Major analyst predicts Xbox 360 GTA IV will outsell PS3 version by a 2 to 1 ratio

Michael Pachter, the biggest analyst in the video game industry says the superior Xbox 360 version will outsell the PS3 version by a 2 to 1 ratio.
Pachter: "We expect around 6 million copies of GTA IV to be sold to Xbox 360 owners"

Janco Partners' Mike Hickey said that Rockstar Games' Grand Theft Auto IV would likely sell 5.8 million units in its first week. Now, in his latest research note on Take-Two, Wedbush Morgan Securites analyst Michael Pachter has issued a similar forecast, predicting that the game will ship six million in its first week and could sell more than nine million during Take-Two's fiscal year, which ends on October 31.

"We estimate that GTA IV is likely to sell over 9 million units during the fiscal year, and think that the company will likely ship 6 million units in its first week, and will sell 3/4 of that amount in a brief period of time. The performance of GTA IV will thus be responsible for more than 100% of Take-Two's earnings for the year, and the game is likely to mask the underperformance of the rest of Take-Two's portfolio," he said. "We think that GTA IV will generate around $450 million of the company's expected $1,073 million publishing revenue this year, and will generate an operating profit of around 30%, or $135 million. At the high end of company guidance, Take-Two will generate operating income of around $130 million, meaning that the game is responsible for 103% of overall company operating profit."

Pachter also questioned the profitability of the downloadable episodic content for the game: "[We think] Take-Two will have to generate over 2 million downloads (assuming a $15 per download price) on the Xbox 360 before it sees any more cash from this content. We expect around 6 million copies of GTA IV to be sold to Xbox 360 owners, and believe that around 65% of Xbox 360 owners are Xbox Live members, so the company has to sell a download to 50% of its addressable market in order to generate cash from the first download. This is possible, but not highly likely."

Elsewhere in the report Pachter noted his disappointment in Take-Two as a whole. GTA IV is the "one glaring exception," he said.

"We think that it is important to point out that U.S. industry software sales have grown by over 58% from the November 2005 – January 2006 period through the November 2007 – January 2008 period, while Take-Two's publishing revenues have declined by almost 23%. This is clearly a company that is losing market share, and as we review the lineup for the balance of 2008 and 2009, we see more of the same type of games we have seen over the last three years," he said. "The company's sports lineup continues to underperform, generating only $32 million of sales (26% of publishing revenues) for the key holiday period. This figure calls into question whether Take-Two can deliver sports revenues of $250 million for FY:08, as management implied in a prior earnings call."