GTA Online Closes Best Quarter

Let's look at a few games released the same year as GTA 5: Bioshock Infinite, Assassin's Creed 4: Black Flag, the Tomb Raider reboot and the Last of Us come to mind as some of the biggest releases, but who speaks of them anymore? Do they make headlines? Do they still get content support and millions of players every week?

Looking at Assassin's Creed more closely — since Black Flag, which launched almost concurrently with GTA 5, Rogue, Unity and Syndicate were all released and the franchise also went on a 2-year hiatus. But GTA 5 is still here and breaking records.

Of course, the driving force behind this success is the multiplayer portion, GTA Online. However fans who know a bit about the game's development history will know that Online was planned almost as an afterthought to the main game, and was more of an experiment than an actual attempt to tear down everything we thing we know about AAA life cycles. Rockstar outright expected it to be fairly unpopular.

When we first launched GTA Online, we didn't know how the title would be received. And we didn't know how virtual currency sales would pencil out. One of the reasons we haven't released a lot of metrics around that is because we've been learning as we go along. What I'm proud of is our approach at this company genuinely is first and foremost to entertain and delight our consumers, and only well after that point to think about how we monetize that engagement. As it turns out, monetization has gone very well indeed

Zelnick provides us with a bit of an understatement there — a year ago, Take-Two revealed that they had earned over $500 million through microtransactions alone, and since then the player base and Shark Card sales figures have only gone up. We'd hazard a guess and say that's been more than doubled since.

Sources from within Rockstar North have indicated in the past that the Houser brothers were uninterested in paying any attention to GTA Online beyond monetization, and the development team fully expected it to be enjoyed only by a niche among the players, and not for long.

This is likely both the largest and most fortunate miscalculation in the history of gaming, as GTA Online has not only earned Rockstar a fortune through microtransactions, but is what has kept the game relevant all these years and is driving the sales of GTA 5 to this day.

When we launched GTA Online, we had virtual currency sales experience with NBA 2K, but we had no experience about what an online offering could look like on an ongoing basis. Even this year, we said we expected GTA Online to moderate its results. Now we're expecting it to have a record year. So clearly we continue to learn about consumer behavior as it occurs.

GTA Online being a secure source of revenue — oh, who are we kidding, it's not even a cash cow anymore, but more like a cash herd. Cash ranch? — provided Take-Two with something of a safety net this year, as thanks to it the company's earnings didn't take too much of a hit in spite of having an uncharacteristically sparse release schedule due to the delay of Red Dead Redemption 2.

Aside from the two annual sports titles, NBA and WWE, getting new installments, no new games are slated for the entirety of 2017, with the only releases being DLC. For a company like Take-Two, not only is this out of character, but a bad picture too. No matter how much cash GTA Online brings in, they're first and foremost a video game company, and video game companies make video games (unless they're Valve).

Of course, it's not like the executives at Take-Two left 2017 devoid of games on purpose, and Zelnick has previously expressed that they don't intend to ever repeat a schedule as empty as this years. In fact, the goal they're gunning for is at least one major AAA release each year alongside the annual sports releases.

We don't want a light release schedule to become a common matter. To the contrary, we're trying to build up our frontline release schedule, and we've successfully done so in the past few years. Sometimes though, the vagaries of the development process will lead to a year that happens to have a limited release schedule. As we continue to increase our development capacity, the goal is to have more frontline titles reflecting these powerful franchises we own, and in any given year, bringing enough of them to market that we have a phenomenal year. And we've achieved that in past years

As the gaming scene grows year over year, with 2017 being the fateful annum when the medium crossed the threshold and became a $100 billion industry, competition is as fierce as ever. Like all other entertainment, rivalry in the games industry works differently than in those industries which produce products of which consumers typically have just one of.

Since most gamers are likely to consume multiple games, the focus isn't on creating titles like GTA 5 which keep selling for years on end — this worked out really, really well for Take-Two, but there is a reason we're writing so much about the success of this game. It's the outlier, the exception.

Instead, large game developers, especially EA and Ubisoft, try to blanket the audience with as many releases as possible. Games are selling more than ever, and more games are being sold than ever. Even if Red Dead Redemption 2 becomes something as major as GTA 5 is, Take-Two can't bank on producing one legendary record breaking blockbuster every 4 years.

The company held up busy release schedules in the past, in fact, only last year 2K produced several AAA releases, not just the one for which the company is now aiming. This year they would have hit things out of the park with Red Dead Redemption 2, and it's the delay of said title which resulted in the thin schedule.

In the meantime, GTA Online is doing a lot more than just keeping the tent standing. While big revenue numbers are being predicted for the next fiscal year, which will see the release of Red Dead Redemption 2, due to the performance of Online the predictions for the current year have been increased by Take-Two.

Initially expecting income in a range of $1.42-1.52 billion, Take-Two boosted that range to $1.65-1.75 billion on account of GTA Online's continued success and popularity. Additionally, net income for the past three months has been up 34% compared to the previous three.

So when will GTA Online run out of steam? In the past fans have been worried that Red Dead Redemption 2 would end up gutting the GTA Online player base. However, even Take-Two joined in denying that will happen. Simply put, the two games will be appealing to different market segments and cannibalization should be minimal.

If not the next big game from Rockstar, then what will finally end this winning streak?

We just don't know. GTA Online chugging along with marked increases year over year this long is already something any analyst would have said is impossible 3 years ago, so there really isn't much point in trying to predict things at this point, since we're in uncharted territory. There is simply no precedent for this kind of overarching popularity and success.

Who knows, maybe it will take a new GTA game several years down the line to spell the end of GTA 5's streak? We'll only find out when that happens — in the meantime, Rockstar is keeping things fresh with a steady stream of DLC, to which Gunrunning was the latest edition, and at least one more major DLC expected this year with many smaller intermittent updates filling the gaps.