Ahead of Rockstar Games' first official extended preview of Grand Theft Auto 6 on Netflix on Thursday, which overwhelmed the streaming platform and generated largely positive reactions from players around the world, a person or group operating under the name "Cyberleek" dumped a series of GTA 6 leaks onto social media - which a nontrivial number of people think is a marketing ploy.
Cyberleek published a steady stream of GTA 6 footage over the past week, providing players with an unofficial preview shortly before Rockstar's planned gameplay presentation on Thursday.
The leaks threatened to overshadow the official debut of a video game that players have been awaiting for nearly 13 years. Or did they?
CNBC described Rockstar's decision to preview GTA 6 on Netflix as a "rare move." The overwhelming traffic that briefly disrupted the platform indicated high usage levels and provided a positive demand signal for the game.
"Some members briefly experienced an issue accessing Netflix, but we quickly recovered," Netflix told CNBC.
Christopher Dring, editor-in-chief and co-founder of analysis firm The Game Business, told CNBC's "Squawk Box Europe" earlier today that he had "never seen Netflix do anything where they put a game on display, and it just shows the power of this particular title. It's in a league of its own."
Morgan Stanley and JPMorgan reiterated their bullish views on Take-Two (Rockstar Games' owner), citing rising interest from institutional and retail investors ahead of what BMO Capital analysts described as "gaming's Super Bowl moment."
Wells Fargo was more cautious. The bank said the trailer only modestly increased its unit-sales expectations and warned that Take-Two may need positive news about the next version of GTA Online to secure a sustained valuation rerating. A launch delay or weaker-than-expected sales remain the primary downside risks.
BMO Capital analysts summed up the developments around GTA 6, from leaks to the Netflix preview:
GTA VI An Extended Look: Gaming's Super Bowl Moment Is Just Around the Corner
Bottom Line:
TTWO released a 27-minute An Extended Look today at 3 p.m. ET exclusively on NFLX, with a broader rollout on YouTube and other platforms at 9 p.m. ET. The special preview was partially spoiled by widespread gameplay leaks, which we do not expect to adversely impact unit sales. An Extended Look confirmed the high-quality gameplay and transformative cinematic experience that we believe will propel GTA VI to become the biggest video game of all time.
Reiterate Outperform, Top-Pick, and $285 Target Price. We maintain Street-high FY27E Bookings of $10.6B.
Key Points
Leakers Spoiled the Surprise, as An Extended Look Confirmed High-Quality Gameplay
We do not expect recent GTA VI gameplay leaks to adversely impact GTA VI unit sales. Today's GTA VI: An Extended Look underscored high-quality gameplay that exceeded our elevated expectations, delivering a true cinematic experience that should deeply engage audiences. We believe the 27 minutes of gameplay barely scratches the surface of the content available at launch. Notably, we see a deepening relationship between NFLX and TTWO, as well as attractive/synergistic opportunities in transmedia.
Management Has Talked Down Ads, But We See a Real Opportunity Over Time
While management has historically shunned embedding advertisements in paid game experiences, we couldn't help but notice seamless opportunities for brands to be organically embedded in ways that enhance gameplay. We view advertising as a real high-margin call option for TTWO in the longer term.
Our Street-High Estimates Remain Unchanged
Our $10.6B FY27E Bookings estimate is 26% above consensus and 29% above the high-end of guidance, primarily driven by our GTA VI analysis. We model FY27E GTA VI full game unit sales of 55M x $59 ASP = $3.25B in FY27E full game GTA VI Bookings vs. consensus 39M units x $58.25 = $2.27B. Our model assumes GTA Online will contribute ~$0.75B in F2H27E Bookings.
Is TTWO Becoming a Sell-the-News Story?
Investors are increasingly viewing TTWO as a sell-the-news investment thesis, suggesting shares may struggle to meaningfully outperform post-game launch on November 19. We highlight that during the GTA V launch, TTWO shares did not meaningfully outperform until ~6 months post-launch. However, we believe investors with duration should accumulate shares, particularly using any potential sell-the-news events as opportunities to own a best-in-class multi-year growth story.
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