Take-Two has announced that 2K Games and Firaxis Entertainment are delaying Marvel’s Midnight Suns, the XCOM studio’s superhero-themed turn-based tactical title.
The news comes from its first-quarter financial results for fiscal year 2022, which also contained data about Zynga’s performance since it was acquired by Take-Two in May 2022.
The delay of Marvel’s Midnight Suns also comes with the news that the Nintendo Switch and last-gen console versions of the game will be released “at a later date.” Midnight Suns will land sometime later in fiscal year 2023, the last day of which is March 31, 2023.
It’s the latest in a number of high-profile delays from triple-A game studios. Take-Two states that the game was delayed to “ensure the teams at Firaxis Games and 2K deliver the best possible experience for [their] fans.”
A Twitter account for the game shared the news with one additional bit of context: Midnight Suns is apparently “the biggest game” the team has ever made.
Important update from the Midnight Suns team pic.twitter.com/79yVfzpDED
— Marvel’s Midnight Suns (@midnightsuns) August 8, 2022
That’s pretty interesting given that Firaxis’ other franchises (Civilization and XCOM) are also fairly large and expansive games.
Take-Two adds a new financial metric
During the three-month period ending June 30, 2022, Take-Two’s GAAP net revenue increased 36 percent to $1.1 billion, while net bookings (digital in-game spending) grew 41 percent to $1 billion. The company did see a net loss in the first quarter that totaled out at $104 million. It’s a 31 percent improvement on net loss it experienced in Q1 of fiscal year 2022, which was $152.3 million.
The company is also using a new accounting metric called EBITDA (earnings before interest, taxes, depreciation, and amortization) as a financial measurement. Its EBITDA for Q1 2023 was $52.2 million.
Take-Two also issued an updated financial outlook for the upcoming fiscal year, but that’s not just because one notable game was delayed. In May 2022, Take-Two completed its $12.7 billion acquisition of casual game publisher Zynga, and now is adding its financial results to its balance sheet.
The company is anticipating between $5.7 to $5.8 billion in revenue, and a net loss ranging between $438 to $398 million. Its EBITDA is anticipated to land between $499 and $548 million. CEO Strauss Zelnick says that the company is anticipating it will earn between $5.8 and $5.9 billion in net bookings.
It would seem that’s not the outcome that investors were hoping for. Shares of Take-Two stock dipped in after-hours trading, diving to as low as $116 per share after ending the day at $125 per share. That’s still within the normal bounds of where its stock is operating. The lowest it dropped was on May 10, 2022, when it went to $106 per share. It’s hovered between $116 and $133 ever since.
How’s Zynga doing for Take-Two?
Take-Two and Zynga’s fates are now intertwined, though now that Zynga is a subsidiary of the larger publisher, we’re going to learn a lot less about how the overall business is performing. Still, we have some key metrics.
Zynga titles Empires & Puzzles and Toon Blast joined the ranks of Take-Two’s largest contributors to net revenue. That list normally includes Grand Theft Auto Online, Grand Theft Auto V, Red Dead Redemption 2, etc. Zynga’s Turkish hyper-casual publisher Rollic also joined that list, though no specific titles were revealed.
In Zelnick’s comments about Take-Two’s expanded net bookings, he credited the improved performance to Zynga joining the publishing.
There is one notable metric you can spot in Take-Two’s revenue reports that indicate how Zynga is boosting its financial profile: in-game advertising. In Q1 2022 (last year’s results), Take-Two only pulled in $17 million in in-game advertising revenue.
This year, it earned $83.2 million in in-game advertising revenue.
Game revenue also took a possibly-Zynga-driven jump ($796 million to $1 billion), but there’s a lot more obvious variables that could be at play in that trend.
Before readers invested in Take-Two start salivating at the though of more advertising revenue, just remember that both Apple and Google have changed their policies for data tracking, which has had a big impact on advertising revenue on mobile devices.
That field may become a wild west in the months ahead.