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No wonder Rockstar Games makes a new Grand Theft Auto. The franchise is a billion dollar behemoth and GTA V is the best selling entertainment property in history. And unfortunately, it's not surprising that GTA 6 needs to be monetized with its own Grand Theft Auto Online mode.
Current and past industry trends provide us with short and long-term visibility into the future of the game. Combined with successful business models such as the multi-billion dollar microtransaction market and strategies investors, these trends allow players, analysts and experts to forecast the evolution of the sector. Monetization is an important part of this forward-looking vision, and we can use these tools to anticipate big franchises like Grand Theft Auto.
According to one CV of Rockstar Games ArtistGrand Theft Auto 6 happens, but in pure Rockstar style, we do not know what, where and when. We have heard buzz on since 2015and recent reports say that it will be a Timed PlayStation 5 exclusive. We do not know much about GTA 6, but given Take-Two's trajectory, Rockstar's push for live services, and internal business incentives, the monetized online mode should be similar to GTA Online and Red Dead Online.
Take-Two Interactive, the publisher that funds, markets and produces rockstar massive games, has a penchant for what it calls recurring consumer spending. It's just a fancy word for microtransactions, subscriptions and DLCs. All of Take-Two's biggest games have online modes with specific grinding mechanisms and spending opportunities, allowing consumers to buy items in the game to save time. In live games, users spend one of two things: time or money. Even if you have spent a lot (or both), publishers always want more.
This repetitive cycle of engagement, which continually adds new content to online game games with new sources of spending, is what makes businesses such as Activision-Blizzard, EA and even Take every year. -Two billion.
At the moment, some publishers such as EA and Activision-Blizzard seem to have peaked, but not the Take-Two. The GTA publishers' strategy works – and worked – pretty well.
Recurring consumer spending typically accounts for up to 48% of Take-Two's total annual revenue, which speaks volumes when games like GTA V sold 95 million copies. Take-Two realized 24% of its third-quarter revenue through in-game purchases, or about $ 300 million, a huge 95% year-over-year peak.
The biggest cash crop is by far GTA Online, a mode that garnered more than a billion dollars in microtransactions since its publication and only now begins to moderate.
Rockstar wanted to regain GTA Online's blazing success by combining another free online mode with a great premium franchise. This time she chose Red Dead Redemption 2 and rolled out Red Dead Online, an online world powered by microtransaction and including both PVE and PVP elements. Take-Two and Rockstar aim to break the two most important metrics of the game: short-term profits with full game sales and long-term growth with monetized modes driven online. Until now, they have won big with the sales of Red Dead Redemption 2, which raised over $ 725 million in three days.
But Red Dead Online is not as accessible as Grand Theft Auto, and the analyst firm SuperData says the mode has 5 times less than GTA Online.
What does Rockstar do? Try again, of course, and keep doing what you do best: create some of the best games in the industry.
The online mode Grand Theft Auto 6 could even offer a unique opportunity for cross-play with GTA Online, somehow to merge the two games in a fundamental way. It would be absolutely huge and propel both games via microtransaction gains.
Read also: Take-Two doubles live services
In a fairly predictable manner, investors strongly support the Take-Two Interactive business model. Games like GTA Online, NBA 2K and a handful of games for mobile devices are in the hundreds of millions each year. Investors so much prefer this business model of live services that they even greenlit is a special incentive that greatly rewards Take-Two's leading actor, ZelnickMedia, when it makes money from microtransactions and sales..
In short, the more revenues generated by microtransactions and game sales are important with Take-Two, the greater the rewards. If certain measures are fulfilled, ZelnickMedia acquires a large number of restricted shares after a period of three years. Given the current success of the company, Take-Two issued 223,772 restricted trading shares to ZelnickMedia just five days ago.
The stock will be acquired or cashed throughout 2021, which is a pretty interesting timing: that's when Sony PlayStation 5 and Microsoft Xbox Scarlett Next-gen consoles should come out.
We are not saying that GTA 6 will be ready by 2021 in time for next-generation consoles, but if so, Take-Two is expected to generate insane cash flow through sales and the potential monetization of imminent online mode of the game. Nobody knows what Rockstar does except Rockstar and Take-Two, and both companies are notoriously cuddly about the details of Grand Theft Auto.
Now, Take-Two has a dual literal interest in pushing for microtransaction. First, it wants to please investors, earn money to finance new development projects and increase share prices with favorable quarterly results; and secondly, the company's CEO, Strauss Zelnick, will directly benefit from the growth of Take-Two in two different ways.
"One of the features of our approach is to find new and exciting ways to engender engagement through creativity and innovation. Through the application of this philosophy, our audiences remain immersed in our titles long after their initial launch and have been a key factor in our continued success. " This is reflected in the strong growth and commitment as well as the recurring summer spending of our titles in recent years, " Take-Two CEO Strauss Zelnick said in a recent call the financial results of the third quarter of the fiscal year.
To investors, Take-Two stated the following in its 2018 Annual Report:
OUR KEY ACHIEVEMENTS
We recorded net revenues and net bookings recorded in digital form. Digitally distributed net revenues increased 23% to $ 1.13 billion and net bookings in digital form increased 25% to $ 1.35 billion.
We generated net revenues and record net bookings thanks to recurring consumer spending. Recurring consumer spending accounted for 42% of total net revenues and 48% of total net bookings.
Grand Theft Auto V and Grand Theft Auto Online continued to exceed our expectations over the 2018 fiscal year – as every year since their release almost five years ago – combined net bookings of securities increasing in size and reach a record high. one year to the next. Grand Theft Auto V has sold over 95 million units, demonstrating its status as the highest-rated title of the current console generation and "must-have game" for PlayStation 4 and Xbox One buyers. In addition, Grand Theft Auto Online broke monthly audience records in June, July and December, adding more new users than in 2017 and achieving its largest year so far for sales of virtual currency. Rockstar Games has achieved these results through the ongoing publication of a wide range of free additional content. "
So we should see Take-Two continue to infuse live services into its biggest games (Borderlands 3 should also be monetized in one way or another, probably with cosmetics) for long-term income. His annual sports games are obvious, and from where we are, so are the renowned titles of Rockstar … especially Grand Theft Auto.
We may have more clues when Take-Two Interactive will release its Q4 earnings results on May 13, 2019.
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