As to why Rockstar needed guaranteed funds up front perhaps this quote from Pachter would suffice:
"We think that it is important to point out that U.S. industry software sales have grown by over 58% from the November 2005 – January 2006 period through the November 2007 – January 2008 period, while Take-Two's publishing revenues have declined by almost 23%. This is clearly a company that is losing market share, and as we review the lineup for the balance of 2008 and 2009, we see more of the same type of games we have seen over the last three years," he said. "The company's sports lineup continues to underperform, generating only $32 million of sales (26% of publishing revenues) for the key holiday period. This figure calls into question whether Take-Two can deliver sports revenues of $250 million for FY:08, as management implied in a prior earnings call."
From what I've been able to gather it is a prepayment...Rockstar keeps the reported cash (I recall they were adding it to this year's balance sheet) and only participates in further revenue once MS earns their money back from DLC.
i think its more likely to be a pre-payment. Rockstar has a risk free venture into largescale downloadable content whilst MS gets the exclusivity rights to boast about. win, win situation, except for sony.
Why would Rockstar need a loan to fund it anyway? they could just wait to see some return on the initial game and then start with the downloadable content if it really was in that desperate need of funds.
@kspraydad, There is a difference between pre-payment (or advance payment) and loan. IF the actual sales of DLC is, say, $40 Million, there will be different result. For a loan, Rockstar have to return the $10 Million difference. For a pre-payment (advance payment), Rockstar doesn't have to return any money to MSFT. So, is it pre-payment, or is it Loan ?
Another thing I've just glommed onto is that the $50 million MS supposedly paid for episodic content was basically a 'pre payment' or loan to Rockstar. Rockstar won't make a dime off the downloads until they have sold $50 million worth...all the sales $ go to MS before that.
"Sam Houser hints 360 download content might take the form of random missions, thought it's all dependent on the reaction of fans.
"In the game, you might be walking around & then someone will come up to you & say something like, 'Hey, I need your help', & you'll be like, 'What? This isn't a story mission', & he'll be like, 'You see that room up there? That's my wife & she's f***ing some bloke, & I need you to go and do...' & this little story will unfold from there just randomly."
6 million is well beyond the suggested IPO prices. Of course, the NPD Futures are US only and not global. However, I still think the current suggested IPO prices are on the low side.
Hmmm, the 360 has a western install base of around 17 Million. The PS3 around 9 Million. That should grow until then, lets say they got 27 Million combined. 6 Million shipping first week would mean 22%. Sounds realistic, maybe a little low.
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As to why Rockstar needed guaranteed funds up front perhaps this quote from Pachter would suffice:
"We think that it is important to point out that U.S. industry software sales have grown by over 58% from the November 2005 – January 2006 period through the November 2007 – January 2008 period, while Take-Two's publishing revenues have declined by almost 23%. This is clearly a company that is losing market share, and as we review the lineup for the balance of 2008 and 2009, we see more of the same type of games we have seen over the last three years," he said. "The company's sports lineup continues to underperform, generating only $32 million of sales (26% of publishing revenues) for the key holiday period. This figure calls into question whether Take-Two can deliver sports revenues of $250 million for FY:08, as management implied in a prior earnings call."