots director for the Parents Television Council, said that despite not having seen the game yet, "You can't necessarily wait until the cat's out of the bag...There's a huge (GTA) marketing and release push, and I'm sure this game will sell lots and lots of copies, so you can't wait."

Plus, McKiernan added, "this is a pretty established, known quantity. If there was going to be a significant change in style and tenor, that would be well known."

To which Muszalski might say, "So what?"

"GTA has always been memorable for the degree to which it succeeds at dramatizing the narrative, and contextually supporting the players actions," he said. "This is not crime for crime's sake, as anyone who has really played the game will tell you, but which, sadly, may not be apparent to anyone who has merely had the game presented to them, mid-gameplay."

Dear Take-Two and Electronic Arts: I'm not an arbitrator. And neither are my colleagues who cover video games.

I know it's nothing new in the fast-paced world of hostile takeovers, tender offers and other forms of mergers and acquisitions, but it's beyond obvious that both Take-Two and EA are using the press--and our outreach to the public--to try to negotiate the best terms in whatever marriage the two eventually end up in.

Much of the belly-aching around the timing and the pricing of any takeover of Take-Two by Electronic Arts has to do with the forthcoming release of 'Grand Theft Auto IV,' and the huge sales it will likely produce.

(Credit: Take-Two Interactive)

First they worked on a possible deal behind the scenes and when EA didn't hear what it wanted from Take-Two, they took their offer public. Take-Two didn't like the money that was put on the table, so they pushed it away. EA made a hostile tender offer. Take-Two's board now urges shareholders to reject it. And on and on and on.

Nothing's really changed: EA wants to pay less; Take-Two wants more. EA wants to close the deal before Grand Theft Auto IV is published. Take-Two thinks it can hold EA over a barrel because of the game's forthcoming release.

Yet everyone seems to agree that one way or another, Take-Two needs to get bought and that EA is probably a good buyer.

I'm reading reports on the kerfuffle in which respected video game industry analysts say Take-Two has to take the offer or it'll be too late. Or maybe they don't, because EA will extend the date of the expiration of their tender offer. Or maybe Microsoft will come in and buy both companies since they don't seem to be making much progress on gobbling up Yahoo. Okay, I made that last one up to see if you were paying attention.

But basically, I just want to tell EA and Take-Two and every other set of companies that decides the best way to achieve their selfish takeover goals is to use the press that, well, I don't want to be used.

These companies are masterful at putting out self-serving releases that they know reporters will swallow, and then they refuse to make executives available for any kind of follow-up questions. I don't expect anything to change because of this rant, but come on: Stop using the press to try to achieve what you should be doing on your own. Get your highly-paid keisters into a meeting room. Order some takeout. Lock the doors. And work this out yourselves.

Update (12:36 p.m. PDT): Wellll, at the risk of being the mouthpiece I've said above that I don't want to be, here's EA's statement on the Take-Two board's rejection of the hostile tender offer:

"It is regrettable for stockholders that Take-Two's board of directors has not accepted EA's offer. EA believes that a combination of EA and Take-Two is in the best business interest of all parties.

"EA's offer price of $26 per share is full and fair, and reflects the value of Take-Two's intellectual properties, talent, and operational progress. EA's all-cash, tender offer commenced on March 13 is the most certain way to create stockholder value, and represents a 64 percent premium over Take-Two's closing stock price on February 15, the last trading day before EA sent its revised proposal to Take-Two.

"EA's tender offer is a clear process for Take-Two stockholders to maximize the value of their investment. By advising its stockholders to reject the offer, Take-Two's board is exposing them to further delays which may reduce the value and the certainty of a potential transaction.

"EA's tender offer is currently scheduled to expire on April 11, 2008."