A $500 Million Week for Grand Theft Auto

Does Take-Two has such a week at least once a year? Perhaps - yes..

While $500 million in sales is extremely impressive, they're still in the red when it comes to net income: http://finance.google.com/finance?fstype=ii&q=NASDAQ:TTW...

Additionally, GTA sales aren't recurring each year and although the GTA effect will certainly help them this year there's a lot of time between GTA releases to account for. I'd say $2 billion is pretty reasonable for a company that lost $138 million in FY07.

The game development company I worked for until a few months ago was bought out in early 2007, at a valuation that was far below the total value of the development contracts it was doing. I'd estimate the valuation to have been about a third or quarter of yearly revenue, although I had nothing to do with the financial side or the acquisition, so I might be somewhat off.

Basically, there seems to be very little confidence that most game companies will ever be sustainably profitable. It's the hit-drivenness and therefore riskiness of the business that's discouraging everyone from investing. There is a slow trend towards smaller development budgets, but it's certainly not coming from within the existing players, profitable or not. (let's face it, having ~70 people work on one project for 2½ years is pretty insane if you have no idea whether anyone will even like it)