shams has pretty much summed up what I was going to say. If there's any doubt that Take-Two's financial strategy stinks to high heaven, look no further. Putting all of your eggs in one basket with an uber-budget game creates an insane level of risk (what if the game is a commercial failure?) If this is true, Grand Theft Auto will likely have to sell 5m copies to turn a profit. Of course, it certainly will do so - but what if it falls short of everyone's expectations? The entire company is going to be bought out if GTA underperforms in the market.

Another reason why I will never invest in this company.

GTA4 is the Titanic of gaming.
100 million spent is nothing compared to how much they will make on the game...

 And shams, 100 millions invested to make 250 millions profit is as good as it gets in any kind of industry...

As for the risk, it's GTA 4, a proven successfull franchise being developed by the same people that did the next installment.

 The risks are a lot lower than they would be in creating new IP... 

Yes this doesn't seem so ridiculous to me, they easily made that entire cost back yesterday, and they always knew they would. Add to that the fact that a good portion of this cost will be spread over two, maybe three games this generation and it becomes perfectly sensible.

@ Shams

Good point, but they won't earn 250M in profit, would they?

Wouldn't Take Two also have to pay tax for their profit? They also have to pay tax on the 50M from MS, pay some money for advertising (although MS and Sony pays a bit, I believe T2 would have to pay somer)

1.  GTA IV is sold to retailers at $49.99 ... GameStop doesnt make almost next to nothing from new games.  Used games is where the money flows in.

2nd ... Game Development is a fixed cost.  Therefore $100 Million spent does not limit the # of games that could be sold.  Selling 1 Million and selling 10 Million copies still meas RockStar spent $100 Million to develop the game.  And copying DVD disks and plastics boxes and shipping them out in cardboard boxes probably cost at most $1.  (Take 2 owns their own distribution unit, Jack of All Games.)

3.  Microsoft paid Take 2 $50 Million ... it was not a loan, for additional exclusive content.  Depending on how the contract went, this payment was either just for just the exclusivity (which is most probable) or the actual content.

4.  Most of the money was spent towards developing the next Gen RAGE engine.  It was first shown in the table tennis series and will be used in Midnight Club.  It will also be featured in most of RockStars games in the future.

5.  Analysts are predicting $400 Million worth of sales for opening week ... at $100 Million in development costs ... well we can already see GTA IV is very freakin profitable ... it prints money

6.  Take 2 never borrowed any money to make the game ... most of the money spent was from the cash pile they built up from GTA III, GTA Vice City, and GTA SA.  Sadly, this pile of money was also whittled down because of frivilous lawsuits by certain individuals name Jack last name Thompson, a certain hot coffee scandel, accounting scandel in the corporate office, yeah I can go on ...

7.   The overall math of how much each GTA IV sale will make:

1 Unit of GTA IV = $60

Amt sold to Retailers: $50

MSFT & SNE licensing fees: 15% of $50 (Not $60) =  $7.5

Cardboard boxes, plastic wrapping, blank DVDs, etc. = $1-2

Not sure who pays for transportation ... I think it is retailers. 

Marketing & Promotion = ??? Sorry no estimate here since I am still having difficult trying to figure out who paid for which ad ... GameStop, Microsoft, Sony, Best Buy, RockStar, and so on.

RockStar royalities = I think this is 30% of what is left over (30% of $40) ... but not sure so =  $12-13

So overall TTWO should pocket $28 - 30 per sold.  (No tax needed cause TTWO had lost so much money in the past they aint paying taxes for 2008 and most of 2009).

So 100,000,000 / 28 = ~3.5 Million copies sold for standard editions.

Hopefully this helps you guys out a bit.

It's not just about cost however. All this money is the only thing propping up Take2. They need GTAIV to make $100s of millions in profit, otherwise Take2 is a money losing business.

seems risky if true

it woulda still sold a ton if it only cost 50mil to develop and thus wasn't as good so got lower review

it is not gonna sell 2x as many copies as a 50m gta4 would have

I think you must all hope that this title will not be 5 million in its lifetime, thats how many dollars spent by this game.

What this article doesn't take in to account is inflation. 70 Million for shenmue in 1998 is not 70 million in 2008. Anyone know the inflation rates for the last 10 years? Maybe Shenmue still owns this record...

Shenmue will certainly maintain the record when inflation is taken into account but unfortunately most of these kind of monetary lists don't. Just look at highest grossing movie lists for example.