The Badboys of Rockstar Games
Five months before the release of Grand Theft Auto 3, Rockstar Games COO Terry Donovan was at the Electronic Entertainment Expo putting the final touches on a marketing campaign as calculated and aggressive as any Hollywood blitz. For two years, his publicity team had been feeding rumors about the title to sympathetic Web sites and carefully parceling out screenshots to enthusiastic gaming magazines. He was even planning a junket to a Nevada firing range where dozens of videogame reviewers would learn to shoot guns out of moving vehicles. Inside his E3 booth, Donovan stayed relentlessly on-message about what separates his company from its rivals. "Fuck the potions and magic spells," he told anyone who would listen - teenage and twentysomething men want games as hip as their movies and music. "These are the same guys who like Goodfellas," he argued, setting up the tagline he'd repeat for the next few months: "If The Sopranos was a videogame, Grand Theft Auto 3 would be it!" The market for games, he insisted, was evolving. "If you've got 30 million households with PlayStations, you aren't just dealing with kids anymore - you aren't just dealing with people who don't smoke weed."
Perhaps, but children still love their games, too. I told Donovan that earlier that day I had seen a 9-year-old boy blowing away guards with a shotgun in a preview version of State of Emergency, an ultraviolent Rockstar game that encourages players to smash shop windows and assassinate executives in an urban street riot.
He froze. "That's not cool," he said flatly. "We're not about cute games for kids."
What Rockstar is about is stylish, streetwise games aimed at guys who listen to Eminem albums, follow Xtreme sports, and admired MTV's Jackass. So far, more than 3.5 million of them have plunked down $50 for GTA3, a gangster fantasy in which players can hustle their way up to the top of various crime families by stealing cars, killing gang leaders, and driving prostitutes to appointments. Released in October, months after Donovan introduced it at E3, GTA3 quickly became the best-selling game ever for PlayStation 2. Debuting a few months later, State of Emergency immediately joined it on the best-seller list, as did Rockstar's Xbox and PS2 versions of the pulpy vigilante shooter Max Payne.
Rockstar owes at least some of its success to the shifting demographics of gaming. "The console industry has changed dramatically over the past two Christmases, and we're seeing more older gamers," says Sims creator Will Wright. "So it's appropriate that we're seeing more mature, gritty titles like Grand Theft do very well."
Of course, Rockstar has also benefited from carefully cultivated hype. In addition to the usual moral outrage - Senator Joseph Lieberman called GTA3 troubling because it rewards "perverse, antisocial behavior," USA Today described it as "a virtual apprenticeship in crime," and Australia banned it until Rockstar removed some sequences - GTA3 has generated a crossover cultural buzz unheard of since Tomb Raider. The game has been praised several times on Comedy Central's The Daily Show, graphics and sound bites from both GTA3 and State of Emergency have been appropriated for underground hip hop mix tapes by DJ Clue, and movie studios have bought up the rights to both of them, plus two other Rockstar titles. By last winter the company was so much a part of youth culture that ecstasy pills were found stamped with its stylized R logo. (The company says it had no knowledge or involvement.)
"You see," said Donovan, "we're not competing with Konami, Hasbro, or Mattel. We're competing with Def Jam, Adidas, and New Line Cinema."
From a business perspective, Rockstar operates much like Miramax, buying up rights to properties from independent developers and selling them on the strength of its brand identity. For all the controversy, few of the company's games have the blood or body counts of most first-person shooters, but they all share a cinematic style and what Donovan called "a nice, healthy, humorous dose of urban nastiness." Essentially, Rockstar reinvigorates stock genres with illicit premises like street racing (Midnight Club) or weapons trafficking (Smuggler's Run). Instead of the requisite blink-182 track and a voice-over from William Shatner, Rockstar games feature music from the likes of Lee "Scratch" Perry and dialog from artists such as Gang Starr rapper Guru.
As a publisher, Rockstar promotes, packages, and publicizes these properties. "Basically," Donovan explained, "we're really good at two things: finishing games and making noise."
For the past few months, though, Rockstar has been silent. After the violence in its games came under increased scrutiny following September 11, and Nasdaq trading in its parent company, Take Two Interactive, was suspended for several weeks, Rockstar has refused all requests for comment, including several from Wired. (Donovan's statements in this article are from interviews conducted last year.) Take Two has since restated its last seven quarters of financial earnings, revealing improper reporting of revenue and expenses, as well as buybacks of its products from distributors. As of mid-May, the firm was reportedly under review by the SEC. But Take Two's accounting improprieties haven't stopped its stock from soaring: Its share price climbed from $7 in September to $26 in May. "The sales numbers are gathered independently now," says Joe Spiegel, an analyst at Spinner Asset Management, "and when they're doing this well, nobody's going to get too worried."
Rockstar was actually formed as a response to controversy in 1998, when Senator Lieberman denounced the original Grand Theft Auto as "graphic, gruesome, and grotesque." Suddenly, Take Two, a staid publisher of PC and console games like Wheel of Fortune and Action Bass, had some street cred. To capitalize on the moment, Take Two founder Ryan Brant, son of newsprint mogul Peter Brant, hired Donovan and Donovan's prep school friend Sam Houser to launch Rockstar as a new division. Born into music business families - Donovan's father directed the iconic Simply Irresistible video for Robert Palmer, and Houser's was a partner in the London jazz club Ronnie Scott's - they started marketing games like movies or music. "The videogame industry is where the music industry was in 1960," said Donovan. "Certainly the content is very sophisticated, but there are still relatively naive and unpolished marketing techniques."
So the two began plastering up playbills and cultivating a badboy image. In 1999, Rockstar launched a streetwear line, complete with baby Ts and pinkie rings, that's now sold in Urban Outfitters stores in England. Later that year, Donovan and Houser enlisted John Davis, the downtown New York nightclub promoter, to launch a regular Rockstar loft party that required would-be attendees to submit to an interview in order to gain admittance. It didn't last long.
"Terry's very, very protective of the brand," says Dawn Berrie, Take Two's director of investor relations. Indeed, the image the 32-year-old Donovan cultivates for his company is in some ways an executive-suite extension of the aesthetic found in his games. Asked about the similarities between State of Emergency and the anti-WTO riots in Seattle (in a prerelease version, the villains were known as the American Trade Organization), Donovan assured Official PlayStation Magazine that he hadn't based the game on real events because the riots "weren't cool enough." As to his rivals, he has said, "The faceless corporation that delivers you a role-playing game about Orcs and spells and whatever is just never going to inspire someone's passion." Of course, Donovan serves as vice president of marketing for Take Two, which is just such a corporation. State of Emergency ("Topple the Tyrannical Corporation") was released with a Rockstar logo and the attendant hype, but Airline Tycoon ("Have you had enough of airline strikes and lost luggage? Think you could do better?"), which was essentially published by the same company, was stamped TAKE TWO.
"I wouldn't be at all surprised if there was a correlation between flagrant hype and sales," says id Software founder and Quake designer John Carmack, "but there's also a backlash danger to contend with if products don't live up to their billing." In the mid-'90s, the Scottish publisher Psygnosis gained some credibility by promoting its racing game Wipeout at raves and commissioning a soundtrack from DJ Sasha, but its positioning didn't help sell the company's mediocre follow-up products, and Psygnosis itself eventually wiped out.
Could the same happen to Rockstar? State of Emergency, generally regarded as a mediocre fighter with a flashy gimmick, rode GTA3's coattails to the top of the best-seller list, then plummeted from number 2 on the charts in February to number 14 in March. "Nobody in this business is saying, 'Wow, GTA sold 3 million copies - that's great,'" notes James Lin, an interactive entertainment analyst at Jeffries. "Everyone is asking, What do you have for me now?"
According to several industry sources, Rockstar's next major release will be a Grand Theft sequel set in Miami - not a surprise considering that GTA3 brought in 41 percent of Take Two's total revenue in the first quarter of 2002. "The phenomenal success of GTA3 gives them a free pass on this one," says Lin. "But if they try to do a GTA Chicago and a GTA Boston, then they're going to risk the franchise."
The rest of Rockstar's 2002 schedule is said to be dominated by sequels (an update of Max Payne, a second State of Emergency, and Duke Nukem Forever) and licenses (Austin Powers, MTV's Celebrity Deathmatch). The only potential new franchise, sources say, is a fugitive thriller from DMA Studios, which originally developed Grand Theft. Meanwhile, Take Two has gone on a buying spree: It purchased Gathering of Developers and DMA, which renamed itself Rockstar Studios and is said to be at work on an online massively multiplayer Grand Theft Auto 4.
But perhaps the best test of Rockstar's staying power will be the anticipated fall version of GTA3 for Nintendo's Game Boy Advance, the happy home of Mario and Zelda. "Games where you drive around and run over people or whatever are probably not Nintendo's main goal," says Perrin Kaplan, VP of corporate affairs for Nintendo, which just released its first M-rated game. "That said, to have licensee relationships with those kinds of games makes all the market sense in the world."
Donovan would certainly agree. "I think the videogame industry was actually crying out for us," he said. "We don't make games about Puff-the-fucking-Magic Dragon."