Microsoft's Grand Theft Auto exclusive: Is it worth $25M? |
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The Xbox 360's exclusive Grand Theft Auto IV add-on, "The Lost and Damned," debuted yesterday to generally positive reviews. That's good news for Microsoft -- especially considering how much the company paid for rights to the extra downloadable episode.
Seth Schiesel's New York Times review gives you a good sense for what $25 million buys a console company these days.
“The Lost and Damned” suffers from a few curious and unfortunate design decisions — players often have less freedom than in the original — that will probably prompt most to return to the original game after completing the new episode’s main story. But there is no question that it is the most fully realized, thoroughly produced and substantial downloadable add-on yet released for a console game. Anyone who enjoys Grand Theft Auto IV should get it."
For the record, we know how much Microsoft paid because of comments made by Take-Two Interactive finance chief Lanie Goldstein back in 2007. According to those comments, the company agreed to pay another $25 million for the second exclusive episode.
Of course, there are many costs and considerations, and the calculations I'm about to propose would make an accountant shudder. But consider that the episode sells for the equivalent of roughly $20 in Microsoft points. Based on that, Microsoft needs 1.25 million Xbox 360 users to purchase the content to generate enough revenue to match what it paid for the exclusive rights.
That seems relatively reasonable considering that, according to NPD data, more than 1.8 million copies of Grand Theft Auto IV were sold for the Xbox 360 in the U.S. in the first five days alone. And that doesn't count the extra marketing benefit of the deal. More than a few additional Xbox 360s were sold because hard-core gamers knew the company secured the rights to this extra content.
So maybe, in hindsight, Microsoft wasn't so crazy after all?
Todd Bishop is co-founder and managing editor of TechFlash. He has covered Microsoft and the technology industry for more than five years, most recently as a daily newspaper reporter and blogger based in Seattle.
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