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.
The company also said it 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.
The company came under fire following wide-spread publicity, including a piece on Tuesday's CBS Evening News, which showed how a simple computer download allows players to enter into an X-rated sex scene. The game's maker Rockstar Games said the scene was not intended to be part of the game and blamed the illegal scene on "determined hackers."
According to the Associated Press, Take Two Interactive, Rockstar's parent company, admitted on Wednesday for the first time that the sex scenes had been built into the retail version of that game -- not just the PC version but also those written for Xbox and PlayStation2 consoles.
"There is sex content in the disc," Take-Two spokesman Jim Ankner told The Associated Press. "The editing and finalization of any game is a complicated task and it's not uncommon for unused and unfinished content to remain on the disc."
The ratings board, the ESRB (Entertainment Software Ratings Board) now says until the game itself is modified to prevent players from being able to access this scene, it must be re-classified as Adults Only.
Take Two immediately revised its estimated earnings reports to reflect a decision it acknowledges could cost the company untold millions. Take Two says a new version of the game will be available later this year and apologized to customers for an event it says presents a new challenge for parents and the industry. The company's president Paul Eibeler also made clear Take Two has always worked to keep mature-themed material out of the hands of children and will continue to do so.
CBS News Correspondent Cynthia Bowers reported Tuesday that "Grand Theft Auto: San Andreas" has come under fire for its violent and sexually explicit content.
The "Grand Theft Auto" series has sold more than 35 million copies with worldwide sales approaching $2 billion.
High school teacher Deb Perryman told Bowers that she knew the games were out there, but until she was asked to review them for a statewide task force, she had no idea what was actually in them
"I was really shocked," she says. "They were even to me more graphic than the most graphic movie I've ever seen."
Partly because of her task force's findings, Illinois passed a law making it a crime to sell violent or sexually explicit video games to anyone under 18.
When Illinois Gov. Rod Blagojevich signs that bill into law, it will face almost certain challenge. Similar laws have been struck down as unconstitutional in Washington state and Indianapolis.
"The courts have never considered the harmful impact that playing violent and sexually graphic has on young children," says Blagojevich.
The video game industry says it will continue to fight any further restrictions. It points out that just like the movie industry, it voluntarily rates its game for age appropriateness, even though a recent study found that despite the warning labels, 50 percent of boys age 7-14 have bought a game rated-M, for mature audiences, and a stunning nine out of ten of the boys have played them.
Fifteen-year-old Travis Perryman says he can understand why some parents might have a problem with a kid playing violent video games.
"Yeah, I can see that, but like I said, this does not equate reality in any way," he says.
As for Deb Perryman, she'll take any help she can get to say ahead of the game.
"It's impossible as a parent to keep up," she says.
Reporter's Postscript: in a Web-only addition to the story, Cynthia Bowers writes about her concerns about violent, explicit video games and her 11-year-old son.
As a mom this story hit close to home for me. My 11-year-old son spends a lot of his time playing video games. And other than knowing the names of the games and their rating, I admit I don't know a lot. For a while now he's known how to go on the computer to download "cheats," or, as he calls them, "guidebooks." Now I'm finding out a "cheat" on the game Grand Theft Auto-San Andreas can take the player into an x-rated scene. The game's maker claims the scene is not part of the game, that it's the work of determined hackers. An investigation is underway to find how who's to blame, but I'm not sure that's what matters to me. What does matter is that I am reminded again just how technologically savvy my son is and how that scares me.
I can't always control what he does at other people's homes, but am I even in control in my own home? Where did my son even learn how to download all this information about video games? And how often does he do it? I know there are always clusters of papers lying around with codes on them. And I know the "cheats" only seem to heighten his fascination with a particular video game.
I guess it's like the difference between working a cheesy airline magazine crossword puzzle versus the Sunday New York Times' crossword. But I'm not sure video games are as healthy for his brain as crosswords are for mine. And I wonder now where do the "cheats" he downloads "take" his game. Probably not anywhere dangerous, but since I can't play the game myself, I have no way of knowing -- other than to ask him.
We had a long talk last night about whether the time he spends alone in front of a screen playing games is emotionally healthy. I tried to explain the concept of moral bankruptcy, about how sometimes when I waste time I end up feeling empty rather than full. I'm not sure the conversation will change his habits but it will change mine. Too often I've been taking the lazy way out and curling up with a book, but after dinner tonight I'll invite both my kids to turn off the TV, log-off the internet and play cards or dominoes instead. Who knows, maybe we'll talk too!