Inside Rockstar Games' posh New York headquarters, there's a buzz of round-the-clock activity. Just weeks before the company releases its much anticipated Grand Theft Auto IV video game, employees are scrambling to deliver finishing touches. "It takes a lot of work to make a crap game," says Dan Houser, Rockstar's co-founder, as he dips into a bowl of candy, "and just a little more to make a great one."
Houser has good reason to be making the distinction. Grand Theft Auto will appear on Apr. 29 to high expectations and even higher stakes. Already, game analysts are forecasting that the fourth installment of the go-anywhere, commit-any-crime series, which will be available for Microsoft's (MSFT) Xbox 360 and Sony's (SNE) PlayStation 3, will be the biggest seller of 2008, moving some 13 million units. The three previous versions of Grand Theft Auto have been huge hits, selling a combined 32 million units and pulling in $1.24 billion in the U.S., according to market researcher NPD Group.
But more than money is at stake. Rockstar is finishing up GTA just as its parent company, Take-Two Interactive (TTWO), is under siege. Last month, games giant Electronic Arts (ERTS) made a hostile takeover bid for Take-Two, offering $2 billion, or $26 a share. Take-Two Executive Chairman Strauss Zelnick rejected the bid, calling it "inappropriate, unfortunate, and opportunistic." He says Take-Two wants to delay any negotiations until after the Grand Theft Auto debut, when the expected strong sales of the game could force EA to increase its offer.
Timing Is Key
EA doesn't want to wait. The company wants to strike a deal before the game's release, in part so that it can count the Grand Theft Auto revenues as its own. EA also wants to stop Take-Two from plowing the profits from the game back into its sports games and other titles that compete with EA's own products. The battle could come to a head in the next week. EA set a deadline of Apr. 18 for Take-Two shareholders to decide on its bid. "If we can't close the deal in time to market their titles in the '08 holiday, the value diminishes for EA," says Owen Mahoney, EA's senior vice-president for corporate development.
Although most analysts expect the deal to go through, it remains to be seen exactly how the negotiations will play out. If shareholders agree to EA's conditions before an Apr. 17 shareholder meeting, Take-Two will likely be swallowed quickly. Shareholders could, however, decide to hold out for a higher price, giving Zelnick a bigger bargaining chip and delaying the deal until after copies of GTA start flying off the shelves.
The boardroom drama isn't likely to match the new Grand Theft Auto's plot, a tale of Eastern European immigrants pursuing gangster glory in a pre-Giuliani New York. Gritty and detailed, the game's city teems with realistic life. In Midtown, grumpy fashionistas crowd the sidewalks, and a high-definition recreation of Times Square pulses with hundreds of satirical billboards. Rather than rote objectives and levels, as in many other games, players can pursue almost any path they wish. They can build relationships with digital characters through bowling, pub-crawling, or other social activities. They can make phone calls and punch out text messages on mobile phones. They can even surf a fake Internet with hundreds of tongue-in-cheek Web pages.