It's the video game that launched a $2 billion takeover war.
"Grand Theft Auto IV" was expected to have one of the biggest debuts in entertainment history when it hit stores Tuesday. Analysts predict it will ring up more than $400 million at retail in the first week, topping "Halo 3," which in the fall smashed the previous record with $300 million.
The "Grand Theft Auto" franchise, which lets players enact a host of criminal activities, has stirred up controversy with its sexually explicit and violent fare.
This time, it's also generating corporate drama. With its eyes on the blockbuster game, Electronic Arts has offered $2 billion for Take-Two Interactive Software, the game's publisher.
Take-Two has told its suitor it's not willing to consider a deal, at least until after the game's debut. Company executives believe the game's launch will give its stock a turboboost and force Electronic Arts to sweeten its price.
Franchise Top Game Seller
The 10-year-old franchise has sold more than 65 million copies worldwide. In the past, each installment has outsold the last, and "GTA IV" is widely expected to top "Grand Theft Auto: San Andreas," which has sold more than 14 million copies since its launch in 2004.
Some analysts expect "Grand Theft Auto IV," which retails for $60, to sell 18 million copies and ring up nearly $1 billion in sales. Analysts say about 80 percent of that would go back to Take-Two as gross revenue, and the other 20 percent to retail outlets.
So, to a potential acquirer, the franchise would be worth "in the neighborhood of $700 million to $800 million," said John Taylor, managing director of Arcadia Investments, which owns shares of Take-Two and Redwood City, Calif.-based Electronic Arts. That's roughly 70 percent to 80 percent of Take-Two's market capitalization, when its stock traded between $13 and $17 a share in the months prior to Electronic Arts' offer in February of $26 a share.
Electronic Arts' bid remains at $2 billion, but it lowered its per-share price to $25.74 to account for 2 million additional shares recently issued by Take-Two for executive compensation incentives.
"Historically, people have felt that this game has a lot to do with the company's valuation," Take-Two Chairman Strauss Zelnick said. "But, as we develop more hits like 'BioShock' and 'Civilization,' we've become a much more diverse company. That said, 'GTA' is the 1,000-pound gorilla."
To its fans, "Grand Theft Auto" represents a singular experience. Created by Rockstar Games, now owned by Take-Two, the games revolve around a gangster plot. The first two versions sold well, but the third, 2001's "Grand Theft Auto III," raced off the charts. It lets players roam around a gritty urban environment and steal cars while being chased by the police.
Competitors tried to mimic its success, including Electronic Arts, which released "The Godfather" in 2006. But none took off.
Fans Respond To Game's Lure
"'GTA' speaks to a certain audience in a way that no other game does," said Geoff Keighley, editor of www. Gameslice.com, a Web site that covers the game industry. "They're movie buffs. They're music buffs. But they're not necessarily game buffs. I had friends who would go out and buy a console just to play this game, even though they wouldn't play any other game."
Many "Grand Theft Auto" games could be played only on Sony Corp.'s PlayStation 2, at least when the games first came out, which analysts said helped cement the console's success. Tuesday, the game debuted simultaneously on the PlayStation 3 and Microsoft Corp.'s Xbox 360.
Early reviews of "Grand Theft Auto IV" are glowing.
"As a fan, my expectations were exceeded," said Ricardo Torres, editor of www. gamespot.com, a game review site. "It's what 'GTA' was always meant to be, but couldn't be because of the technical limitations of the previous consoles. With the current hardware, they have a canvas that lets them paint whatever they want. The city, which used to be just a background for the game, has so much detail that it feels alive. The level of immersion is crazy."
The games industry is hoping that "Grand Theft Auto IV" helps boost its fortunes by giving reluctant consumers a reason to buy a console during the holidays. That would help other publishers, too.
Still, acquiring Take-Two carries risks for Electronic Arts, the No. 1 game publisher. Although the series shows no signs of flagging, fans could grow tired of future versions.