The video game industry today learned that Rockstar's Red Dead Redemption has had one of the biggest openings of any title in this console generation. In fact, only two titles released in the first three quarters of any of the past few years have done this well in their opening month: Capcom's Resident Evil 5 which was released in March 2009, and Rockstar's Grand Theft Auto 4 in April 2008. Yet it's important to point out that those titles were each sequels to well known successful franchises with significant built up pre-orders. Red Dead's predecessor, on the other hand, 2004's Red Dead Revolver, was a relatively forgettable release in terms of sales and attention. This led to low expectations for Red Dead Redemption.
However, that didn't stop Take Two Interactive [NASDAQ:TTWO] from marketing the title heavily and making sure all were aware that it was, "From the Makers of Grand Theft Auto 4." That selling point, along with the fact that reviews were glowing and the Western genre has never had such a highly rated title, may have been the unique formula necessary to produce a rare new mega blockbuster franchise. Considering its relatively unknown name, Red Dead Redemption's success is unprecedented for a third party developer and will certainly raise many eyebrows in the industry. Rockstar is living up to their name in this business.
Another important point about the title is that the multiplayer portion has proven to be extremely popular on charts, so much so that GameStop [NASDAQ: GME] stores are seeing very few trade-ins for their used game inventory on this particular title, meaning buyers are choosing to hold onto their games.
Rockstar San Diego’s last major release, Midnight Club, was a dramatic failure that helped cause Take Two’s value to drop dramatically. Midnight Club had previously been a second pillar to Grand Theft Auto, selling a combined 12 million units. However, racing game popularity plummeted in recent years when casual gamers moved over to Nintendo’s Wii. Now Rockstar San Diego has finally found redemption, indeed, and has created for Take Two a rare blockbuster franchise that can come in between Grand Theft Auto iterations. CEO Ben Feder called it, “a game changer for the company.” If Rockstar San Diego is already working on the sequel to Red Dead Redemption, that statement may prove to be correct.
As an added note, my channel checks and online charts strongly suggest that the game continued to dominate as the number one title on both consoles in the month of June, worldwide. Today's figures confirm that the title likely sold around 3 million in the first 11 days of release worldwide (since U.S. sales are often half of worldwide sales). So it may end up with nearly 5 million sold by the end of Take Two’s quarter in July. Take Two’s guidance seemed to suggest the expectation of only 5 million shipped in the quarter. If 5 million were to actually sell through in the quarter, there will be healthy upside to their guidance.
Disclosure: author holds shares of TTWO
