Why Take-Two Is Okay Losing $53 Million On A Cancelled Game

Although video games were made on more modest budgets back in the medium's infancy, modern day game development has become more and more expensive due to higher demand and the potentially unfathomable digital sales they can net post-release. Within that in mind, $53 million still represents a large budget for a game. But it seems one company is fine with letting such an expensive project die.

Take-Two Interactive — the parent company of AAA developers like Rockstar Games and 2K Games — is one of the biggest video names in the gaming biz. Having overseen the development and publishing of some of gaming's most popular and lucrative titles — including "Grand Theft Auto 5", the "Bioshock" series, and a litany of 2K Sports properties — Take-Two announced earlier this year that its plan was to release 93 games through the next 5 years. However, at least one of those titles will not be hitting shelves within that timeframe — and whatever it was supposed to be, it was a costly project.

With a huge number of games planned for the next half-decade, it's only inevitable that some of them will fail to go gold due to budgeting, time constrictions, and a plethora of other reasons, not to mention all the challenges presented by the ongoing COVID-19 pandemic. But one could easily presume that big budget, AAA titles — especially ones with budgets that stretch into the middle spectrum of eight figures — would be given some type of priority, or would at least make it to market. Apparently, that isn't the case with every Take-Two project.

Take-Two's press release following the earnings call remained vague on why the project was so costly and went unfinished, stating only that the "cost of goods sold included a $53 million impairment charge related to the Company's decision not to proceed with further development of an unannounced title in its pipeline."

In its own report on the earnings call, however, ComicBook turned up some more details, reporting that Take-Two CEO Strauss Zelnick said that the company had allocated "a lot of time and resources to the property," but that the game ultimately didn't meet the standard the team was were hoping for. "We're trying to build tentpole franchises," Zelnick apparently told shareholders, "And in certain instances, we don't have the confidence that something will reach that level of excellence, and therefore we can't proceed." In other words, this didn't seem like the kind of game that would grow into its own series.

As of right now, it remains unknown what specific title Take-Two cancelled. From all reports, it seems that the cancelled game was never officially announced, leading to many gamers and news outlets to speculate. In a since-deleted tweet (per Comic Book), industry insider Nick Baker said that the game in question was likely "Bully 2," a sequel fans have wanted for years.

""I was told last year that they canceled 'Bully 2,'" said Baker. "I mentioned a cancelled game on the podcast a few weeks back that I didn't want to publicly mention. That was it. So I'm guessing that's the cancellation this refers to."

Other reports, however, seem to indicate that it wasn't a Rockstar-produced title at all, and was instead a project from Hangar 13, the developer behind "Mafia 3," and "Mafia: Definitive Edition." This theory was notably reported by Bloomberg's Jason Schreier, who said that sources close to the situation have told him that the project, codenamed "Volt," was essentially stuck in development hell and was hampered by "reboots, technological hiccups and challenges caused by Covid-19."

For most companies, dumping $53 million into a project only for it to be cancelled would have the potential of being a death blow. But for Take-Two Interactive, it is hardly a drop in the bucket. Thankfully for Take-Two, "Grand Theft Auto Online" continues to pull in profit hand over fist.

In May 2021, Journalist Daniel Ahmed tweeted what was allegedly a Take-Two earnings report that revealed the company had made $985 million on "Grand Theft Auto 5" in 2020 alone, averaging out to about $2.7 million per day. Additionally, Take-Two's SEC filing from the same year stated that "Grand Theft Auto 5" continues to sell copies as well, with the game now reaching over 145 billion copies sold worldwide since its release in 2013.

With profit margins like this, it becomes more clear why Take-Two and its subsidiaries aren't too worried about a $53 million project being cancelled. "GTA Online" has the potential to make up for that stalled project in under a month.