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    Take-Two and FTC make nice.

    Take Two promises it'll be a good boy from now on. Generally my reaction to this is 'meh', but the blurb at the bottom is disturbing. If L.A. wins its civil case regarding game content, I wonder about the precedent leading to other communities being able to sue companies over objectionable content.



    By RON HARRIS, Associated Press Writer

    SAN FRANCISCO - Take-Two Interactive Software Inc., publishers of the popular video game "Grand Theft Auto: San Andreas," agreed to settle Federal Trade Commission charges for failing to disclose that animated sex scenes were hidden on the discs.

    The deal requires Take-Two and Rockstar Games Inc., the developer of the game, to properly notify consumers of racy content on future games and not to misrepresent rating or content descriptions.

    The companies face fines of up to $11,000 per violation if they violate the order, once it becomes final.

    When the lurid content was first discovered, the two companies initially said it was the work of third-party video game modifiers.

    They later acknowledged it was their work after The Associated Press tracked down a Dutch programmer who developed software to unlock the sex scenes. The companies said the content was never meant to be accessed by consumers during normal game play.

    "Parents have the right to rely on the accuracy of the entertainment rating system," said Lydia Parnes, of the FTC's Bureau of Consumer Protection. "We allege that Take-Two and Rockstar's actions undermined the industry's own rating system and deceived consumers."

    The Commission voted 5-0 to accept the agreement, which was announced Thursday. It is subject to a 30-day public comment period before becoming final.

    Take-Two did not immediately return calls seeking comment and Rockstar Games did not immediately reply to e-mails from The Associated Press.

    The game was originally rated "M" (Mature) for its depiction of blood, violence and sex themes. The Entertainment Software Rating Board changed the rating to "AO" (Adults Only), and major retailers nationwide hastily removed the title from their shelves, following the game makers' admissions.

    Take-Two claimed it incurred $24.5 million in costs associated with returns of the game, which generated $100 million in sales within its first month of release in October 2004.

    Published rating-board rules at the time the game was released did not require the disclosure of the sex content in question, said Keith Fentonmiller, an attorney for the FTC who worked on the case.

    "But it's our belief that there was a duty to consumers to let them know about important content that was on the game," Fentonmiller said Thursday.

    After the hidden sex scenes made headlines, the political fallout hurt the whole gaming industry.

    Sen. Hillary Rodham Clinton, D-New York, applauded the ratings change forced on the game, but said she was disturbed the steamy sex content was on store shelves in the first place.

    In January, the Los Angeles city attorney's office sued the makers of "Grand Theft Auto: San Andreas" over the hidden sex scenes, seeking civil penalties from Take-Two. That case remains active, the city attorney's office confirmed Thursday.
    So you're a fish out of water...
    Keep swimming.
    What else can you do?

    #2
    Re: Take-Two and FTC make nice.

    Serves them right for trying to pull one over on us.

    Comment


      #3
      Re: Take-Two *****-slapped by Wall Street.

      I didn't think it was worth a new topic for this. More bad news for Take-Two:


      By BARBARA ORTUTAY, AP Business Writer

      NEW YORK - Shares of Take-Two Interactive Software Inc. tanked Friday, a day after the video game maker best known for the popular and bloody Grand Theft Auto series, posted a second-quarter loss far wider than Wall Street had expected.


      Shares plunged $2.94, or 18 percent, to clost at $13.83 Friday on the Nasdaq Stock Market, at the low end of a 52-week range of $13.64 to $29.60.

      On Thursday after the markets closed, the company posted a loss of $50.4 million, or 71 cents per share, including accounting charges of 24 cents per share. But even without the charges, the results were far below the loss of 11 cents per share analysts polled by Thomson Financial were expecting. Sales rose 20 percent to $265.1 million.

      The quarter's product mix weighed heavily toward lower-margin license titles in the company's publishing business, hurting profitability despite higher sales. Software development costs also were higher than a year ago.

      "Since the company does not give guidance, it's not fair to call this a 'miss', but the big losses despite a decent revenue number are troubling," wrote UBS analyst Michael P. Wallace in a note to clients.

      Chief Financial Officer Karl Winters said during the company's conference call that, given its short-term uncertainty, Take-Two no longer has the visibility to give detailed guidance.

      The company doesn't expect to return to profitability until the fourth quarter. Paul Eibeler, chief executive, said the company is "taking a small break" from issuing guidance while business factors and conditions normalize.

      Wallace, who rates Take-Two "Neutral," said the quarter's adjusted loss of 47 cents per share, excluding charges, was mostly due to writing off development costs. He added that the quarter's heavy losses came despite a top-selling game, "Elder Scrolls," and Take-Two's third-party exclusive rights for a baseball game. The company "paid a lot of money for the third-party exclusive, but got beaten to the market by Sony and has been outsold by them on the PlayStation 2," Wallace wrote.

      Citigroup analyst Elizabeth Osur recommended that investors shed the stock, and downgraded Take-Two to "Sell" from "Hold."

      Osur lowered her 2006 outlook to a loss of $1.24 per share before stock options costs, from a previous forecast of earnings of 14 cents per share. For 2007, she now expects earnings of 81 cents per share, down from the prior projection of $1 per share.

      "Without guidance from management regarding the breadth of the release slated next year and even potentially incomplete data for this year, we find it difficult to forecast earnings for the coming years," she wrote in a note to clients.

      Osur lowered her 2006 outlook to a loss of $1.24 per share before stock options costs, from a previous forecast of earnings of 14 cents per share. For 2007, she now expects earnings of 81 cents per share, down from the prior projection of $1 per share.

      Consensus estimates, which reflect stock options costs, are flat for 2006 and earnings of 77 cents per share in 2007, according to Thomson Financial.

      Take-Two said video game sales are weakening and prices are declining. The industry has seen a slump in recent months as players await the release of Sony Corp (NYSE:SNE - news).'s PlayStation 3, set for November, to buy new games. Nintendo is to announce the release date of its new console, Wii, in September.

      Also on Thursday, Take-Two agreed to settle Federal Trade Commission charges for failing to disclose that animated sex scenes were hidden in its "Grand Theft Auto: San Andreas," game.

      Under the deal, Take-Two and its Rockstar Games subsidiary, which developed the game, must notify customers of any hidden sexual content on future games, and represent rating or content descriptions accurately. The company received no penalties, but faces fines up to $11,000 per violation if it breaks the order.

      The game is now rated "AO," or "Adults Only," after the Entertainment Software Rating Board, an industry body, changed it from "M," or "Mature" last year after a Dutch programmer unlocked the hidden sex content.

      The company has since released a new version of "St. Andreas" without the hidden content.
      So you're a fish out of water...
      Keep swimming.
      What else can you do?

      Comment

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