Rockstar Games History & How The Studio Makes Money

 

Rockstar Games is undoubtedly one of the largest companies in the modern gaming landscape. Its estimated yearly revenue is $5-$25 million dollars, according to Glassdoor, its market cap totals around 19.6 billion dollars, according to stats provided by Dario Andric of Levvvel and the average yearly salary of a Rockstar employee is $112,317 dollars, which is around $53 dollars an hour, all according to Comparably. Wikipedia lists 2013’s Grand Theft Auto V, one of the single largest and most successful pieces of media ever released, without question, as the second highest selling video game of all time, with an estimated 185 million copies sold, a statistic backed up by Statista. This puts it second only to Mojang Studios 2011 Sandbox mega-hit “Minecraft”. The numbers don’t lie – and there are more to get through – but the question remains: how does such a burlesquing enterprise come to exist in the gaming space? To understand that, we must first go through a bit of a history lesson.

Humble Beginnings And Founding

Rockstar Games’ heads are well-known for their historic air of mystery. Interviews with them are sparse, and the massive corporation behind some of gaming’s most exciting and fortuitous titles, such as Grand Theft Auto V (2013) and Red Dead Redemption 2 (2018), has not featured in an E3 showcase, one of gaming’s biggest video game conferences in the world, in a decade and some change! According to Harold Goldberg of Vulture, Sam Houser, Rockstar Games’ president and co-founder, describes E3 as: “a big sort of willy-waving exercise”. This means, that finding information on the company and reliable data is a difficult undertaking, but perhaps one that has its reasons. Throughout the article I will make various references to different studios throughout the larger Rockstar Games enterprise, for a nifty list of all of them, check out this article on GameRant.

Our trail of bread crumbs begins in the year 1984 (according to author SlipSlot of OpiumPulses), a group of four colleagues of the Kingsway Amateur Computer Club, located in Dundee, Scottland: David Jones, Russell Kay, Steve Hammond and Mike Dailly decide to cooperate, under the name “Acme Software”. Seperately, each begins to develop small games for fun, though nothing notable in the group’s early years. 1987 sees a rebranding of the four-man pet project to “DMA Design”, and four years later they finally strike gold, with their 1991 breakout hit “Lemmings”, which was developed for the Amiga, an early line of PCs, which began in the mid 80s. Lemmings was a 2D Puzzle Platformer, revolutionary for its time, where the player controls a colony of green-haired, lanky little creatures, commanding them, either into an unfortunate demise, or the exit and a temporary, but successful survival.

The money made from the unforeseen success of Lemmings would give rise to a new production, with a larger scope and budget. The project, called “Race’N’Chase” was shaping up well, though the vision for it had changed drastically, and the development cycle had been rough. The gameplay was high octane for its time, the player would race through the streets, going way past the speed limit and breaking every rule of traffic as they went, and senselessly killing pedestrians with their reckless automotive handling, prompting a rather predictable upset from the cops, along with the titular chase. In 1997, this game, now called “Grand Theft Auto”, would be released for MS-DOS and Microsoft Windows. The game was picked up for publishing by BMG Interactive and soon DMA Design was bought out by Gremlin Interactive, who had previously published DMA Design’s 1999 tank-based third person shooter “Wild Metal Country”. The deal would go through for £4.2 million, before Gremlin Interactive would eventually also be assimilated into Infogrames, who bought it for £24 million.

BMG Interactive, however, still had the publishing rights to Grand Theft Auto, which would be acquired, along with the company, by Take-Two Interactive in March 1998. In December of the same year Rockstar Games would be formed, as Take-Two’s subsidiary. The project, helmed by founders: Terry Donovan, Jamie King, Gary Foreman and the brothers Dan and Sam Houser, who had all been colleagues at BMG Interactive would officially be announced to the world on 22. January 1999, and the company would soon open its first of many studios, „Rockstar North“, a final rebranding of DMA Design, after the company’s assets were acquired by Rockstar around the year 2000. The new studio would port DMA Design’s „Wild Metal Country” (now simply called „Wild Metal“) for the Sega Dreamcast in the same year. They would also go on to be the main Rockstar Games studio to continue the Grand Theft Auto series for decades to come.

The Rise of Rockstar Games

A large part of Rockstar Games’ undertaking for its first few years, would be acquiring publishing rights to games and seeing them through to their release into the market. During this time they published well-known franchises, such as Angel Studios’ “Smuggler’s Run” and “Midnight Club Street Racing”. Both racing games released in the year 2000, and would both spawn sequels. 2001 would see Rockstar Games publish “Max Payne” by Remedy Interactive, developers known today for their 2019 bizarre action-adventure game “Control” and the Alan Wake series; this series, too, would become a trilogy.

2002 would be the year to kick Rockstar Games’ development efforts into a higher gear, as Angel Studios was bought by them and renamed to Rockstar San Diego, and subsequently put on a novel new game called “Red Dead Revolver”, a third person shooter hearkening back to the days of the American Wild West. In 2004 the game would release, after a rocky start of cancellation by Angel Studios and the subsequent, hopeful renewal by Rockstar.

In 2003, after a deluge of bad press and controversy, which had followed Rockstar Games ever since the debut of their Grand Theft Auto series, they doubled down, releasing “Manhunt” to the world. A game so uncompromisingly brutal for its time, that it almost caused a full scale mutiny at the studio, where it was developed.

2006’s “Bully” garnered another round of bad press, from misguided journalists, who thought it was a promotion of school bullying, completely overlooking the game’s actual message and narrative, which was quite the opposite, and still considered one of the greater video game narratives to this day. The game ended up releasing in the UK under the latin name “Canis Canem Edit” (“dog eat dog”) to hopefully escape the scornful gazes of some of Rockstar’s detractors. 

Somewhere during 2006, co-founders Jamie King and Gary Foreman would leave Rockstar Games silently. 2007 saw the departure of Terry Donovan, who had up until that point been the managing director for Rockstar. He was succeeded by Gary Dale, as COO, who too, would leave only about a year later.

In 2008 Electronic Arts would make a shortlived offer to Take-Two Interactive, attempting to buy the entire company, which was struggling at the time. Long story short, despite a close call, the offer ended up not going through, but the rejection from Take-Two Interactive, as archived on the Wayback Machine, ended up providing one of the few historical insights we have into the massive media conglomerates sales data, Rockstar properties featuring heavily throughout.

According to the rejection, Grand Theft Auto, which had been on its fifth game at the time, Grand Theft Auto: San Andreas, had sold 75 million copies worldwide. Midnight Club and its two sequels sold 12 million. Max Payne 1 and 2 had sold over seven million units, Manhunt sold 1.7 million and Red Dead Revolver sold 1.5 million. The last of Rockstar’s games on the list is 2006’s Bully, with a still impressive 1.5 million units sold at the time of the EA rejection.

2010 would see the release of one of Rockstar Games’ most successful games to date “Red Dead Redemption” on the Playstation 3 and Xbox 360, the main gaming systems of the time. The game was a follow-up to 2004’s Red Dead Revolver, brimming with clever ideas and intelligent, heartfelt narratives written by Dan Houser, who was the writer and hidden ace behind all of Rockstar’s gritty stories – breathing into them as much bombast as he did nuance and soul. According to Harold Goldberg’s article about Red Dead Redemption 2, the game sold 15 million copies till 2018 (the date of the article’s release).

In 2011, following a robust advertising campaign, which could get its own article, L.A. Noire released to the public for the Playstation 3 and Xbox 360. The detective game, steeped in Doyle-esque intrigue, gathered rave reviews and accolades. Rockstar Games seemed to be on an unbreakable streak, with the clever penmanship of Dan Houser and the vast swathe of developers and studios, powered by an engine of seemingly inexhaustible funds and resolve, one would think they could never fail. According to an article on Polygon, L.A. Noire had shipped around 7.5 million copies worldwide, at the time of the article’s release (2017).

2012 would see the release of Max Payne 3. The third game in the trilogy was no longer developed by Remedy Interactive, with Rockstar Games taking over both development and publishing. The game was a commercial failure, selling only an estimated 440.000 copies in its first month, having already taken a hit prior, through its three year delay since its originally planned release date of 2009.

Rockstar didn’t have time to mourn its loss and count its remaining coppers, because only a year later they would release their most successful game to date. Grand Theft Auto V, released on the PS3 and Xbox 360 – though available today for almost all consoles under the sun – destroyed most understood metrics of what a game could be. At the beginning of October 2013 “GTA Online” would launch, marking a pivotal part in Rockstar’s rise to impossible riches. More on that later! Today, the entire Grand Theft Auto franchise sits at an estimated 380 million units sold and GTA V comprises 185 million of those. According to Harold Goldberg, the game was made on an estimated budget of $265 million, as of 2018, when Goldberg had written his article, the game had already made around $6 billion dollars.

In March 2016, Rockstar would expand its ventures into India, with a small employee count somewhere in the 500s, “Rockstar Interactive India LLP” was founded and would later be expanded in 2019, through the acquisition of Bangalore-based studio “Dhruva Interactive”, which became merged with the Rockstar India branch.

2018 would mark the last of Rockstar’s major new releases at the time of writing “Red Dead Redemption 2”, the last game written by Dan Houser, before his 2020 departure to form “Absurd Ventures”. The game would be a prequel to Rockstar’s 2010 tear-jerker about penitent cowboy John Marston on his way to outrun his past. This hinted at past from the game’s previous installment, would be the prequel’s chief concern. The game has sold an estimated 55 million copies to date, since its release.

In 2020, Rockstar Games would officially acquire the Scottish studio “Ruffian Games”, which had previously worked with Microsoft Studios, on games for their motion control-based Kinect system and the highly acclaimed Halo: The Master Chief Collection, and also had experience with open world video games. The studio would be renamed to Rockstar Dundee.

Lastly, Rockstar would venture into music, partnering with well-known, Spanish, Ibiza-based party organizer “CircoLoco”, to establish CircoLoco Records. Though the full effects of this new venture remain to be seen, as is the potential of Rockstar’s India and Scottland branches.

Rockstar’s License To Print Money: GTA Online

It is unquestionably true, that Rockstar Games made a lot of their money through the creation and sale of high quality and high effort video game productions, helmed by some of gaming’s greatest writers, directors and actors, as well as carving out a niche for themselves by sticking to a formula of high effort open world experiences with bustling, grand worlds made on their proprietary RAGE engine (Rockstar Advanced Game Engine). The gaming market is, as many markets are, volatile, however, and the big fish don’t always stay at the top of the pond. The veil of secrecy looming over Rockstar Games’ operations would briefly be lifted in 2016, when a lawsuit was filed by former Rockstar North president, Lezlie Benzies, against Take-Two Interactive, Rockstar Games and his former colleagues, Dan and Sam Houser. Benzies was, according to him, fired unjustly and not paid due royalties on a project he was working on at the time of his expulsion from the company. The lawsuit lasted till March of 2018, and, according to Benzies, he was owed a pretty substantial sum of $150 million dollars. 12 of his 18 claims ended up dismissed by the court, but Benzies was found to be justified in his pursuing of certain royalties. The rest of the proceedings were messy, drawn out and unimportant to the topic of this article.

Throughout the case, it was found that Rockstar had made around $500 million at the time, just from the sale of in-game microtransactions, inside of GTA Online. As Paul Tassi of Forbes had aptly noticed in 2016, Grand Theft Auto 5 had not had a story DLC, unlike most of Rockstar’s previous games. DLC, short for “downloadable content” are digital addons to a pre-existing game, which are often paid, and provide some form of additional content (like an additional campaign, new weapons, quests or the base game’s soundtrack) for players to experience. Rockstar Games was particularly known as some of the best at this form of post-release content, often featuring incredible stories, which helped to further enrich their grand, open worlds. Still, today, Tassi’s words hold true, Grand Theft Auto V’s online services are updated regularly with new content and unlockables, but the singleplayer experience is not.

To be fair to Rockstar Games, here is a statement from director of design Imran Sarwar, provided to GameInformer, about the lack of singleplayer expansions for GTA V: “We would love to do more single-player add-ons for games in the future. As a company we love single-player more than anything, and believe in it absolutely – for storytelling and a sense of immersion in a world, multiplayer games don’t rival single-player games. With GTA V, the single-player game was absolutely massive and very, very complete. It was three games in one. The next-gen versions took a year of everyone’s time to get right, then the online component had a lot of potential, but to come close to realizing that potential also sucked up a lot of resources. And then there are other games – in particular Red Dead Redemption II. The combination of these three factors means for this game, we did not feel single-player expansions were either possible or necessary, but we may well do them for future projects.”

The reason, I think, is a lot more simple, as the $500 million figure speaks stronger than any of my words could – but how did this come about? A look at Rockstar Games’ news service, “Newswire”, prompts the realization of just how much content, updates, resources and time are shared and spent on GTA Online to this day. It is a well-oiled machine, and the grind for money and power on the digital Los Santos’ streets never ceases with ever-new additions to the game. The in-game microtransactions mentioned in Benzies lawsuit are called “Shark Cash Cards” (or often simply “Shark Cards” for short). Their listing on Rockstar Games’ official online store reveals that the lowest value Shark Card, the “Tiger Shark Cash Card”, comes in at 3.99€ and rewards the player with $250.000, while the highest value Shark Card costs 74.99€ and gives the player a whopping $10 million. At least, the number would seem whopping to an outsider, but a list from 2023 of this year, by Erik Petrovich of GameRant of GTA Online’s most expensive items for player’s to attain reveals a shocking truth: The most expensive item in Grand Theft Auto Online, the “Luxor Deluxe” jet, is exactly $10 million in-game – And that’s only one item from a list of 17, where the lowest one already costs $3.870.300.

These figures lead me to believe, that Rockstar Games makes much of its profit today, through “whales”. A “whale” in gaming, a term previously only reserved for mobile games, is a consumer, who is in the minority (roughly 2%), but drives most of a game’s revenue, through their sheer amount of capital and their desire to spend it on the given app or game of their choice. As Mihovil Grguric for Udonis writes: „If we look at statistics for top-grossing games, the whales represent the smallest percentage of users who are responsible for 50% or more in revenue sales of an app. In other words, there’s a small number of mobile game whales, but they account for the majority of a game’s revenue. They will often make a difference for a game from breaking even to being profitable.” Take-Two Interactive admitted in 2019, that 58% of their entire revenue is made through DLC and microtransactions.

Rockstar Games seems intent on not slowing down in the slightest, even if Sam Houser remains the last of its founders still on the team, the gaming giant’s adaptability, past luck and ability to capitalize on profits, a consistent formula, as well as leveraging media coverage and outrage seem likely to keep them afloat for many years to come. The proof of that, as well as the proof of their enduring quality, after all but one of their original founders’ departure, along with their main storyteller, and half of the Houser duo, remain to be seen!