Is 'Grand Theft Auto' Running Out of Gas?

Things still move fast in Liberty City—but not nearly as fast as they did a year ago.

Make no mistake: The “Grand Theft Auto” franchise, which has set its last few games in the fictional metropolis, is still one of the largest brands in the video game industry.

But lately, gamers have seemed a bit less interested in the series that once defined cool—and shattered boundaries.

“Grand Theft Auto IV” – for Microsoft’s Xbox 360 and Sony’s PlayStation 3—was a sales monster.

Since its release a year ago, the game has sold over 13 million copies.

There was no reason to think momentum would slow, but when Take Two Interactive Software released “The Lost and the Damned,” a $20 downloadable add-on to “GTA IV” via Xbox Live in February, things got real quiet.

To date, neither Microsoft nor Take Two has released sales numbers for the digital download, but analysts speculate the number to be at or below the 1 million mark.

That’s … ok, but it’s hardly the barnburner the industry was expecting.

To put it in perspective, when Activision released a digital add-on for “Call of Duty 4” in early April, it sold over 1 million copies in just nine days.

A second “GTA IV” downloadable add-on pack is coming—part of the $50 million exclusivity deal Microsoft signed with Take Two for the content.

But, to date, there has been a distinct lack of information from the companies – and a greater lack of buzz about the content from gamers.

Things didn’t get much better when Take Two (and developers Rockstar Games) released “Grand Theft Auto: Chinatown Wars” for the Nintendo DS in March.

The game bombed – selling only 87,000 copies that month.

While Nintendo took the highly unusual step of defending the performance of a third-party publisher game after those numbers came out, some retailers don’t seem to be convinced.

“Chinatown Wars” carries a retail price of $34.99 – but Best Buy has cut the price nearly in half, and is currently selling it for $19.99.

Price cuts for software aren’t unusual. For AAA games, though, they usually don’t happen two months after release. Three to nine is more the norm.

So what’s happening here? Part of the blame can be pointed at the changing face of gaming.

While the hardcore gamer is still alive and well, the influx of casual gamers has shifted where the gaming population as a whole is spending its money.

During the last console cycle, the PlayStation 2 was the king of the hill, vastly outselling both Microsoft and Nintendo. And “GTA” was one of the PS2’s preeminent titles.

Today, it’s the Wii that’s dominating the sales chart. And the PS3 is far behind, largely due to its $400 price tag. (Having the game also available on the Xbox 360 helps mitigate the shortfall somewhat, but not enough.)

“The limited success of the PlayStation 3 has had an impact on a number of franchises,” says Colin Sebastian, Senior Vice President of Equity Research for Lazard Capital Markets. “Grand Theft Auto is one of them. … I think the video game market has expanded. Does GTA get a smaller percentage of that market? Sure. But it’s still a strong brand.”

The poor performance on the Nintendo DS may be an offshoot of the same problem.

Mature-rated games are tough sells on the system, which tends to gravitate to the hands of a younger audience.

Reviews for the game were nearly as strong as the ones for “GTA IV” – but the buyers, so far, haven’t been there.

As Nintendo pointed out, some big DS games have had a slow burn—posting miserable first month numbers and eventually building to something respectable.

That’s a hard argument to make with something as influential as “GTA,” though. Given the size of the game’s extensive core fan base, the initial numbers should have been higher.

It’s the radio silence (and perceived disappointing numbers) of the downloadable content that’s the big mystery. Downloadable content works. The “Call of Duty 4” numbers show that.

And the “Guitar Hero” and Electronic Arts published “Rock Band” weekly download packs have proven popular as well.

No one seems to have an answer for why “The Lost and the Damned” didn’t click with most “GTA” fans – but it’s a sure bet they’ll be looking closely at reaction to the next set of episodic content.

Should that underperform as well, investors might begin questioning if the franchise is as ‘grand’ as it used to be.

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