Red Dead’s Virtual Economy Creates Real-Life Woe at Take-Two

(Bloomberg) -- Red Dead Online has a problem with its virtual economy, and that’s taking a real-life toll on the game’s developer, Take-Two Interactive Software Inc.

A Forbes story over the weekend said that the game’s online economy has a “painfully slow” earn rate, meaning it takes too long for characters to generate wealth. The flaws could ultimately cost Take-Two a fortune in lost revenue, writer Paul Tassi said.

The concerns contributed to a decline of almost 8 percent for Take-Two on Monday, marking its biggest intraday drop in nearly two weeks.

Still, the fears may be overblown, said Wedbush Securities analyst Michael Pachter. Red Dead Online is in beta mode -- a publicly available test phase. So there’s time to correct any problems. Pachter estimates that the game will generate $100 million next year.

“I’m confident that they will fix the problems before they launch the actual game,” he said in an email. The Forbes writer “critiqued a beta, with the defense that ‘sometimes beta tests don’t change.’ That’s fair enough, but if this is really as bad as he thinks, they would be fools not to fix it.”

Take-Two said in a statement the current version of the game is the “beginning of an ongoing iterative process” during which it will continue to incorporate community feedback into the product.

“As the evolution and ultimate success of GTA Online has proven, tuning and balancing an online game of this scale takes time and iteration,” the company said, in reference to its popular Grand Theft Auto game.

Rockstar Games, the Take-Two division that publishes both titles, said on its blog that improving the in-game economy was a focus, along with fixing what it called persistent bugs causing some players to be removed from sessions.

In-Game Sales

Selling in-game items online has been a big part of the growth strategy for video-game makers -- and Take-Two in particular. Grand Theft Auto Online alone generated an estimated $758 million in revenue for Take-Two last year, according to a Piper Jaffray Cos. estimate.

The New York-based company is projected to have total revenue of $2.98 billion in fiscal 2019 and $2.86 billion in fiscal 2020, according to the average of analysts’ estimates compiled by Bloomberg.

The broader video-game industry has been on edge in recent days. GameStop Corp. plunged on Friday after predicting a weak holiday season. Other game makers, such as Activision Blizzard Inc., also have seen their shares hammered. After falling 5.1 percent on Friday, Activision fell an additional 4.1 percent on Monday.

©2018 Bloomberg L.P.