Video Game's Virtual Vice Proves Costly

$20 million is a lot of money to make a sex-scandal go away, even for the makers of Grand Theft Auto.

It's fine to build a videogame that openly allows people to murder, carjack, and deal dope, but if you try to sneak in a hidden sex scene it's going to cost you. That's the lesson that the makers of the popular Grand Theft Auto video game series learned today after shelling out some $20 million to settle a three year-old class action lawsuit filed by disgruntled company investors. The infamous, poorly hidden sex-scene (sex-minigame, to be more accurate, as the player controls the action) was included in millions of copies of 2005's Grand Theft Auto: San Andreas, sparking the ire of more than one concerned parent and US Senator. Now that the lawsuit has been settled, what does the future look like for publishers Take-Two Interactive?

• A Long, Bumpy Road The settlement was just but one of several serious problems facing Take-Two in 2009. As Jay Miller notes in today's Wall Street Journal, a 68% drop in revenue today marks the third fiscal quarter in a row that the company has suffered losses. And it's not just the numbers that are looking bad- goodwill among some industry press is also running low. Game Politics criticizes the company for its handling of the controversy, specifically its initial claim that hackers were responsible: "In one the sleaziest moves ever seen in the game biz, Take-Two tried to pin the rap for the hidden sex scenes on its biggest fans, the GTA mod community." 

• Wrong Turn Douglas McIntyre at Daily Finance says that if only Take-Two had accepted a buyout deal from gaming powerhouse Electronic Arts back in 2008, the company wouldn't nearly be in the kind of rough straits it is now. "The transaction would have made sense for both video game companies. EA's huge distribution system would have Take-Two products like Grand Theft Auto. Combining the two companies would almost certainly have allowed for some expense savings."

• Not So Fast Brian Crecente of Gawker's video game blog Kotaku reminds readers that Take-Two is still technically "innocent," if such a word can be used to describe a company whose flagship product peddles digital immorality: "Do keep in mind that just because the suit was settled, that doesn’t mean the contents have been proven or disproven."

• Roaring Back to Life? As a result of the scandal, the company has been under new management since 2007. One of its most popular titles of late, the dystopian action-thriller Bioshock, is being developed as a feature film. Two new editions of the Grand Theft Auto series are on the also on the way this fall, including an iPhone version thats generating lots of early buzz.