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.

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Latest comments (4)

Ian Brown IT Developer / IT Infrastructure 9 years ago
It'll no doubt make money as its a game that for some is the reason they buy consoles for (i remember working with some guys who were buying a PS3 for the sole purpose of getting GTA 4).

Personally I am not that bothered about it as I just can't help but get tired/bored of sandbox games such as this very quickly. Typically I'll do a few missions, get to an awful "taxi" mission then give up and go on a rampage followed shortly by turning it off and loosing interest. I don't think I've actually finished a GTA game since 3 on PS2 as I just get bored of traveling so much (applies to other open world sandbox games such as Saints Row, Just Cause etc.).

I have respect for the game and studio non the less as at least they have taken time over this rather than regurgitate a new release every 12 months.

Can't help but feel that perhaps the release window being moved is tied with all the heat games have been getting for violence as if I remember correctly caused an outrage over its initial release many moons ago.
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James Ingrams Writer 9 years ago
It may make money,but this is another nail in the coffin for gaming. Quite simply, it will mean fewer and fewer releases, meaning less choice and thereby ever lower sales.
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Leon Tilbrook Tech Team QA Engineer, NaturalMotion9 years ago
$137 million and still quiet on if a PC version is coming or not. I'm sure the cost of a PC version with all the gubbins (like the Max Payne 3 Port) would not add much more. Give it to Rockstar Leeds to do already
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Shane Sweeney Academic 9 years ago
With the next gen consoles coming out this year and with (I assume) the Last Guardian being a launch title for PS4, it's almost a missed opportunity for GTA5 to not be a launch title as well. They could always do a Zelda Twilight Princess Wii/GameCube multiple version release.
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