UPDATE: Take-Two tells GamesIndustry.biz the marketing spend is only for third-party games, not internally-developed titles like Grand Theft Auto 6.
Take-Two plans to spend $89 million on marketing in FY2024, which likely coincides with GTA 6's launch timing.
Take-Two's recent Form 10-K SEC filing might've inadvertently confirmed GTA 6's release window. The form shows Rockstar's parent company Take-Two Interactive plans to spend $89.2 million in Fiscal Year 2024, which indicates something big is on the way. Companies typically spend millions for big marketing pushes ahead of major new releases, and for Take-Two, it doesn't get any bigger than Grand Theft Autio.
In this case, Take-Two plans to spend more money on marketing than it has in the past 7 years. It will spend 80% more on marketing in FY2024 than it spent when Red Dead Redemption 2 released in FY2019.
It's worth noting these plans shift all the time. The massive marketing surge was originally supposed to happen in FY2023 (April 1, 2022 - March 31, 2023), but as of this month, Take-Two has pushed the marketing spending jump to FY2024 (April 1, 2023 - March 31, 2024).
Another indicator is the downward trend in amortization and depreciation spending on intangible assets. The company expects its amortization to fall sharply in the next few fiscal years, and is estimated to drop by 60% between FY2023 and FY2024.
So what does this mean?
Basically this is a way for companies to gauge costs of titles that aren't released yet. An unreleased game is intangible and can't be sold. The longer a game is in development, the more a company spends on it via R&D costs, payroll, and amortization costs, which are calculated costs spread out over a period of time.
Take-Two's current amortization rate for games is at $44 million over 4 years time.
There's also depreciation of IP rights. The lack of new releases in a game series drops the value of the IP. The longer it takes for a game to release in an IP, the more it depreciates. It's basically a cost that denotes the perceived loss in value of the IP.
Coupled with the huge marketing spend in the same period, Take-Two's estimated drop in amortization in FY2024 strongly indicates a slew of big releases will launch during these periods. Or one really big one, like, say, Grand Theft Auto 6.
A drop in these expenses usually indicates games are on the way. When games are released, their development is no longer amortized and the IP value surges after it's released, which drops depreciation.Think of D&A number drops as a kind of cash out.
Another interesting trend is how total amortization of internal game development software has risen from FY2018 through FY2020. This basically indicates games are ramping up development--remember, the longer a game is in dev, the higher the D&A costs are. These costs will diminish rapidly once a game is finished being developed and will drop even more when it's released onto the market.
Take-Two has yet to confirm anything, but we do know it plans to release 93 games in the next 5 years. This massive slate will include new games from its entire spectrum of labels, including Rockstar Games, as well as a number of annualized sports games, mobile games, indies, and new IP.
The publisher was careful to say that not all of these games will actually launch, though.
Last updated: Jun 16, 2020 at 04:29 pm CDT
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