2K, a division of Take-Two Interactive (TTWO), and Gearbox Software recently announced a new franchise Battleborn, which is in development. The game is set to be released in Mar 2016 on Microsoft’s (MSFT) Xbox one, Sony’s PlayStation 4 and Windows-based personal computers.
2K and Gearbox Software are well-known as the developer and publisher of the Borderland franchise, which to-date has sold more than 9 million units globally. Much in the lines of Borderlands, Battleborn is a first person shooting game, set in distant future of a make-believe universe. Gamers can play in both competitive as well as co-operative modes.
The new game will help Take-Two solidify its position in the first-person shooting game genre, going forward. The attractive features and interesting storyline of the game will help Take-Two capture console market share amid significant competition from Electronic Arts (EA) and Activision Blizzard (ATVI).
We believe that Take-Two’s robust pipeline is the key growth catalyst for fiscal 2015 and beyond. The company will benefit from the launch of NBA2K15, Evolve, next-gen WWE title, Borderlands: The Pre-Sequel and Civilization: Beyond Earth.
Post the phenomenal success of Grand Theft Auto V (GTA V) in fiscal 2014, the company is expected to benefit from the game’s release on PS4 and Xbox One this fall. The upcoming update to the online version is also expected to boost Take-Two’s top-line growth in the near term.
For fiscal 2015, the company expects non-GAAP net revenue in the range of $1.35 to $1.45 billion, while earnings are expected in the range of 80 cents to $1.05 per share. Both revenues and earnings per share are expected to significantly decrease on a year-over-year basis, due to modest growth expectations from GTA V in fiscal 2015.
Although Take-Two has a healthy product pipeline, we believe that it will be challenging for the upcoming games to repeat the success of GTA V in fiscal 2015. Take-Two is rumored to release the next installment of GTA V in 2017.
Although we believe that GTA has a loyal customer base, a 2017 release will be way too slow to capture market share from the likes of EA’s Battlefield and Activision’s Call of Duty, both enjoying annual iterations that keep the franchises fresh.
Moreover, Take-Two's overdependence on console gaming sales and lack of mobile gaming titles is a major headwind in the long run.
Currently, Take-Two has a Zacks Rank #3 (Hold).
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