Pachter: Take-Two Creative Staff A 'Tempting Target'

Ahead of publisher Take-Two's planned July 9th call on the state of its "100 day plan," Wedbush Morgan's Michael Pachter has told Gamasutra that reducing studio staff remains a "pretty tempting target," and says fallout from Manhunt 2 will likely turn off Wii owners. In a statement, Take-Two said Monday would see the first official status update on the new board of directors' "100 day plan," a five-point plan to revitalize the company first announced in April. In June, the company announced some of the first concrete moves in that plan, "[realigning] label and studio administrative functions to report to the respective departments at the corporate level," and "[consolidating] the management, marketing and business development operations of the 2K and 2K Sports labels on the West Coast," as Wedbush Morgan's Michael Pachter had speculated some weeks earlier. We talked to Pachter and asked his opinion on the board's progress, and what he believes the future holds for the publisher. "They're doing what they're supposed to do," said Pachter, "finding ways to trim expense without compromising the business. When I said studio closures, I meant physical office closures for development staff. We've seen admin cuts on the 2K Sports side, and I think we'll ultimately see consolidation of development personnel." "In particular," he speculated on the publisher's recently released The Bigs and other 2K Sports titles, "I think that the brand extension efforts for baseball will yield little, and expect that All-Pro Football will be a flop, so we may see further consolidation of sports development. In addition, there are teams like the tennis (Top Spin) group that probably will be redundant." Speaking on the publisher's headline studio, Pachter added, "I don't expect a lot of consolidation on the Rockstar side, nor do I expect tremendous consolidation on the 2K Games side. In order to continue with cost cutting, management has to cut headcount, and the studios are a pretty tempting target." In June, Pachter said he believed that the chances of a "flawless" execution of the company's turnaround were less than 50 percent, adding that "without better decisions about games," the financial group was "not optimistic that Take-Two can generate the earnings power necessary to justify its current share price." Asked what better decisions he thought the company could be making, Pachter admitted that "hindsight is a great tool. If they had it to do over again, I'd bet that we would not have seen Charlie and the Chocolate Factory, The Da Vinci Code, 24, Ghost Rider, and maybe not even Fantastic Four." "I think that they would have accelerated development of Manhunt and Max Payne," he continued, "and delayed development of new properties like The Warriors and Bully until the installed base of next generation consoles was bigger." Finally, we asked how recent ratings problems with Take-Two's forthcoming Manhunt 2, now being retooled to avoid a console-prohibited adult-only rating in the US, and to gain a UK rating altogether, will affect the publisher. "Manhunt 2 received an AO rating for two reasons: the ESRB is hyper vigilant, and the Rockstar guys answer to no one," Pachter offered. "I think that the game is likely not a lot more violent than its predecessor, but the ESRB is not taking any chances with Take-Two games, and will carefully scrutinize all of them." "That's political reality," he concluded, "and the company has to recognize that it is working under a microscope from now on. They'll fix Manhunt 2, but I don't see it selling as well as it would have, particularly since it is a PS2/Wii game. The hardcore will have abandoned the PS2 by the time the game is ready, and the publicity was likely a turnoff for Wii owners."