IP profile: Grand Theft Auto

GTA – THE STATS

Number of iterations: 6 games plus 2 expansion packs for Grand Theft Auto (GTA) 1

Estimated total unit sales: 65 million

Timeline (sales):
1997: GTA (630,000+ units)

1999: GTA 2 (1m+ units)

2001: GTA 3 (12m+ units)

2002: GTA Vice City (15m+ units)

2004: GTA San Andreas (20m+ units)

2005: GTA Liberty City Stories (8m+ units)

2006: GTA Vice City Stories (3m+ units)

Ownership history
1988: DMA Design founded by Dave Jones

1991: Lemmings published by Psygnosis (eventually selling over 10m copies)

1997: DMA bought by Gremlin for £4.2m (long-term GTA rights had already been pre-sold by DMA)

1997: GTA released by Take 2 (North America in June 1998), ASC Games (Asia), BMG Interactive (Europe)

1998: DMA’s Body Harvest released on Nintendo 64, Take 2 acquires GTA publishing rights from BMG Interactive

1999: Gremlin bought by Infogrames for £24m, who sold DMA to Take 2 for the nominal sum of £1 and the assumption of $12.3m in debt. DMA was subsequently integrated into Rockstar Games, becoming Rockstar North

2002: Sony secures 3-year console exclusivity for the GTA series (terms undisclosed). This was later amended and terminated, allowing Take 2 to release it on Xbox

2004: GTA San Andreas becomes the best selling game ever in the US (12m units sold)

2005: Develop indicates Rockstar North generated £71m in sales in the UK alone in 2004

2006: Microsoft secures exclusive downloadable content for GTA IV

Creator(s): Dave Jones (GTA 1) and team.

GAME INCEPTION AND GROWTH
Grand Theft Auto’s roots are relatively humble.

In the late ’90s, Nintendo had asked DMA Design to join its “Dream team” of independent developers to create launch titles for its new N64 platform. The result was Body Harvest, a top-down 2D game involving driving and aliens harvesting human organs that was originally intended as a launch title but delayed until nearly three years after the platform’s launch.

Eventually published in 1998 by DMA’s new owners Gremlin, it did so badly that the company had to announce a profit warning and start assessing its strategic options. Mid-development cycle, DMA harvested the driving gameplay mechanics for a quick interim game, Grand Theft Auto, which took the top-down 2D engine and made a crucial switch of gameplay from the cops’ perspective to that of the robber.

Despite budget production values, relatively primitive graphics (even for the time) and a lukewarm critical reception, GTA was a commercial success in its first two iterations selling over 630,000 (GTA) and 1m units (GTA 2). The game’s violence and perceived immorality immediately caused uproar in the conservative press in Europe and North America. Players enjoyed wide freedom of movement in large cities with endless activities including a range of linear missions, assassinations, robbing banks, driving taxis, shooting strangers, jacking cars and entering a wide variety of buildings. Before the advent of third person perspective 3D in GTA3, the violence was fairly cartoon-like and viewed from a top-down 2D perspective. However, as the game progressed into 3D, the humour became more subtle and the violence more graphic, with deliberate echoes of gang violence found in America’s big cities.

The arrival of 3D and GTA’s launch on PlayStation 2 brought huge global success, resulting in 2002 in a 3-year exclusive deal with Sony. Production values rose sky high as well-known actors were involved in playing characters, 3D perspectives and compelling narratives yanked players deeper into the game, and the gameplay widened to include even more activities including pimping hookers and fighting fires. Increasingly sophisticated, the series began deliberately conjuring memories of bygone days such as Vice City’s 1980s Miami theme, and San Andreas’ 1990’s Los Angeles gang theme. The studio added humorous “those were the days” features which both lauded and satirised US culture including radio stations, commercials, popular music and a dysfunctional urban environment. The inclusion of a deeply buried set of sex scenes in San Andreas caused Take 2 much negative publicity, but, while this story was beyond the publisher’s control, the company has generally encouraged that kind of publicity and looks set to benefit from the eagerly anticipated release of GTA IV on PlayStation 3 and Xbox 360.

COMPANY INCEPTION AND GROWTH
DMA Design was formed in 1988 in Dundee by Dave Jones. The studio had some early successes with games such as Blood Money and Menace, before producing the blockbuster Lemmings in 1991. The Lemmings series of puzzle games became an enduring world-wide phenomenon with over 10m unit sales. DMA had signed the Lemmings rights to long-term publishing partner Psygnosis (later acquired by Sony). DMA Design was itself acquired by Gremlin for £4.2m in 1997, subsumed into a combined development/publishing company with over 300 staff. The publishing rights to GTA were already under contract to BMG at the time of the acquisition and were subsequently sold on to Take 2 Interactive in 1998 but the development talent, technology IP and potential royalty flow from GTA were Gremlin’s.

Gremlin listed on the London Stock Exchange in 1997 shortly after the DMA acquisition but lasted 20 months before poor performance of key titles, in particular Body Harvest, forced a sale to Infogrames for £24m, a lower valuation than its IPO value. The acquisition in part revealed a management team lacking in the experience and capital to play on a world stage increasingly dominated by larger global publishers.

In a complex rights deal, Take 2 acquired DMA from Infogrames for a nominal sum of £1 (but also assumed some $12.3m in company debt), incorporating it into its Rockstar Studios.

The team grew rapidly under Take 2, as the company invested heavily in the development of GTA’s first iteration on PlayStation 2 (GTA 3). More recently, Rockstar Leeds was established (by acquiring Mobius Entertainment for $4.6m) as a new studio to develop PSP versions of GTA.

ANALYSIS
The GTA franchise is an example of a game that grew gradually from modest, local roots to achieve global renown, dominate the charts upon every release and become one of the most valuable games IPs ever created. The kernel of the game – driving around a completely navigable environment committing crimes – has not changed substantially since inception. This remained true even when the game took the leap from limited top-down 2D graphics to full 3D environments. GTA did become more refined, even subtle at times, tapping into an extremely British undercurrent of humour and cultural commentary.

Much of GTA’s success can be credited to Take 2’s faith in DMA, its recognition of GTA’s potential and its understanding of the drivers of its success. GTA’s consistent success also relies on the publisher’s marketing savvy. Marketers have used outraged parents, politicians and the right wing press as brand vehicles as much as normal marketing channels to target the young male demographic. Publicist Max Clifford helped ensure that the media was saturated with and outraged in its coverage of the first game, an approach which has persisted.
Not all the publicity has produced positive results – Take 2 endured product recalls and management upheaval following revelations about hidden sex scenes within San Andreas.

Take 2 has become the target of numerous campaign groups including the conservative Christian lobby in the US, and the similarly provocative Bully and Manhunt games have been banned in multiple territories, either by governments or retailers. The company has suffered significant share price instability following financial underperformance and, most recently, the delayed GTA IV launch. In parallel, shareholders managed to oust various board members, including CEO Paul Eibeler.

GTA 3 was also ground-breaking in being one of the first world-class games built with third party middleware – Criterion’s RenderWare – rather than the originating studio’s technology. This obviated the need for Rockstar North to spend years and millions of pounds researching and developing its own 3D technology and allowed it to focus on maximising the quality of the game’s content and gameplay. GTA 3’s use of RenderWare proved pivotal for Criterion and inspired a surge of interest in middleware.

Given the number of companies that, at one stage, owned DMA Design or the publishing rights to the GTA IP, Take 2’s acquisition of the publishing rights in 1998 from BMG Interactive (for an undisclosed but probably low sum) and then DMA Design in 1999 for just £1 must represent two of the greatest deals in games industry history.

[img :199]From the release of the first GTA title in 1997 until the end of October 2007, the GTA IP generated $2.1bn in net revenues for Take 2. At its height, the IP generated $458m (38% of net revenue) in a single financial year (2005) and it remains a significant cash cow for Take 2 (see image, right, for complete analysis of Take 2 revenues through GTA’s lifecycle).

GTA IV looks set to continue this trend, appearing to retain the quality of gameplay, cutting edge production values, new delivery mechanisms (such as exclusive downloadable content on Xbox 360), and strong marketing. Although the delay caused Take 2 problems on Wall Street, it benefits from reaching a larger installed base on current generation console platforms. Despite this, the installed base will not have reached the level attained by PS2 at San Andreas’ launch and so few analysts are forecasting unit sales to exceed even Vice City levels – although revenues could reach record heights due to the greater average sales price.

KEY CONCLUSIONS

• Take 2 was shrewd in first acquiring the publishing rights to several iterations, then acquiring the entire share capital of DMA Design for just £1 (plus $12m in debt). DMA Design/Rockstar North and the GTA series have generated over $2bn in net revenues for Take 2.
• Take 2 has consistently marketed GTA to maximise controversy, generating scandalised headlines and raising the games’ appeal for its target market – young males.
• GTA 3 was one of the first blockbuster games to utilise middleware (Criterion’s RenderWare), which kept costs down and allowed designers to focus on gameplay not technology.