Rockstar Games has ceased manufacturing of the current version of the title and will begin working on a version of the game with enhanced security to prevent the "hot coffee" modifications. This version will retain the original ESRB M-rating and is expected to be available during the Company's fourth fiscal quarter. Rockstar Games will be providing AO labels for retailers who wish to continue to sell the current version of the title.
As a result of the re-rating of the game, Take-Two is lowering guidance for the third fiscal quarter ending July 31, 2005 to $160 to $170 million in net sales and a net loss per share of $(0.40) to $(0.45) to provide reserves for the value of the title's current North American retail inventory. Accordingly, guidance for the fiscal year ending October 31, 2005 is also being lowered to $1.26 to $1.31 billion in net sales and $1.05 to $1.12 in diluted earnings per share.
"Take-Two and Rockstar Games have always worked to keep mature-themed video game content out of the hands of children and we will continue to work closely with the ESRB and community leaders to improve and better promote a reliable rating system to help consumers make informed choices about which video games are appropriate for each individual," said Paul Eibeler, Take-Two's President and Chief Executive Officer. "The ESRB's decision to re-rate a game based on an unauthorized third party modification presents a new challenge for parents, the interactive entertainment industry and anyone who distributes or consumes digital content. Rockstar Games is pleased that the investigation is now settled and they look forward to returning their focus to making innovative and groundbreaking video games for a mature audience."
The scenes depicted in the "hot coffee" modification are not playable in the retail version of the game unless the user downloads and/or installs unauthorized software that alters the content of the original retail version of the title, representing a violation of Take-Two and Rockstar's end user license agreement (EULA) and intellectual property rights. "We are deeply concerned that the publicity surrounding these unauthorized modifications has caused the game to be misrepresented to the public and has detracted from the creative merits of this award winning product," said Mr. Eibeler. Take-Two is exploring its legal options as it relates to companies that profited from creating and distributing tools for altering the content of Grand Theft Auto: San Andreas.
Rockstar Games will be making available shortly a downloadable software patch to render Grand Theft Auto: San Andreas for PC impervious to the "hot coffee" modification. Rockstar encourages parent groups and political leaders to assist with distribution of the patch to prevent the content of the modification from spreading further.
"After a thorough investigation, we have concluded that sexually explicit material exists in a fully rendered, unmodified form on the final discs of all three platform versions of the game (i.e., PC CD-ROM, Xbox and PS2)," said Patricia Vance, president of the ESRB. "However, the material was programmed by Rockstar to be inaccessible to the player and they have stated that it was never intended to be made accessible. The material can only be accessed by downloading a software patch, created by an independent third party without Rockstar's permission, which is now freely available on the internet and through console accessories. Considering the existence of the undisclosed and highly pertinent content on the final discs, compounded by the broad distribution of the third party modification, the credibility and utility of the initial ESRB rating has been seriously undermined."
In addition to directing retailers to cease all sales of the game, Rockstar has agreed to take the following ESRB-mandated corrective actions:
- Offer retailers the option of either re-stickering existing inventory with an AO (Adults Only 18+) rating, or exchanging all unsold inventory for new versions of the game that has the hidden content removed and the original M rating intact.
- Make a downloadable patch available to all consumers who have previously purchased the PC version of the game, which will make the modification that unlocks the material inoperable.
- Grand Theft Auto: San Andreas was originally released with an M (Mature 17+) rating with Strong Sexual Content, Intense Violence, Strong Language, Blood and Gore, and Use of Drugs.
Going forward, the ESRB will now require all game publishers to submit any pertinent content shipped in final product even if is not intended to ever be accessed during game play, or remove it from the final disc. Furthermore, the ESRB calls on the computer and video game industry to proactively protect their games from illegal modifications by third parties, particularly when they serve to undermine the accuracy of the rating.
"The integrity of the ESRB rating system rests upon its accuracy and reliability, and we will continue to do whatever is necessary to protect the public's trust in it. Independent research confirms that the overwhelming majority of consumers find ESRB ratings to be an effective tool to help make informed purchase decisions," continued Ms. Vance. "We encourage every parent to always check the ratings before bringing games home for their families, and to actively monitor what their children play."