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New 'Grand Theft Auto' Jacks Take-Two Stock

Shares of Take-Two Interactive Software surged Tuesday as the company confirmed the long-rumored next installment in its hit "Grand Theft Auto" series is on the way.

The logo for "Grand Theft Auto V" festooned the Website of Rockstar Games, the developer of the series, teasing a Nov. 2 release for the first trailer for the game. And despite the lack of a release date, plot information or any other details about the title, the publisher's stock was up nearly 7 percent in midday trading.

Grand Theft Auto IV
Source: Take Two Interactive Software
Grand Theft Auto IV

While it has often been shrouded in controversy, the "Grand Theft Auto" series is one of the most popular and successful game franchises around. Long before "Halo" and "Call of Duty" were setting sales records, "GTA" games were the talk of water coolers as well as game forums. (Related: The 'Battlefield 3' Clash)

To date the six games in the series have sold over 114 million units—and "GTA V" is widely expected to be the biggest installment to date, financially. Sterne Agee analyst Arvind Bhatia estimates Take-Two could see sales of up to 25 million copies during its first year.

The last installment in the game - "GTA IV"—sold 17 million units in its first year. Since that time, the install base of Sony's PlayStation 3 and Microsoft's Xbox 360 has grown significantly, as the industry has been through three holiday sales periods – and both systems have had price cuts. Bhatia expects it to be 125 percent higher when "GTA V" is released (another detail not mentioned in today's reveal).

He theorizes that if 90 percent of "GTA IV" owners buy a copy of "GTA V," and only 10 percent of the incremental install base buy the game, then sales would still surpass 20 million units. If so, that could bump Take-Two's earnings from a projected $2.50 per share to $3 or $4, says Bhatia.

Put another way: Sales of 25 million units would put year one gross sales at roughly $1.5 billion. (By comparison, the worldwide gross of the film Titanic came in at $1.84 billion, according to BoxOfficeMojo.) And "GTA" tends to have long legs at retail.

"Grand Theft Auto IV" shattered entertainment industry sales records in 2008, with first week sales of $500 million. The "Call of Duty" franchise has since reset those records twice (and is likely to do so again this year with "Modern Warfare 3"). But "Grand Theft Auto" is still incredibly powerful and could set an even higher bar.

The big question for shareholders is when the game will hit store shelves. Rockstar is a development team that does not release games with an investor-centric viewpoint, instead focusing solely on meeting its own exacting standards before allowing players access.

Analysts generally believe "GTA V" will be a late 2012 release, though most allow for the possibility that it could slip until early 2013. That could open up a big window of opportunity for Nintendo .

While Nintendo's Wii is nowhere near powerful enough to run an optimized "GTA" game, the forthcoming Wii U, expected to launch next Christmas, will support high definition graphics and be at least as powerful as an Xbox 360 or PS3. A launch on that system that occurs simultaneously with the other high definition consoles would go a long way in mending Nintendo's reputation with the core gaming community, which has felt somewhat abandoned by the Wii.

While Tuesday's announcement was noteworthy, clues have been building that a "GTA" announcement was coming. In late February, with the registration of several domain names by Take-Two– specifically, LifeInvader.com, CashforDeadDreams.com, SixFigureTemps.com, StopPayingYourMortgage.com and HammersteinFaust.com. Though it was hardly conclusive, each had a GTA ring to them, as the game likes to tweak pop culture touchstones.

Then in March a casting call for voice actors listed a number of roles that seemed to fit into the GTA universe, such as "Jose," a 30-40 year old "white creepy man who thinks that technology is a poison against the wilderness" and "James Pedeaston," a 40-45 year old "man-boy love activist who just got released from an Indonesian prision." (The Pedeaston character was actually a part of GTA IV.)

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