Take-Two Interactive Software, Inc. is an iconic American video game production company headquartered in New York City. Founded by Ryan Brant in September 1993, Take-Two operates two major video game publishing labels, 2K and Rockstar Games, both of which operate independent production studios.
Take-Two initiated its Private Division label to assist with supporting independent developers, launching an in-house production studio, ‘Intercept games’, to help with the project. Take-Two acquired the game developers Playdots, Socialpoint, and Nordeus, establishing itself in the mobile gaming market.
Take-Two also owns a 50% stake in the professional esports NBA 2K League. The company’s combined portfolio of game franchises includes titles like Borderlands, NBA 2K, Grand Theft Auto, BioShock, and Red Dead.
With a market cap of $13 billion, Take-two is the third-largest publicly traded video game developer and publisher, after Activision Blizzard and Electronic Arts. Let’s unpack everything you need to know about this video game giant and how to buy their TTWO Stock.
How to Buy Take Two Interactive Stock (TTWO)
- Ticker Symbol: $TTWO (Nasdaq)
- Market Cap: 20.526B
- PE Ratio (TTM): 81.01
- EPS (TTM): 1.52
- Earnings Date: Nov 01, 2022 – Nov 07, 2022
- Forward Dividend & Yield: N/A (N/A)
- Ex-Dividend Date: N/A
- 1y Target Est: 165.26
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Take-Two Interactive – Company History
Founded by Ryan Ashley Brant, son of media exec Peter Brant, Take-Two Interactive is a huge player in the video game market. Brant got the idea for the company after working during his college years. He started the company with the goal of getting into a business where he could raise capital as a young guy.
Brant started the company with $1.5 million raised from his family members and private angel investors. He incorporated Take-Two Interactive in Delaware in September 1993, making it the youngest company out of the three-game giants.
Brant took the CEO role in the company at 21 years of age. John Antinori and Mark Seremet were early investors in the company and part of the management team. Seremet ended up selling his stake in Take-Two in 1998.
Take-Two had its initial headquarters in Latrobe, Pennsylvania, with the company acquiring InterOptica in 1994. This software publisher, headed by Catherine Winchester and owned by Wan Chai, eventually saw Winchester become take-twos president.
Only a few months later, Take-two would strike a deal with the publisher ‘GameTek,’ leading to the international distribution of five game titles to the global market. Take-Two would then hire the movie legend Dennis Hopper and other Hollywood stars to feature in ‘Hell: A Cyberpunk Thriller.’ The game was released in 1994, selling more than 300,000 copies in the first year of sales.
The next game to see success was ‘Ripper.’ Released in 1996, Ripper featured the talents of Christopher Walken, Burgess Meredith, and Karen Allen. The game’s huge success led to a publishing deal between Acclaim entertainment and Take-Two. Take-Two handed over the rights to Acclaim for its publishing and international distribution.
Take-Two collaborated with Sony Computer Entertainment to secure licenses to publish its content library on PlayStation gaming consoles. The company moved its headquarters to New York City in 1995 while expanding its Latrobe offices.
In September 1996, Take-Two expanded into the second floor of its New York Offices, previously occupied by the American Red Cross. By the end of 1996, Take-Two has generated annual revenues of $10 million. However, Brant felt obligated to continue his expansion of the company.
He would go on to make his first acquisition in 1996, signing a deal with Mission Studios and publishing the popular ‘JetFighter III’ title.
Take-Two Interactive IPO
By 1997, Brant was in need of funds to continue the expansion of Take-Two. He decided to raise the capital required by taking his company public. In April 1997, Brant announced his intention for the listing in an attempt to raise $8.2 million during the IPO.
The company launched its Initial Public Offering on April 15, 1997, listing under the ticker symbol $TTWO on the Nasdaq stock exchange. The stock’s opening price was $5.50, surprising analysts who valued the opening price at $5. By the end of the first day, the stock was trading at $5.75.
The comp[any netted around $6.5 million from the IPO, short of Brant’s goal for the listing. However, the company gained a further $4 million in venture funding through promissory notes. Brant remained the largest shareholder in Take-Two, with a 255 stake, owned through Bridgehampton Investors LP.
The funds raised through the IPO gave Take-Two the capital it needed to acquire The European operations of Gametek and its in-house ‘Alternative Reality Technologies’ studio, which brant would later rename ‘Rockstar Toronto.’
The deal also included the rights to the GameTek catalog, including, The Quivering, Dark Colony, The Reap, Wheel of Fortune, and Jeopardy! Titles. The purchase also included the hiring of GameTek executive director Kelly Sumner.
The IPO funding also went to the acquisition of ‘Inventory Management Systems,’ ‘Alliance Inventory Management,’ and ‘Creative Alliance Group.’ These three companies assisted with the international distribution of Take-Two’s titles into the retail market.
Take-Two Interactive and Rockstar Games
1996 also saw Take-Two acquire the publishing rights to ‘Monkey Hero.’ The developer, ‘Blam!’ was dealing with financial issues after the closure of BMG Interactive, the original publisher. Take-Two saw the opportunity and acquired the assets of BMG Interactive for a 16% stake in Take-Two common stock or 1.85 million shares. The deal was valued at $14.2 million.
In 1995, BMG took fire from the public regarding the violence in its title ‘Grand Theft Auto.’ At the time, the game wasn’t a commercial success, but Brant saw the BMG deal as a way to acquire Grand Theft Auto and the publicity created by the controversy around it.
Brant left the development and publishing to Jamie King and Terry Donovan, starting a new label in Take-Two’ Rockstar Games‘, which would handle the development of Grand Theft Auto and other titles. The ‘label’ infrastructure conceived by Brant proved popular in the industry, with EA adopting it in 2008.
After completing its acquisitions, Take-Two and Rockstar launched Grand Theft auto in the United States, to huge Acclaim from the gaming community. GTA was the company’s first big financial success, selling more than 1.5-million copies in its first year of release.
As a result of its success, Take-Two started assuming the role of distribution in-house, acquiring distribution firm DirectSoft Australia to handle the Oceania market. The company went on to acquire ‘Jack of All Games in 1998, an American game distributor. They paid $16.8 million for the company in an all-cash deal.
Take-Two acquired DMA Design in 1998, remaining it ‘Rockstar North.’ It also invested in Bungie and the Gathering of Developers, which it would eventually transfer out to Microsoft Game Studios.
Take-Two invested in GTA sequels with Rockstar. The franchise ended up including the titles ‘Grand Theft Auto 2’ (1999), ‘Grand Theft Auto III’ (2001), ‘Grand Theft Auto: Vice City (2002), and ‘Grand Theft Auto: San Andreas’ (2004). The GTA franchise was incredibly popular and one of the highest-selling franchises in video gaming history.
By 2004, Take-Two’s revenues exceeded $1 billion, and in 2004, Take-Two acquired the rights to the Civilization series by Info games for $22.3 million.
Take-Two Interactive and 2K
In 2005, Take-Two speeded up its acquisitions. The company went on to spend more than $80 million on buying up game developers. One of the largest was ‘Kush Games’ and ‘Visual Concepts’ from games console giant Sega in an all-cash deal of $32 million in January 2005.
These studios were the development teams behind the ‘2 K’ esports brand, managed through ESPN. The franchise intended to release updates to the game each year. Prior to its acquisition of these developers from Sega, Electronic Arts announced it secured the exclusive development rights to the NFL in a 15-year branding deal with ESPN.
As a result, Sega abandoned the sports game market, selling it to Take-Two. The deal included the rights to the 2K brand. The company also negotiated the sole rights to game development for Major League Baseball.
After quiring the 2K brand, Take-Two went on to complete several other major acquisitions. The company bought Firaxis Games in November 2005 for $27 million. Take-Two had previously supported the studio with the Civilization license acquired to support the publishing of Civilization IV.
Take-two acquired Irrational Games in January 2006 for $10 million, which included its Boston and Canberra studios. Irrational had already struck a publishing license deal for its upcoming Bioshock title. After completing the merger, Bioshock fell under the 2K label.
Take-Two wasn’t done yet, with its acquisition of PAM Development from the Gaia Capital Group closing for $11.4 million. With this purchase came the rights for the ‘Top Spin’ franchise of tennis esports games. Take-Two went on to secure an agreement with Ditan Distribution LLC, owned by Cinram.
This deal allowed Take-two to offload its distribution responsibilities from Jack of All Games while creating the means to license and distribute its third-party game titles. The company would go on to sell Jack of Games to Synnex in 2009 for $43 million in cash.
Take-Two purchased the rights for the WWE wrestling game franchise in 2013 after the liquidation of THQ. The company added the WWE titles to its 2K brand, capturing the WWE fans in the gaming market. Take-Two released annual updates to its WWE game title as part of the 2K lineup.
Take-Two has equal control of the NBA 2K League with the NBA. This competitive esports league is derived from Take-Two’s popular NBA 2K series. The National Basketball Association announced its partnership with Take-Two in creating the NBA 2K League, making Take-two its official video game development and publishing partner. In so, it became the first esports league to be managed by a professional sports league.
NBA teams partially sponsor the esports teams in competitions, creating equivalent teams for each featured in the NBA. The inaugural season of the NBA 2K League was in 2018. The 2K brand also secured a deal with the NFL in March 2020, allowing Take-Two to republish its titles starting in 2021.
It’s important to note that the 2K football franchise is a ‘non-simulation football game experience,’ and the EA Madden series remains the official video game of the NFL.
Take-Two Interactive Company Structure
Take-two has global headquarters located in New York City. It runs its European operations from its offices in Windsor, England, and Singapore hosts its Asian operations. Take-Two’s core business is its two private publishing labels, Rockstar Games and 2K.
Rockstar Games also has its headquarters in New York City, specializing in developing the Grand Theft Auto franchise and other action-adventure games. The 2K label has headquarters in Novato, California, comprising the divisions’ 2K Games,’ ‘2K Sports,’ and ‘2K Play.’
The 2K Sports division handles the development and publication of Take-Two’s sports simulation games, such as the NBA 2K series. 2K Play manages the development of children’s and family-friendly video game content produced by Take-Two and its studios.
2K Games handles the production of Take-Two’s in-house development studios. It also develops titles from third-party studios, such as the ‘Borderlands’ franchise from Gearbox Software.
Take-Two also owns the ‘Private Division,’ which it uses to publish and market games from independent developers. Social Point provides Take-Two with publishing for its mobile gaming titles.
The Take-Two structure has had nearly 25 years of operations, coming into effect in 1997 through 1998. Each label under the Take-Two umbrella is an incorporated principal operating business. The labels have a high degree of autonomy, with each having independent resources and infrastructure at its disposal. The labels also benefit from separate management teams and profit and loss strategies.
Take-Two successfully divested the company from its older manufacturing and distribution operations, instead choosing to favor in-house digital publication and third-party distribution at the retail level. Over half of Take-Twos revenues come from digital distribution, as of 2016.
Take-Two continues to grow its market share through digital sales of its video game titles, available for consoles or PCs, and monetization of PC, console, and mobile gaming titles.
The stock benefited from the 2021 mania in the market, seeing an all-time high of $210 a share before falling back into the $125 range per share in 2022.
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