Take-Two Releases BioShock DLC - Analyst Blog

Take-Two Interactive's TTWO last downloadable content (DLC) pack for BioShock Infinite, BioShock Infinite: Burial at Sea – Episode Two, is now available for Sony's SNE PS3 and Microsoft's MSFT Xbox 360 console systems.

The BioShock Infinite game, released in Mar 2013, received rave reviews and a high metacritic rating of 94, 93 and 94 for the PC, Xbox 360 console and PS3 versions, respectively. To cash in on this successful launch, TakeTwo Interactive released the game's first content pack in Nov 2013 named BioShock Infinite: Burial at Sea – Episode One.

Although, the DLC was released for almost all the available gaming platforms, the ratings received can be termed moderate. For the PC, Xbox 360 and PS3, BioShock Infinite: Burial at Sea – Episode One received modest ratings of 70, 68 and 76, respectively.

It is noteworthy that reviews and revenues from a particular game are directly related and therefore, we believe the latest DLC release could be a strong revenue generator for the company. That's because the BioShock Infinite: Burial at Sea – Episode Two has a metacritic rating of 84 for the PC version (the PS3 and Xbox 360 ratings were currently not available). DLCs and expansion packs primarily help aging gaming franchises remain fresh for gamers.

Another major benefit of these expansion packs is cost effectiveness. The content packs are mostly delivered online, which costs less than the traditional physical format, as they require minimum packaging cost.

Interestingly, despite the dismal video game sales scenario for the last couple of quarters, revenues from DLCs have grown on a year-over-year basis. According to market research firm Super Data, DLC revenues surged 23.0% year over year in Feb 2014.

Nonetheless, one shortcoming for the BioShock franchise could be the current unavailability of the game on the latest gaming consoles of PS4 and Xbox One. According to an NPD report, the PS 4 was more popular than the Xbox One in Feb 2014 (258K units sold).

Although we expect retail software sales to increase in 2014 (due to new game releases), the long-term outlook remains bleak. According to PwC, worldwide console game sales are expected to grow 4.2% to $26.0 billion in 2013 and 6.4% in 2014.

Among the traditional gaming companies, we believe Electronic Arts EA, Activision and Take-Two Interactive have significant growth opportunities due to their innovative product pipelines in the near term. However, market fragmentation remains a major near-term headwind.

Currently, Take-Two has a Zacks Rank #2 (Buy) while Microsoft and Sony have a Zacks Rank #3 (Hold).