Take-Two Still Eyeing Support for Kinect, 3DS

Take-Two Interactive is still “looking at the 3DS” and is eyeing Kinect for Xbox 360 “very hard,” Chief Operating Officer Karl Slatoff said in a Thursday earnings call. The company hasn’t announced specific plans for games supporting either system and Slatoff gave no specifics in the call.

The publisher is “excited” about Nintendo’s coming handheld game system that features stereoscopic 3D images without the need for special glasses, and is “excited about what it can bring to the consumer market,” said Slatoff. “We're looking at doing some things, but we haven’t announced anything at this point. … The same holds true for Kinect,” the new motion-sensing system for the Xbox 360, he said.

Take-Two already shipped a game for the PS3, the multi-platform NBA 2K11, that supports that system’s new PlayStation Move motion control system. Initial sales results, however, indicated there was more demand for Kinect than Move in the U.S. PS3 sales disappointed in November despite the new, heavily-promoted PlayStation Move, as the 360 and Wii far outsold Sony’s console, NPD’s U.S. data showed (CED Dec 13 p2). The 360 represented more than 40 percent of total U.S. game industry sales for the month, “driven by the successful launch of Microsoft’s Kinect,” said NPD analyst Anita Frazier. Xbox 360 accessories accounted for 60 percent of total accessory revenue for the month, with the Kinect sensor finishing as the No. 1 accessory its first month available, she said. About 50 percent of the 360 consoles sold in November were bundled with the Kinect sensor, while only about 20 percent of the PS3s sold were bundled with a Move controller, an industry source said.

"It doesn’t make a lot of sense for us to just go back and try to retrofit” games that Take-Two already released to make them compatible with Kinect or Move, Slatoff also said. “I don’t think that’s a recipe for great success,” he said, saying the company’s intention is to offer the feature in only new releases. “There are certainly applications for some of our franchises” with Kinect, he said. “We really haven’t discussed what our development plans are for Kinect,” he said, declining to say how long it will take for Take-Two to be able to offer a game using the Microsoft sensor peripheral.

Strong demand for new games including Red Dead Redemption allowed Take-Two to achieve its goal of profitability in a fiscal year that didn’t include a new Grand Theft Auto videogame release, CEO Ben Feder said (CED Dec 13 p3). It reported a profit from continuing operations of $54.2 million, 58 cents per share, for the quarter ended Oct. 31, reversing the $7.9 million, 10 cents, loss in the same quarter last year. Revenue jumped 32 percent to $373.7 million. For the year, the company posted a profit from continuing operations of $49.7 million, 58 cents, reversing the $130.4 million, $1.70, loss the prior year. Revenue for the year grew 65 percent to $1.16 billion.

NBA 2K11 was also a strong seller for Take-Two in the quarter, moving more than 3 million copies globally, Take-Two Chairman Strauss Zelnick said. The company’s 2K Sports division “achieved profitability this year, driven primarily by” the strong NBA game sales, he said.

PS3 game sales accounted for 38 percent of Take-Two’s revenue in the quarter, up from 21 percent a year ago. But 360 game sales fell to 34 percent of its sales from 53 percent. PC games sales grew to 15 percent of sales from 7 percent. Wii game sales were flat at 5 percent of sales, while DS game sales were flat at 3 percent, PSP game sales fell to 2 percent of sales from 7 percent, and PS2 game sales dipped to 3 percent from 4 percent.

Despite the better-than-expected Take-Two results, Slatoff said it was “another challenging year” for the industry, caused largely by “continued weakness” in categories including handheld and music games. “These trends have dampened what has otherwise been a solid year for the core hardware and software markets,” he said. There have been “double-digit increases” in PS3 and 360 software sales for the year, while “the installed base of consoles across the board has continued to grow at reasonably healthy rates,” he said.

It’s “still early,” but Zelnick said he felt “very good about our outlook both for 2012 and beyond.” Take-Two expects to report revenue of $290 million-$315 million and earnings per share of 25-35 cents for the quarter ending Dec. 31, it said. It expects to report revenue of $100 million-$150 million and a loss per share of 50-60 cents for the quarter ending March 31, and revenue of $1-$1.1 billion and earnings per share of 50-65 cents for the fiscal year ending March 31. The company shifted the end of its fiscal year from Oct. 31 to March 31 “to align its fiscal periods more closely with the seasonality of its business and improve comparability with industry peers” (CED Oct 27 p8).