<http://schema.org/articleBody>
"A scene from Take-Two&amp;#8217;s Borderlands 2\n\nFORTUNE &amp;#8212; 2012 was supposed to be a banner year for video game maker Take-Two Interactive. The spring was supposed to mark the triumphant return of Max Payne, one of the gaming world\u2019s traditional heavyweight franchises. But positive reviews, eight years of development, and one of the company\u2019s largest marketing campaigns ever couldn\u2019t convince gamers to purchase Max Payne 3, the franchise\u2019s latest installment.\nTake-Two \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tTTWO\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t had had a rough go of it lately, and in July the company missed analyst\u2019s estimates for the second straight quarter. With no release date in sight for Grand Theft Auto V &amp;#8212; the latest sequel to the company\u2019s best-known and most profitable franchise &amp;#8212; Take-Two must rely on space western shooter Borderlands 2, which hits shelves this week.\nTake Two is also likely hoping that Borderlands can help the company rely a little bit less on Grand Theft Auto. Despite the lack of updates to the franchise, Grand Theft Auto product sales accounted for almost 14% of the company\u2019s net revenue in fiscal year 2012. As of September 2011, Grand Theft Auto titles had sold 20 million more units then the rest of Take-Two\u2019s catalogue combined. That\u2019s over six times the number of games sold by Take-Two\u2019s second most successful franchise.\nMORE:\u00A0Windows 8: Microsoft&amp;#8217;s &amp;#8216;New Coke&amp;#8217;\nThis unbridled success has given Grand Theft Auto\u2019s in-house developer, Rockstar Games, free reign over the studio\u2019s development process. Rockstar takes a considerable amount of time between releasing its games (the latest Grand Theft Auto game was released in 2008), driving up Take-Two\u2019s overall development costs.\n\u201C[Rockstar] fancy themselves James Cameron in everything they do,\u201D says Wedbush Securities analyst Michael Pachter, \u201CEveryone gets a game out in three years; Rockstar doesn\u2019t follow these rules\u2026.\u201D And while the studio\u2019s games are consistently praised, they aren\u2019t guaranteed financial successes. Rockstar produced Max Payne 3.\nAt the very least, the success of Borderlands 2 will make or break Take-Two\u2019s second quarter. Pachter estimates that Borderlands sales to account for 54% of the company\u2019s quarterly revenue. More importantly though is the Borderlands franchise\u2019s potential as another long-term source of revenue for the company.\nBorderlands 2\u2019s September release date comes a little under three years after the original game was published. The game also has major hit potential. Cowen and Company analyst Doug Creutz sees Borderlands as a potential third anchor franchise for Take-Two, along with Grand Theft Auto and the Red Dead franchises, a series of spaghetti western shooters. \u201C[Last quarter] the focus was on the missing earnings, everyone knows that,\u201D Creutz says, \u201COne big hit [Borderlands 2] can pay for everything.\u201D\nAccording to the video game research firm VGChartz, Borderlands 2 is on pace to rack up over 1 million United States unit sales in its first week. That\u2019s over double the first-week U.S sales of Max Payne 3.\nMORE:\u00A0Kids&amp;#8217; tablets prepare for battle\nPart of Borderlands\u2019 potential success has to do with its blend of two popular video game genres, first person shooters and role-playing games. \u201C[Borderlands 2] is a very unique title,\u201D Take-Two COO Karl Slatoff said on the company\u2019s July 31 earnings call, \u201CThere\u2019s nothing else like it out there. It\u2019s a great window for us.\u201D\nTake-Two\u2019s stock has soared over 35% since August 1, reflecting, at least in part, growing enthusiasm about Borderlands. Still, despite its hit potential, Borderlands 2 isn\u2019t a perfect fit for a Take-Two turnaround game.\nTake-Two teamed up with third-party developer Gearbox Studios to create and distribute Borderlands 2, which lowers its share of the profits, says BMO Capital analyst Edward Williams. That\u2019s a smaller slice of revenue for the company at a time when packaged video game profits are already struggling. According to the NPD group, industry sales dropped 20% in August, a dip that\u2019s part of a larger trend as gamers wait for a new generation of consoles to hit stores.\nTake-Two must also escape the considerably large shadow of Grand Theft Auto. \u201CTake-Two is a Grand Theft Auto company,\u201D say Edward Woo, an analyst at Ascendiant Capital Markets. \u201CWhile the other games are useful, they don\u2019t have as much of an impact.\u201D"^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2012/09/21/take-two-looks-for-life-beyond-grand-theft-auto/?section=money_topstories>