Take-Two will earn $206M from GTA V’s digital content in 12 months
October 1st, 2013 | Permalink
Grand Theft Auto V, Take-Two’s latest game, burst forth last week with quite a force: at $1B in sales in three days, the game is the fastest-selling entertainment product in history. And today—with the launch of the game’s online channels—Take-Two also begins a closely followed experiment in monetizing its projected 20+ million install base. This could very well set the tone for digital content on consoles to come. But before we all succumb to outright fanboism, just how much will GTA’s downloadable content and microtransactions make Take-Two? By our count: $206M in the first twelve months.
There are two things to understand before you start making predictions about digital content revenue potential. First, there are two types of digital purchases: additional content in the form of downloadable packs (DLC), and in-game currency purchases which can be used to buy items in the game. GTA will have both. Second, monetization methods must suit gameplay mechanics. Offering players the ability to buy an extra five lives for $0.99 works really well for Candy Crush Saga, but makes little sense for, say, Call of Duty.
GTA, a primarily single-player game, will see a boon from this first kind of digital content, DLC. The traditional model for most major console titles, offering new storylines and experiences through DLC is the go-to way to continue to monetize console players. Assuming a couple add-on releases, and based on what we know about digital revenues from other console games, Take-Two will see $165M from DLC in the first year of the game.
But console publishers, noting success with microtransactions and free-to-play games on other platforms, have begun to eye the in-game currency model. GTA V is, of course, not the first console title to do so, but the model for major retail titles like this is not yet proven. Take-Two is testing the microtransaction waters with a playerbase that may be largely unfamiliar with them. It’s also introducing it in a game environment that, unlike an MMO, does not require in-game items to progress. GTA’s microtransactions will merely let players acquire items faster, so the conversion rate will be lower than free-to-play games. Purchasable in-game currency will earn the publisher an estimated $41M in the next twelve months. Over the game’s five-year lifetime, we estimate total digital content revenues to ring in at $93M for microtransactions, and $344M for DLC. Not a bad sum.
This isn’t the game’s next billion dollars, as some have supposed GTA V microtransactions will make Take-Two (it would mean that 100% of the 20 million people that will buy the game over its lifetime will spend another $50 on in-game credits. That seems excessive, and doesn’t make sense given the game’s mechanics.) It is, however, a successful foray into the microtransaction world for a console title. Games like Borderlands 2, though with an admittedly smaller player base, saw just over $10M in total digital content revenues in its first year.
GTA V’s introduction of this hybrid model will begin to make familiar many console gamers with spending on virtual currency. For publishers like Crytek, Namco Bandai and World of Tanks developer Wargaming, all of whom are creating microtransaction-based titles for console, the success Take-Two sees will be an important barometer for the future of the revenue model. And at a time when next-gen console makers are promising to improve the atmosphere for microtransactions, the lessons learned could not be more relevant.