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Take-Two delays Marvel's Midnight Suns

Take-Two capped off its first quarter of fiscal year 2023 with the delay of Marvel's Midnight Suns and details about Zynga's financial performance.

Take-Two has announced that 2K Games and Firaxis Entertainment are delaying Marvel's Midnight Suns, the XCOM studio's superhero-themed turn-based tactical title. 

The news comes from its first-quarter financial results for fiscal year 2022, which also contained data about Zynga's performance since it was acquired by Take-Two in May 2022.

The delay of Marvel's Midnight Suns also comes with the news that the Nintendo Switch and last-gen console versions of the game will be released "at a later date." Midnight Suns will land sometime later in fiscal year 2023, the last day of which is March 31, 2023.

It's the latest in a number of high-profile delays from triple-A game studios. Take-Two states that the game was delayed to "ensure the teams at Firaxis Games and 2K deliver the best possible experience for [their] fans."

A Twitter account for the game shared the news with one additional bit of context: Midnight Suns is apparently "the biggest game" the team has ever made.

That's pretty interesting given that Firaxis' other franchises (Civilization and XCOM) are also fairly large and expansive games.

Take-Two adds a new financial metric

During the three-month period ending June 30, 2022, Take-Two's GAAP net revenue increased 36 percent to $1.1 billion, while net bookings (digital in-game spending) grew 41 percent to $1 billion. The company did see a net loss in the first quarter that totaled out at $104 million. It's a 31 percent improvement on net loss it experienced in Q1 of fiscal year 2022, which was $152.3 million.

The company is also using a new accounting metric called EBITDA (earnings before interest, taxes, depreciation, and amortization) as a financial measurement. Its EBITDA for Q1 2023 was $52.2 million.

Gameplay of Marvel's Midnight Suns. Several Marvel heroes square off against an unknown enemy.

Take-Two also issued an updated financial outlook for the upcoming fiscal year, but that's not just because one notable game was delayed. In May 2022, Take-Two completed its $12.7 billion acquisition of casual game publisher Zynga, and now is adding its financial results to its balance sheet.

The company is anticipating between $5.7 to $5.8 billion in revenue, and a net loss ranging between $438 to $398 million. Its EBITDA is anticipated to land between $499 and $548 million. CEO Strauss Zelnick says that the company is anticipating it will earn between $5.8 and $5.9 billion in net bookings.

It would seem that's not the outcome that investors were hoping for. Shares of Take-Two stock dipped in after-hours trading, diving to as low as $116 per share after ending the day at $125 per share. That's still within the normal bounds of where its stock is operating. The lowest it dropped was on May 10, 2022, when it went to $106 per share. It's hovered between $116 and $133 ever since.

How's Zynga doing for Take-Two?

Take-Two and Zynga's fates are now intertwined, though now that Zynga is a subsidiary of the larger publisher, we're going to learn a lot less about how the overall business is performing. Still, we have some key metrics.

Zynga titles Empires & Puzzles and Toon Blast joined the ranks of Take-Two's largest contributors to net revenue. That list normally includes Grand Theft Auto OnlineGrand Theft Auto V, Red Dead Redemption 2, etc. Zynga's Turkish hyper-casual publisher Rollic also joined that list, though no specific titles were revealed.

In Zelnick's comments about Take-Two's expanded net bookings, he credited the improved performance to Zynga joining the publishing. 

There is one notable metric you can spot in Take-Two's revenue reports that indicate how Zynga is boosting its financial profile: in-game advertising. In Q1 2022 (last year's results), Take-Two only pulled in $17 million in in-game advertising revenue.

This year, it earned $83.2 million in in-game advertising revenue.

Game revenue also took a possibly-Zynga-driven jump ($796 million to $1 billion), but there's a lot more obvious variables that could be at play in that trend. 

Before readers invested in Take-Two start salivating at the though of more advertising revenue, just remember that both Apple and Google have changed their policies for data tracking, which has had a big impact on advertising revenue on mobile devices. 

That field may become a wild west in the months ahead.

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