Take-Two Interactive breaks free of its Rockstar addiction as Borderlands 2 becomes its bestselling game

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Take-Two Interactive shareholders are a brave lot. The parent company of video game developers 2K Games, 2K Sports, and Rockstar Games has struggled to build an increasingly profitable business without the aid of the latter studios’ signature Grand Theft Auto series. In 2010, then CEO Ben Feder claimed that the success of Red Dead Redemption showed that Take-Two had finally found a Grand Theft Auto free path to profitability, but even then it was relying on the slow output of Rockstar Games. Take-Two finally has a second studio to provide the company with a tent pole series. Gearbox Software is the studio and Borderlands 2 is the jewel in Take-Two’s crown.

Borderlands 2 continues to expand its audience and remains on pace to become the highest selling title in 2K’s history,” said current CEO Strauss Zelnick during Take-Two’s October through December earnings report on Tuesday, “It has also been the largest contributor to our digitally delivered revenue this year, driven both by strong sales of full-game downloads and high attach rates for the titles out on content, especially the Borderlands 2 season pass.”

Net income for the holiday quarter totaled nearly $79 million, compared to just $29 million the previous year. That’s on top of revenue of around $416 million, a big year-on-year boost over the more than $236 million from 2011. As Zelnick intimated, a huge part of that growth came from Borderlands 2’s digital content success. Digital revenue grew 244-percent and was responsible for 23-percent of Take-Two’s revenue. That doesn’t mean that all games will be delivered in the profitable episodic chunks that Borderlands 2 has after its initial release.

“Does that mean that these games will transition into a situation where you are constantly putting out new episodes and that bridges you from release to release?” said Zelnick, “We don’t see the business shaping up that way, but it does mean that the life cycle is extended greatly and we’ll continue to experiment with what this means creatively for consumers.”

Relying too heavily on Rockstar Games releases has damaged Take-Two in the past. Strauss Zelnick pointed to the delayed release of Grand Theft Auto V as the cause of his company’s nearly $108 million loss for fiscal 2012, but the disappointing sales of L.A. Noire at the beginning of that fiscal year contributed as well.

Gearbox Software remains an independent studio, but the importance of the Borderlands 2 series to Take-Two’s future could certainly make it an acquisition target in the future.

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