GT Interactive To Report Development Costs in Ongoing Shift to Publishing
GT Interactive [GTIS] will for the first time break out how much it spends on development when it reports financial results later this year, CEO Ron Chaimowitz tells MMWIRE.
It's a sign of the growing importance of internally developed titles and the importance GT places on publishing, as opposed to distribution. Most entertainment software publishers break out R&D expenses in their financial reports, Furman Selz analyst Stewart Halpern says.
When it reports results for Q1 '98, the company will reveal that it is budgeting 15%-20% of what it expects will be its annual publishing revenue on R&D, Chaimowitz says. He declines to reveal how much revenue is expected, but CIBC Oppenheimer analyst Robert Fagin forecasts GT generated about $308m from publishing last year.
Most of the development budget will go to internal studios SingleTrac, CaveDog Entertainment, Humongous Entertainment and Oddworld Inhabitants. Chaimowitz and analysts agree that 15%-20% is within the industry average.
Internal development is playing an increasing role for GT, particularly since it's losing work from two independent developers, Apogee Software/3D Realms and Epic MegaGames, to new publishing venture Gathering of Developers (g.o.d.).
GT is headed in the right direction by ramping up internal development, but "the question is whether they can ramp it quickly enough ... in the next couple of quarters," Fagin says, noting that GT has talked about increasing internal capabilities since the last E3 in June.
CaveDog, which GT established from scratch last year, is set this year to deliver two add-on products for its debut title, Total Annihilation, as well as Total Annihilation II, Chaimowitz says. It is slated to deliver three or four titles next year, he adds.
In addition, GT is increasing efforts at edutainment division Humongous. It's doubled the development staff to about 110 and will release six titles this year, as opposed to four last year. GT is set to report financial results for Q4 '97 and the full 1997 on Feb. 17. (GT Interactive, Ron Chaimowitz, 212/726-6500; Furman Selz, 212/309-8200; CIBC Oppenheimer, Robert Fagin, 212/667-7000) |
