Industry analyst Michael Pachter says silence on the Grand Theft Auto front "reflects poorly" on management at Take-Two Interactive because it's putting off investors who might otherwise be interested in the company.
Pachter said management was showing poor judgment by keeping mum on the GTA front, even if development on the next title is still in the early stages. While denying the popular misconception that Take-Two is a "one-hit wonder," he made the obvious point that the Grand Theft Auto series is far and away its most important franchise and said that the "lack of visibility" regarding the next release could be causing hesitation among investors.
"Dan Houser, one of the three key employees behind the franchise, said in a recent interview that the trio hadn't even thought of the locale for the next installment, let alone the plot," Pachter wrote in an investors' note. "While we find this unfathomable, if it is true, it suggests that there will not be another installment of GTA until late 2011 at the earliest, putting the game on a three and a half year release cycle."
"In our view, if the company's most important franchise is on a three and a half year schedule, management owes its shareholders the obligation of informing them of this fact. With no visibility into the timing of the next installment of GTA, we think that many investors will remain skeptical of the Take-Two story," he continued.
Pachter said Take-Two currently brings at least eight "bona fide franchises" to the table and has the potential to raise that number up to 10 or 12, but is hampered, ironically, by "high expectations and high quality standards" that inevitably lead to delays. "If Take-Two can deliver its franchises on a more compressed schedule, its earnings power would essentially double, and the stock would command a much higher price," he concluded.
Just in case you needed more proof that making great games and making lots of money don't necessarily have much to do with each other.