As it stands today and we may still get more announcements, but FY08 looks like their strongest year ever, maybe the strongest among all third party publishers including ERTS. ERTS is still going to be the volume leader, but as far as titles and games, there's no match. From what we know historically, I predict:
Definite multi-million sellers
GTA IV - 8-12 million (plus the two 360 episodes)
Bioshock - 2 million in FY08 especially with a PS3 release
Midnight Club LA - 2-4 million
Mafia II - Looks better than GTA (1-2 million)
Civilization - 1-2 million
Likely 1+ million sellers
MLB2K8, NBA2K9, Manhunt2, APF2K9
Possible million sellers
L.A. Noire, Borderlands (FY09?), Bully
I am still expecting more Wii announcements, especially a GTA stories type of game. There's a new IP from Rockstar Leeds. There's a new IP that Sony was boasting about being the next best thing from Rockstar. There's the possibility of Max Payne 3 and Duke Nukem next year as well. There's the possibility of another Irrational title. I don't think anyone has modelled this kind of lineup, I don't think analysts have adjusted their FY08 models to account for the majority of GTA sales occuring within one year instead of being split into two years as in the past.
The only major TTWO titles listed on the simExchange that can be expected to contribute to the bottom line are GTA IV and BioShock.
The video game prediction market is currently forecasting the following global lifetime sales:
GTA IV (PS3) at 6.70 million copies
GTA IV (Xbox 360) at 10.90 million copies
BioShock (Xbox 360) at 3.29 million copies
BioShock (PC) at 1.23 million copies
Check out the TTWO page: http://www.thesimexchange.com/company.php?symbol=TTWO&r=57
These are probably the most accurate forecasts available now as they are "based on the trading of thousands of gamers, developers, and investors." Trading on the simExchange has resulted in NPD forecasts that have been more accurate than analysts for five months now.
Doubtful there will even be an APF2k9, let alone it selling 1 million copies.
This July Preview report had expected APF2k8 copies to be so bad that TTWO would can the series: http://www.thesimexchange.com/research.php?r=57
And the sales of APF2K8 were even worst than expected by the APF2K8 July futures contracts.
Wow! Every one thought Carnival Games was a dud even Take Two. Carnival Games is one of those games that was relatively cheap to make that has mass market appeal. Parents, young kids, ladies, and senior citizens will enjoy this game. If that isn't market expansion of the gaming market then I don't know what is. Yes, I know the reviews for the game has been low but the people who purchase the game love it. Carnival Games is going to help Take Two surprise a lot of financial analysts.
>>Doubtful there will even be an APF2k9, let alone it selling 1 million copies.
>>This July Preview report had expected APF2k8 copies to be so bad that TTWO would can the series
I doubt it hits a million too . . . but that doesn't mean they should quit. Compare APF 2K8 sales to NHL 2K7 sales or College Hoops 2K7 sales.
You were of course calling for a profitable FY07 even without GTA, just a few months ago... Oh well, just because you were dead wrong about FY06 and FY07, maybe third time's the charm. And, if the stock doubles it will finally be above where you first started pumping this back in 2005!
As for T2's lineup. There's not a single money loser on their slate. Compare that to previous years. There's also $28 million in costs savings. Here's a rosy view of what could happen, it's rosy and things have to click, but it's not out of the question:
Sports breakeven is around $220 million according to Winters.
MLB 2K7 and BIGS will sell around 2.5 million at $40, that's $100 million
NBA 2K8 sells 1.5 million at $45, that's $67 million
NCAA and NHL games sell 500K between then at $45, that's $23 million
APF2K8 sells 2 million at $40, that's $80 million.
Not counting catalog, boxing, or other sports games. We're talking $280 million. That's almost $1 of EPS.
GTAIV will ship 4 million in Q4 (2 million Xbox 360, 2 million PS3) at $50 that's $200 million. I think over $100 million of that is transferred to the bottom line. That's $1.50 of EPS.
I think Bioshock sells 2 million units at $45, that's $90 million. There could be a $20 million contribution to the bottom line. That's $0.25 of EPS.
GTA VCS PS2 should also provide a nice contribution. Maybe another $0.25.
I am going to assume games like Manhunt2, Darkness, Shivering Isles, FF4, Catalog, distribution will not provide meaningful contributions to the bottom line.
Assuming they squander $100 million of that income on other expenses (highly unlikely), that still leaves them over $100 million in earnings.
Ok, so based on your assumptions:
Most pessimistic scenario: 08 EPS = $2
Most optimistic scenario: 08 EPS = $3
Based on current price of say $15, we are looking at forward P/E of:
Pessimistic scenario: 7.5
Optimistic scenario: 5
Interesting to note that analysts predict forward PE of 15.67 (more than 2 times your pessimistic scenario).
What can we learn from that:
1) Analysts have not yet modeled what we are seeing here. Their expectations are far worse than what we beleive will actually happen. This leaves a lot of room for upgrades and price target changes.
2) Compared to other market leaders, TTWO is grossly undervalued:
ATVI forward PE = 22.66
ERTS forward PE = 26.53
THQI forward PE = 16.9
We can accept that the market discounts TTWO PE because of many mistakes and higher cost structures. But 100%-400% discount comared to its peers???
No way. This is yet another example of extreme inefficiency, and the smart money sees that.
I made loads of money on TTWO last year (din't buy at the bottom and didn't sell at the top). I intend to make even more money this time, looking to sell at the end of 08. The expected lineup of products is absolutely fantastic, perhaps the best they ever had. New management is far more seasoned and Wall Street friendly compared to the previous one. This is the closest I have seen to a sure thing in a long time.
This is not to say that we won't experience heavy manipulations and wild swings. The end, however, is inevitable. Shorts cannot hold this down forever.
Pretty good estimates with them being multiplat. It is decent, but I guarantee you L.A. Noire gets bumped to bumped to possibly holiday season because they announce it as a multiplatform game and Borderlands being from Gearbox and on 3 platforms is more of a 'possible 3 million copy' seller as opposed to 1 million 'likely'. Just hope games such as Mass Effect live up to the hype because even though they are from a different company it will help keep the hype going in that sci-fi/RPG element shooter genre.