If you click on a link and make a purchase we may receive a small commission. Read our editorial policy.

GTA V dev costs over $137 million, says analyst

Sterne Agee's Arvind Bhatia expects Take-Two blockbuster to sell 18 million, make over $230 million in operating profit

It's been said that you have to spend money to make money, and one analyst believes Take-Two is poised to do both in abundance with the upcoming Grand Theft Auto V. In a note to investors today, Sterne Agee's Arvind Bhatia said the game's recent delay will add to its development costs, but does nothing to blunt its potential success.

Bhatia detailed a "hypothetical profitability model" for GTA V based on an estimated development cost of $137.5 million (representing a team of 250 people working on the project for five years). Even adding projected marketing costs between $69 million and $109.3 million, Bhatia saw GTA V providing huge returns for Take-Two. In the event that GTA V sells "only" 15 million copies, Bhatia estimated Take-Two would still see more than $193.6 million in operating profit from the game for its fiscal year, or an earnings per share contribution of $2.11. Should the game outperform expectations with 25 million copies sold (a figure that assumes a much higher marketing spend), Bhatia put Take-Two's operating profit from the game at $390.8 million, with an EPS contribution of $4.26.

At the moment, Bhatia believes GTA V will sell 18 million units in Take-Two's fiscal year, saying it's likely to be the best-selling game of the year. Bhatia suggested it could be second only to the next Call of Duty, which he identified as Call of Duty: Modern Warfare 4. As for the delay, the analyst said it will make for a more crowded holiday market, especially combined with the potential of new consoles. Regardless, Bhatia said, "[T]his is a long-awaited title that consumers are unlikely to pass up and we remain bullish on our outlook for this title and for the company."

Yesterday, Take-Two delayed Grand Theft Auto V from its previous spring release window to September 17. The news drove Take-Two stock down sharply, although it had regained most of its value by mid-day trading today.

Related topics
Author
Brendan Sinclair avatar

Brendan Sinclair

Managing Editor

Brendan joined GamesIndustry.biz in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot in the US.

Comments