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Grand Theft Auto maker announces first game in five years

Rockstar Games announces new game Red Dead Redemption 2.
Source: Rockstar Games

Rockstar Games, the creators of the "Grand Theft Auto" series, has announced its first new game in five years. And investors in the developer's parent company Take-Two Interactive Software are already salivating.

After a two day tease campaign on Twitter, Rockstar formally unveiled "Red Dead Redemption 2" Tuesday, the sequel to its critically lauded and fast selling 2010 shooter that was set in the old West. A trailer for the game will release on Thursday.

Shares of Take-Two spiked Monday when Rockstar began its Twitter teaser campaign. The stock is up nearly 6 percent from its close on Friday afternoon, but was essentially flat on Tuesday.

The game will be released in the fall of 2017 for Sony's PlayStation 4 and Microsoft's Xbox One. At this time, the company has not announced a PC version of the game (though Rockstar typically ports its titles to PC a year or so after console launches).

"With 'Red Dead Redemption 2,' the team is working hard to push forward our vision for interactive entertainment in a truly living world," said Sam Houser, founder of Rockstar Games, in a statement. "We hope to deliver players an epic experience that builds upon everything we've learned making games."

Gamers and analysts have long-expected Rockstar to confirm that a sequel to "Red Dead Redemption" was its next title, but the developer has remained steadfastly silent. Its last title, "Grand Theft Auto V," was announced in 2011. That game has gone on to sell more than 65 million copies since its 2013 release.

"Red Dead Redemption" is no "GTA". But it's still a monster franchise. The previous installment of the game has sold 14 million copies as of August 2015. And analysts say they expect "RDR 2" to be a big hit as well.

Michael Pachter of Wedbush Securities says he expects the game to sell 10 million copies to retailers in its first quarter, and says catalog sales of the game will be a solid earnings driver for several quarters beyond that.

Ben Schachter of Macquarie Securities is even more optimistic, modeling in 12 million units sold in the first quarter, and says that number could go higher.

"There could be additional releases alongside the game, such as a reissue of the old game (now backwards compatible on Xbox One) and a possible VR experience on PlayStation VR," he said. "We also expect the game to have features similar to 'GTA Online,' which has been positive for monetizing 'GTA V' three years beyond its release."

That online component seems likely. Pachter has projected that "GTA Online" could add $250 million per year to Take-Two's bottom line for several more years and Take-Two CEO Strauss Zelnick has called the online portion of that game "a watershed moment for our company".

While analysts are still modeling what the addition of a new Rockstar title will ultimately mean for Take-Two's earnings, Eric Handler of MKM Partners has said in the past that the announcement of a new "Red Dead" game could drive fiscal 2018 earnings of $3 or more.