A Look at How One of the Largest Record Companies in the World Once Owned Rockstar Games and Sold it For a Pittance (musicbusinessworldwide.com) 49
Question: what is entertainment's highest-grossing weekend debut of all time? Hint: It only took place two weeks ago. From a report: It was claimed by a Western-themed video game called Red Dead Redemption 2 -- the second in a series dubbed 'Grand Theft Auto on horseback' -- which generated over $725m in just three days. The wording above ('highest-grossing weekend debut') has been carefully chosen. Because the highest-grossing entertainment launch of all time actually kicked off on a Tuesday, in September, 2013. That launch was Grand Theft Auto V, another video game, which grossed more than $1bn during its opening 72 hours on sale. Both Red Dead Redemption and Grand Theft Auto are made by Rockstar Games -- a New York-HQ'd interactive entertainment company famed for its ability to bring filmic sophistication to the world of PlayStations and Xboxes, and for its ability to generate billions upon billions of dollars by doing so.
Ready for this? The Grand Theft Auto franchise, and the core team behind Rockstar's success, were, unbelievably, both once part of the music business. They were allowed to leave 20 years ago. For an absolute pittance. Let's rewind. Back in 1990, London-born Sam Houser, aged 19, landed a dream first job -- working in the post-room at BMG's UK HQ. Houser then supplemented his university studies by continuing to work at BMG for the next four years, focusing on pop music videos and VHS releases. By 1994, he'd graduated, and took a full-time role within BMG's new interactive entertainment division. Houser, it turned out, had a natural talent for 'A&R'ing' video games -- spotting titles that would sell big and signing them up as a label would an artist -- and, by 1996, he was named Head of Development at BMG Interactive in the UK. Got your palm located somewhere roughly near your forehead? Good. Prepare for the two to forcibly meet.
Interactive released Grand Theft Auto, a 2D action-adventure game, which saw players fulfilling the objectives of criminal overlords across three cities. The title was a commercial smash in the US and Europe -- yet it emerged amid serious corporate turbulence. In March 1998, convinced that its foray into video games had been a waste of time and money, BMG -- under the instruction of owner Bertelsmann -- agreed to sell off BMG Interactive. According to Sam Houser, BMG let the company go, to New York-based Take Two Interactive, for a total consideration of $9m. (For those who can see where this narrative is going: Red Dead Redemption 2 generated that $9m back within an hour of going on sale last month.) The story doesn't end there.
Ready for this? The Grand Theft Auto franchise, and the core team behind Rockstar's success, were, unbelievably, both once part of the music business. They were allowed to leave 20 years ago. For an absolute pittance. Let's rewind. Back in 1990, London-born Sam Houser, aged 19, landed a dream first job -- working in the post-room at BMG's UK HQ. Houser then supplemented his university studies by continuing to work at BMG for the next four years, focusing on pop music videos and VHS releases. By 1994, he'd graduated, and took a full-time role within BMG's new interactive entertainment division. Houser, it turned out, had a natural talent for 'A&R'ing' video games -- spotting titles that would sell big and signing them up as a label would an artist -- and, by 1996, he was named Head of Development at BMG Interactive in the UK. Got your palm located somewhere roughly near your forehead? Good. Prepare for the two to forcibly meet.
Interactive released Grand Theft Auto, a 2D action-adventure game, which saw players fulfilling the objectives of criminal overlords across three cities. The title was a commercial smash in the US and Europe -- yet it emerged amid serious corporate turbulence. In March 1998, convinced that its foray into video games had been a waste of time and money, BMG -- under the instruction of owner Bertelsmann -- agreed to sell off BMG Interactive. According to Sam Houser, BMG let the company go, to New York-based Take Two Interactive, for a total consideration of $9m. (For those who can see where this narrative is going: Red Dead Redemption 2 generated that $9m back within an hour of going on sale last month.) The story doesn't end there.
Happens all the time (Score:2, Interesting)
Does Gates schooling IBM ring a bell? It would kill IBM to admit it but they regret it to this day.
That was its worth at the time (Score:5, Interesting)
Why is it so surprising? Under the original management, it might have done as well, but probably not.
Kudos really should go to Take Two Interactive, for recognizing what the future COULD bring.
Re:That was its worth at the time (Score:4, Interesting)
GTA was a product of Rockstar North, which used to be called DMA Design back when they made games for the Amiga. Classics like Blood Money, Lemmings, Walker, Hired Guns... They are the ones who generated all that money.
BMG weren't really all that involved with them... They went through a few different publishers over the years but BMG were only every very peripheral to their operation I think.
This just in (Score:5, Insightful)
Corporations have no idea what they're selling and only know for how much.
For the average CEO it doesn't matter whether he's selling computer games or lawn mowers, they pretty much treat them the same. This is why small businesses with people who know what they're doing can actually still exist.
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Bobby Kotick [wikipedia.org] is famous for comparing games to packaged goods. EA is also famous for killing all studious it acquired; just to name few - Westwood [wikipedia.org], Origin [wikipedia.org]. They are now in the process of killing off Blizzard, a studio that invented soap opera of MMOs and consequently had license to print money for a decade after it released it in 2004.
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Does EA own blizzard? I thought that was activision.
Re:This just in (Score:4, Insightful)
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Sony is where game franchises go to die.
EA is a step further. That's where game studios go to die.
So? (Score:5, Insightful)
The story doesn't end there
The summary does, though. Anyway: this story can be summarized by "Execs fail(ed) to predict the future, and isn't that dumb?". There are many similar stories of execs selling an asset cheaply only to see it blossom into a profitable powerhouse. And while these stories are a good example of survivor bias, the reverse also happens: they buy a highly successful promising startup, which then turns out to be a thoroughly unprofitable one hit wonder. It happens.
Re: So? (Score:3)
And in between there are countless cases where a company sold off a video game division that wasn't worth anything and never would be.
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> The summary does, though. Anyway: this story can be summarized by "Execs fail(ed) to predict the future, and isn't that dumb?".
Sure, but if you read the whole story you'd also see that one of the execs saw the future, fought a losing battle to keep the company in house with his short sighted bosses, and then later struck out on his own and maneuvered to bring that which he saw value in under his control:
“We hired a team, and we started acquiring properties for distribution, and just on the eve of
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go back to the right moment in time and loan Bill Gates $5000, and today you would be one of the richest men on earth, and he would be your oddly geeky houseboy. Discuss!
He probably would've just given you your money back.
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I seem to recall a buddy of Zuckerberg's who loaned him what, 10 grand, when he was starting out? And Zuckerberg rewarded that nice little lifeline by maneuvering to cut him out of the business entirely, forcing him to sue to get some (relative) crumbs .
Give an aggressive entrepreneur a leg up, and he will likely try to hold your head underwater.
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Except if you read the story, you'd see that the division when it was sold already employed the brothers Sam and Dan Houser.
https://en.wikipedia.org/wiki/Dan_Houser
Not to say you're totally wrong though. I could see the music label making any number of boneheaded decisions that would have completely screwed up any chance of success for the fledgling game company through either incompetence or malice.
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"The story doesn't end there."
Article literally ends there...... Leaving the reader to wonder why the article is cut off.
They want you to put down for the season pass then the story will be finished post launch.
These sort of stories are pointless (Score:5, Insightful)
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Yea, they would have been called RecordStar.
Summary is a clusterfuck of omissions (Score:5, Interesting)
Here is a interleaved timeline of developers/publishers as far as I can piece together. There are very little details of the history of BMG's (Bertelsman Music Group) sub-divisions such as BMG Music Group, BMG Entertainment, BMG Ineractive
1984 Acme Software founded
1984 Just Micro founded
1987 RCA/Ariola International founded (eventually becomes BMG Music Group)
1987 Acme renamed to DMA Design
1991 DMA released Lemmings
1993 Take-Two Interactive founded
1994 Just Micro renamed to Gremlin Interactive
1994 BMG Interactive Entertainment founded (division of BMG Entertainment)
1996 Sam House becomes head of development for BMG Interactive
1997 GTA released by DMA, published by BMG Interactive
1997 DMA bought by Gremlin Interactive
1998 Sam and Han Houser leave BMG Interactive, start Rockstar Games
1999 GTA 2 released
1999 DMA bought by Infogrames
1999 DMA bought by Take-Two Interactive
2001 GTA 3 released
2001 DMA renamed to Rockstar North
2004 BMG combines with Sony Music
2008 BMG Music Group sold to Sony
This whole thing probably needs a 2D timeline chart to show owners/mergers.
References:
* https://en.wikipedia.org/wiki/... [wikipedia.org]
* https://en.wikipedia.org/wiki/... [wikipedia.org]
* https://en.wikipedia.org/wiki/... [wikipedia.org]
* https://www.mobygames.com/comp... [mobygames.com]
* https://en.wikipedia.org/wiki/... [wikipedia.org]
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Red Dead Redemption is just yee haw Skyrim
Skyrim is just ye olde shenmue
Story for people who don't understand business (Score:2)
They sold it to $9m because it was only worth $9m back then. It had GTA1 under its belt, and GTA2 was a total disaster. RDR2 may well have made back $9m in 33ns but that doesn't mean Rockstar was worth more than $9m back in 1998. TT then took the franchise and developed GTA3 which was a world-beating smash hit. That's why RDR2 is grossing now, because of what TT did with the company, not because the company somehow contained a magic "seed" for RDR2 back in 1998. The RDR franchise wasn't even a concept
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The RDR franchise wasn't even a concept back then.
I don't believe that for one second. You can't tell nobody looked at GTA and went "Holy crap this would sell a buttload in the states if it was in a western format!"
There's probably a concept of GTA-themed games for everything you can think of, from Feudal Age Japan to Roman Empire-style.
Please.
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If you can't imagine GTA in a Roman Empire theme, there's nothing further I can do for your imagination.
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I think you're arguing for the sake of arguing.
Unbelievably... (Score:2)
Yes, who could have ever imagined a company called Rockstar might have once been connected in some way to the music industry?
Shocking.
It works for all of those record company pricks (Score:2)
That's a line from a Frank Zappa song that pops into my head whenever I see the words "record" and "company" or "companies" together.
But then again this system works
As perfect as a dream
It works for all of those record company pricks
Who come to skim the cream