Greetings, and welcome to the Take 2 Interactive Software First Quarter Fiscal Year 2018 Earnings Conference Call. At this time all participants are in a listen only mode. An interactive question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.
Hank Thomas, Senior Vice President of Investor Relations. Thank you. You may begin.
Good afternoon. Welcome and thank you for joining Take Two's conference call to discuss its results for the first quarter of fiscal year 2018 and to June 30, 2017. Today's call will be led by Strauss Zelnick, Take 2's Chairman and Chief Executive Officer Carl Sladoff, President and Laney Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q and A session following our prepared remarks. Before we begin, I'd like to remind everyone that the statements made during this call that are not historical facts are considered forward looking statements under federal securities laws.
These forward looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us. We have no obligation to update these forward looking statements. Actual operating results may vary significantly from these forward looking statements based on on a variety of factors. These important factors are described in our filings with the SEC including the company's most recent annual report on Form 10 K and quarterly report on Form 10 Q, including the risks summarized in the section entitled Risk Factors. I'd also like to note that unless otherwise stated, Our press release and filings with the SEC may be obtained from our website at www.take2games.com.
And now I'll turn the call over to Strauss.
Thanks, Hank. Good afternoon and thank you for joining us today. I'm pleased to report that fiscal 2018 is to an excellent start with our business's positive momentum continuing to exceed our expectations in the first quarter. Take too delivered growth in both net sales and net revenue as well as margin expansion. Grand Theft Auto5 and Grand Theft Auto Online continue to former expectations during the first quarter nearly 4 years after their initial release.
Grand Theft Auto5 remains highest rated game of the current console generation and the must have title for gamers on both console and PC. Grand Theft Auto Online delivered its best quarter ever, substantially exceeding our net sales expectations and was once again the single largest contributor to recurrent consumer spending. Rockstar Games has continued to drive sustained engagement and growth in recurrent consumer spending through the ongoing release of free additional content most recently, the Don Raid, Overtime rumble and Powermat updates. On the heels of the June 13th release of the substantial gun running update, June July successfully became our 2 biggest months ever for Grand Theft Auto Online monthly active users. And Rockstar Games will continue to support the game going forward.
As a result of Grand Theft Auto Online's performance in the first quarter, we now expect game to deliver net sales growth during fiscal 2018 and another consecutive year of record results. NBA 2K17 remains the top rated sports game of the current console generation and is now our highest selling sports title ever, with sell in to data more than 8,500,000 units. In addition, a robust demand for the game itself, net sales from our NBA 2K series continue to benefit from strong engagement and recurrent consumer and can continue to grow both unit sales and recurrent consumer spending for years to come. In addition, a number of other titles from our diverse portfolio contributed to our 1st quarter results, including social points free to play mobile titles, WWE 2K17, and WW SuperCard, mafia 3 and Sid Meier's Civilization VI. Digitally delivered net sales exceeded our expectations in the first quarter, driven by growth in both recurrent consumer spending and full game downloads.
Recurrent consumer spending increased 71% and accounted for 58 K, a variety of other offerings contributed to recurrent consumer spending. In the free to play category, Social Point continues to outperform our expectations with net sales its 2 biggest games: Dragon City And Monster Legends, growing double digits in the first quarter. Opportunity for Take 2. WWE SuperCard also continued to grow with net sales up more than 50% and total downloads now exceeding $15,000,000. An NBA 2K Online remains the number one PC online sports game in China, with over 35,000,000 registered users.
Downloadable add on content also contributed to the growth in recurrent consumer spending, led by offerings for Sid Meier's Civilization, Mafia III and WWE 2K17. We expect fiscal 2018 to be another strong year for Take 2, and we've raised our outlook for net sales and net cash provided by operating activities. Looking ahead to fiscal 2019, by operating activities led by the launches of Rockstar Games Red Dead Redemption 2 and a highly anticipated new title from 1 of 2K's biggest franchises. Today, our industry exciting new hardware platforms to the continued growth of digital distribution, we now have the ability to reach and captivate audiences like never before. In addition, the ways in which consumers engage with interactive entertainment are continuing to evolve, including through mobile devices and the fact growing world of competitive gaming.
Take 2 is exceedingly well positioned creatively operationally and financially to capitalize on all of these opportunities and to deliver value to our customers and returns for our shareholders, over the long term. I'll now turn the call over to Carl.
Thanks, Strauss. I'd like to begin by providing an update on our recent strategic accomplishments and then review our lineup for fiscal 2018. In May, we further diversified our industry leading portfolio of owned intellectual property, to the acquisition of Kerbal Space Program, the critically acclaimed Physics Space Stimulation game. Created by independent developer squad, Cripple Space Program was originally released on PC in April 2015 and has sold over 2,000,000 units to date. Title has been widely popular with critics and consumers alike, earning a Medicare rating of 88 and esteemed user score of 97%.
In Kerbal Space Program, players must build a space worthy craft capable of flying its crew of lovable beings called Kerbal's in the space. Players who successfully launched their spacecraft can explore their planet's moons and solar system, as well as share the unique creations and advice with a vibrant and growing online. And community. Kerbal Space Program is currently available solely through digital download for PC. The team at squad will continue to provide support and ongoing development for the title through updates and additional content, including the previously announced Kerbal Space Program making history expansion, which will launch later this calendar year.
Since completing the acquisition, sales of Kerbal Space Program are outperforming our expectations. We view the brand as a new long term franchise that adds a well respected and beloved IP to our portfolio as we continue to capitalize on opportunities across the independent development landscape. Turning to the exciting and growing world of eSports. Our team and the NBA remain hard at work on setting the foundation for the launch of the NBA 2K Esports week in 2018. The joint venture builds upon the success of our NBA 2K brand and relationship with the NBA, to bring together the best basketball gamers in the world, marking the first official competitive gaming league that is jointly owned by a U.
S. Professional sports league. We are thrilled to expand our presence in competitive gaming and believe that the NBA 2 KE Sports Lake has a long term potential to be a meaningful driver of profits for our company. I'll now discuss our fiscal 2018 lineup. On September 19th, 2K and Visual Concepts will launch NBA 2K18, the latest installment of our industry's number one rated and number one selling basketball series.
The title will be available for PlayStation 4, PlayStation 3, Xbox 1, Xbox 360, Windows PC, and will also be at the NBA 2K18 standard edition, while the Toronto Raptors, Demar De Rosen, will be the game's first ever cover athlete specifically for the Canadian edition. In addition, 2016 Hall of Famer and 15 time NBA All Star, Shaquille O'Neal, will be on the cover of the Legend Edition, and Legend Edition Gold, which will retail for $99 $149, respectively. Fans who pre ordered standard addition of NBA 2K18 at participating North American retail and online vendors will receive early tip-off access ensuring that they received their copy and in game bonuses 4 days early on September 15th. On October 17, 2K, Visual Concepts And YOOX will launch WWE 2K18. The newest offering from our popular simulation based WWE series for PlayStation 4 and Xbox 1.
The title will also be available this fall for the Nintendo Switch, marking the first time in 5 years that the series has been released for a Nintendo platform. WWE superstar, Seth Rollins, will be the game's cover athlete and decorated Olympian, WW Hall of Famer and current raw general manager, Kurt Engel, will return to WWE in ring action virtually for the first time in more than a decade as a bonus character, for those who pre ordered WWE 2K18 at participating retailers. In addition, TUK will celebrate the 15 year career of WWE superstar, John Cena, through the limited worldwide release of the SINA Nuff edition, which includes exclusive memorabilia and Indian content. WWE, series of post launch downloadable content, including a season pass. On August 29th, 2K and For Access Games were released Xcom II, War of the Chosen.
The expansion pack for the 2016 award winning strategy title for the Windows PC, PlayStation 4 and XBOS 1. XCOM2 were the chosen greatly expands upon XCOM2's campaign and also includes new enemies, missions, environments, and increased depth of strategic gameplay. In the coming months, 2K and Firaxis games will release additional civilization and scenario pack for Sid Meier's Civilization VI, but we introduced 2 new leaders representing civilizations from Southeast Asia. This content will be available automatically at no extra cost for purchasers of the Civilization VI Digital Deluxe edition. Social Point is also hard at work and has a number of exciting games planned for the launch over the next 2 years.
Looking ahead, we have an exceptional development pipeline across our labels, including new releases from our popular series and groundbreaking original intellectual property. In addition, we remain focused on finding new and innovative ways to increase consumer engagement and drive recurrent consumer spending, as well as enhance our growth through emerging platforms, business models and geographies. The long term opportunities for both our company and industry are more exciting and ever. I'll now turn the call over to Lainie.
Thanks, Carl, and good afternoon, everyone. Today, I'll discuss our first quarter results and then review our financial outlook for the second quarter fiscal year 2018. Please note that additional details regarding our actual results and financial outlook are contained in our press release. Including the items that our management uses internally to adjust our GAAP financial results in order to evaluate our operating performance. As mentioned by Strauss, our fiscal first quarter provided an excellent start to the year.
Sales with our offerings exceeded our expectations. Due primarily to the continued outperformance of Grand Theft Auto5 and Grand Theft Auto Online, as well as recurrent consumer spending on NBA 2K17. Total net sales grew 28 percent to $348,000,000. Of this amount, 81% were digitally delivered net sales, which grew 47% to $281,000,000 as we continue to benefit from growth in recurrent consumer spending as well as our industry's ongoing transition to full game downward. While the operating performance of our business exceeded our expectations, this outperformance was not reflected in our GAAP results for two reasons.
First, our better than expected net sales were driven by titles that we are required to defer, and therefore, our GAAP revenues and profits will not benefit from these sales until future periods. And second, because of the better than expected performance of Grand Theft Auto V and Grand Theft Auto Online, we recorded higher than forecasted internal royalties, which are calculated using results that are adjusted to exclude the impact of deferrals and unlike certain other costs that sold are not deferred. Turning to some details from our first quarter income statement. GAAP net revenue grew by 34% to $482,000,000, and cost of goods sold increased by 2% $195,000,000. Operating expenses increased by 9% to $173,000,000, due primarily to higher stock based compensation reorganization costs and the inclusion of Social Point, partially offset by lower marketing expense.
And GAAP net income increased to $60,000,000 or $0.56 per share, up from a net loss of $39,000,000 or $0.46 per share. In the first quarter, we recognized a $16,000,000 GAAP tax benefit related to tax deductions from stock compensation expense. These additional tax deductions were to the increase in our stock price from the date that stock was granted to the date set invested. Previously, these excess benefits were recorded in additional paid in capital. With new accounting guidelines required that they now be recognized in income tax expense.
This benefit had no effect on our management reporting tax rate, which is 22%. Now, I will review the highlights of our fiscal 2018 financial outlook. Starting with the fiscal second quarter. We expect net sales to range from $465,000,000 to $515,000,000. At the midpoint, this represents 2% growth versus the prior year.
The largest contributor to net sales is expected to be NBA 2k18, along with Grand Theft Auto 5 and Grand Theft Auto Online. We accept GAAP net revenue to range from $400,000,000 to $450,000,000, and cost of goods sold to range from 194 to $222,000,000. Operating expenses are expected to range from $185,000,000 to $195,000,000. At the midpoint, this represents a 14% increase over last year, driven by the inclusion of Social Point as well as higher R and D, and stock compensation expense. And we expect GAAP net income to range from $17,000,000 to $27,000,000 or $0.15 to $0.25 per share.
Turning to our outlook for the full fiscal year. As a result of our better than expected first quarter operating results and improved forecast for the remainder of the year, We are increasing $75,000,000,000, up from our prior outlook of $1,420,000,000 to $1,520,000,000. Net sales are expected to be down from fiscal 2017, it to fewer new releases and moderating sales from Grand Theft Auto5, partially offset by growth in sales from NBA 2K and Grand Theft Auto Online, as well as the acquisition The largest contributors to net sales are expected to be NBA 2K, Grand Theft Auto5 and Grand Theft Auto Online and WWE 2K18. We expect the net sales breakdown from our labels to be roughly 55% 2K, 39% Rockstar Games and 6% Social Point and Other. And we expect our geographic net sales split to be about 65% United States and 35% international.
We now expect to generate approximately $200,000,000 in net cash provided by operating activities, up from our prior outlook of approximately $150,000,000, and we plan to deploy approximately $60,000,000 for capital expenditures. Although our operating performance is exceeding expectations and we are increasing our fiscal 2018 outlook, we are reducing our forecast for GAAP net revenue and net income. This is due to 2 factors: 1st, as a result of the continued success of Grand Theft Auto Online, we have determined that it is necessary to stem life of Grand Theft Auto V and Grand Theft Auto Online for purposes of calculating deferral. This change has no effect on our net sales, cash flow or management reporting results. But it does extend the period over which we recognize GAAP net revenue.
And second, because of this strong ongoing performance of Grand Theft Auto, We expect to record higher internal royalties, which, unlike certain other costs of goods sold, are not deferred. As a result, we now expect GAAP net revenues to range from one point $2,000,000,000 to $1,720,000,000 and cost of goods sold to range from $732,000,000 to $781,000,000. Total operating expenses are expected to range from $770,000,000 to $790,000,000. At the midpoint, this represents a 17% increase over the prior year. Driven by the inclusion of Social Point and higher R and D expense.
And we now expect GAAP net income to range from $112,000,000 to $140,000,000 or $1 to $1.25 per share. In closing, we are very pleased with the start to fiscal 2018. Which is poised to be another strong year for our organization. And we believe that fiscal 2019 will be a record year for both net sales and net cash provided by operating activities, which are expected to exceed $2,500,000,000 $700,000,000, respectively. Over the long term, Take 2 is well positioned to capitalize on our many exciting opportunities around the world and to generate growth and margin expansion for our shareholders.
Thank you. Now I'll turn the call back to Jeff.
Thanks, Carl Elmani. On behalf of
our entire management team, I'd like to thank our colleagues for delivering such a strong start to the year. To our shareholders, I want to express our appreciation for your continued support.
Thank you. Our first question is from Eric Handler from MKM Partners. Please go ahead.
Yes, thanks for taking my question. Just in case I didn't miss it, I want to just make one quick question on GT Online. So the full year is going to be up 1st year, the 1st quarter was the best quarter ever. Are you assuming that 2nd, 3rd or 4th quarters, we see declines, or are you sort of begrudgingly amending this this game just continues to grow, unbelievably quarter after quarter. And then secondly, I wonder if you could talk a little bit about the growth that you're seeing put some numbers, for us, provide some numbers for us on the NBA 2k digital numbers.
Well, I'll start with, GTA Online, and it has really formed unbelievably. Q1, it outperformed, beat our expectations. We're heading into Q2, we see that Q2 will also be up over last year. But for Q3 and Q4, we still have it moderating slightly. But overall, we'll be up for the full year.
Great.
And
then for the MBA information, we haven't given out that level of detail.
Okay. You can't give like a directional number double digits or anything along the line?
Recurring consumer spending for EMEA as you mentioned, was up 64%.
Thank you.
Our next question is from Tim O'Shea from Jefferies. Please go ahead.
Yes. Hi. Thank you for taking my question and congratulations on the quarter. So by my math, you guys are increasing full year non GAAP EPS outlook by around 30% to 41% from the outlook that you provided last quarter. So just given the relatively light release slate, it does seem like this growth is coming recurrent consumer spending.
And I know that Strauss spoke about how GTA Online should grow this year, given the record MOW levels in June July. And obviously MVA all sounds, very strong. But I'd just love to hear your thoughts on what's driving this level of optimism around this non GAAP EPS outlook.
So for the full year, we are lifting the year due to, our Q1 beat then our improved outlook for the remainder of the year, which is driven by the improved forecast for GTA5, GTN line and NBA 2K. And we also increased our marketing expense for certain titles, GTN line and some of the rest of the titles that are in our pipeline.
Thank you.
Next question is from Mike Olson from Piper Jaffray. Please go ahead.
Hey, good afternoon. I had two questions if I could. First, as we're talking about here GTN line obviously continues to beat expectations. Just curious what if anything do you think could slow it down, is there reason to believe that the launch of Red Dead is actually maybe the largest threat to GTI Online Engagement? And then second, you mentioned full game download exceed expectations.
Can you share what percent of current gen sales were full game downloads and what you would expect that to be by year end? Thank you.
I think 4 years after its initial release were meant to gratify the REN Theft Auto V continues to sell, sold in more than 80,000,000 units and that it looks like Grand Theft Auto Online will have another record year. Beyond that, we're not making any projections. However, we have observed that When Rockstar Games drops additional robust content, people are enthusiastic about playing the game and monetization follows appropriately. And kind of how we look at the world. In terms of the competitive landscape going forward, look, our view is that all entertainment titles compete against every other possible use of your time.
And they don't compete specifically against our games or anyone else's games. They compete against every against text messaging, going to the movies, reading a book, doing your work, whatever else can occupy your time, entertainment is a nice to have, not a must have. However, when there's more than one title in the marketplace that compels people, the market also expands to take advantage of it. So the marketplace can be competitive, but it's rarely directly competitive title to title, whether that's a title that comes out under take 2 umbrella or any of our competitors or anything else for that matter. That's sort of a roundabout way of saying, we're really looking forward to the release of Red Dead Redemption too.
We're really excited and enthusiastic, of course. We don't think that has anything to do at all with how Grand Theft Auto cramp style online will perform.
So in terms of our full game downloads for our new, new consult. For Q1, we had it was at 40%, which is, higher than usual for us, because we were so heavily weighted towards our catalog titles during the quarter. But for the full year, we see it being at around 30%.
Our next question is from Justin Post from Merrill Lynch. Please go ahead.
Thank you. A couple questions. Just wondering about the online MAUs for Grand Theft Auto relative to the new game sales. So do you see that ratio changing a lot as you sell more units of GTA5 and you watch your online users. Is that ratio staying about the same?
And is there still a lot of room to grow the online universe based on the game sales. And then the second thing, any updates on Red Dead for next year? And how what kind of lessons are you learning from GTA? Can you apply those to the Red Dead online universe? Thank you.
Yes, we haven't given out many statistics in terms of the connection between purchases and users and how that's developed. Except, of course, to say that we've experienced another record and expect to have a record result this fiscal year, which Lainie gave detail on I'm sorry, your second question was?
Any update on Red Dead? And how do you think about that online given what's going on with GTA?
Yes, there are no updates apart from our enthusiasm about the release in spring of 2018. And what Rockstar Games has said is there will be an online component, no more details have been given, we've said as a company that our hope and expectation is that all of our significant releases offer consumers an opportunity to stay engaged after the initial release. It's our belief that if you surprise and delight and excite consumers, then monetization can't be far behind and that's been our experience. Beyond that, we're not giving out any more details.
Our next question is from Ben Shacker from Macquarie Group. Please go ahead.
Hey, congratulations to everyone over there on the continued success. Few questions, Strauss. I'd love to hear your high level views on exclusive content for the various platforms. It seems like over the recent past, we haven't seen a lot of exclusives, but as app stores and potentially new services become more important, do you think that will change? And then separately AR versus VR, Strauss, I think you were corrected correctly skeptical of virtual reality's growth.
So far, it hasn't done much just wondering what your views are on augmented reality? And then finally, just a definitionally, I consider Borderlands a 2K title. Is that correct or because it's developed by gearbox, should I not think of it as a 2K title? Thanks.
So I'll just give you the 3rd third one into the easiest one. Yes, Borderlands is a 2K title. So it's published by 2K developed by Gearbox. So that's a quick answer to that question. In terms of platform exclusivities, we don't really focus too much on that.
I think for us, the priority for us is to make sure that our products are available as widely on as possible and as many platforms as possible. There may be specific game related reasons for us to do, a certain level of exclusivity by a platform, but there really is no strategic focus on increasing or decreasing that going forward.
Hey, Ben, it's Strauss. In terms of AR versus VR, they're completely different user experience. And the concerns that I raised regarding VR are not applicable to AR, in order to have an AR experience necessarily have to be wearing glasses or a headset. You're not burdened by being in a particular location. And the discomfort factor, doesn't exist necessarily.
And we've already seen a very successful AR title with Pokemon Go. A very successful title. And one can talk endlessly about the trajectory of that title, how it peaked relatively quickly. Separate issue. But I have no skepticism about the, possibilities for AR.
It's in the hands of the developers. Are they passionate about an idea, and is the idea brought to reality in a spectacular, exciting and compelling way. So I think there's great opportunity, remains to be seen if the AR technology itself is what creates the opportunity. This entertainment business that we're in here is a sort of, is unique in that. It's this combination of technology and what that means in terms of gameplay, character story on graphics.
It's unusual that so many moving parts at any given time. And the full history of this business since its inception, as one piece moves ahead, other pieces move ahead. So it's pretty hard to predict what will excite consumers. And we don't we sitting here today, from a corporate point of view, don't propose to, to predict that. But that's what our 2200 creative folks who are in the business of doing and our strategy is to be the most creative, the most innovative and the most efficient.
And I think where you're talking about is an innovation. And, we're proud of of the innovations that our creative teams, are focused on every day. So more to come, but I don't have any skepticism particularly about AR technology.
Okay, thanks. Good luck.
Our next question is from Ray Stochel from Consumer Edge Research. Please go ahead.
Hi guys. Thanks for taking the call. The first question would be if there's any change to your initial 2019 outlook given the increase in guidance for this year?
As I mentioned in my prepared remarks, we don't have a change. We're reiterating what we said last quarter. And net sales above $2,500,000,000 and cash from operations above $700,000,000.
Got it. Thanks. And I think, you may have mentioned some marketing timing being put back into this year. Is that a timing shift or just additional marketing for your properties that you're trying to gain users for? And then separately, how are you guys thinking about your mix of marketing, whether that be from social influencers, whether that be from retail or whether that be more media related ad spots?
So the marketing expense being higher that I mentioned, in our new outlook, that is, additional marketing for, some of our titles.
And in terms of mix of marketing, I think we are seeing a change in mix I, I and that, you know, that doesn't, that's not to say that we don't have the same kind of opportunities that we have in the past in traditional marketing, television, outdoor or otherwise. We are obviously seeing more opportunities to be more efficient on the mark from a marketing perspective. Social media presents all kinds of new and interesting opportunities for us. But in terms of, you know, very significant meaningful changes that would impact your models or expectations, I would say, no.
Got it. Thanks so much guys.
Our next question is from Mike Hickey from The Benchmark Company. Please go ahead.
Hey, guys. Congrats on another great quarter. Strasse, I think you may have touched on this. I'm going to ask anyway. I guess when you look at GTA Online and your record mile that you're seeing in June July.
I think you said, obviously, new content is And clearly, that seems to be the case in this quarter. But sort of thinking, I guess, I'm wondering how you sort of balance new content with continued catalog sales. They obviously both seem to be big drivers here, but you would expect, I guess, over time, that catalog sales might slow. I have a quick follow-up. Thanks.
1 would expect that catalog sales would slow over time. Certainly. And, we also, when we outlined our expectations for Grand Theft Auto Online for this fiscal year, we felt that sales would moderate has not turned out to be the case. In the first quarter, we're not expecting to be the case in the second, but as Laney said, we are expecting sales to moderate in the 3rd fourth quarter would still yield a record year. And of course, we have to see how it pencils out.
But yes, unit sales of the full game would normally decline over time.
Okay, thanks. The, and I guess on GT Online, when you think about, sort of the construct of monetization, obviously record performance here, record now. Is that is the money collected just primarily the growth there from increased player base? Or are you also seeing some fits maybe in paid conversion rate or ARPU And secondarily, I guess, when you think about maybe medium to longer term, where you see the biggest opportunity for the game, geography wise or platform wise? Thank you.
We're not giving out more color in terms of conversion and ARPPU, or ARPU on the title, except the information that we already gave in terms of where the game is going, Rockstar being just says that there's more content to come for Grand Theft Auto Online. And we're excited about that and I think consumers are too. Beyond that in terms of where the title goes creatively or where any franchise goes creatively, as you know, Mike, we leave those discussions and announcements to our labels.
Our next question is from Doug Creutz from Cowen And Company. Please go ahead.
Thanks. When I'm thinking about the size of the beat in the quarter and particularly in a quarter where you didn't have any new releases and where you were, I think 7 weeks deep in the quarter when you gave guidance, I'm just trying to wrap my head around, was there something that just really inflected positively in the back half of the quarter you didn't expect Was it more a case of you expected things to sort of really slow down in the back half of the quarter and they didn't? And then if you could let us know what your cash net sales were in the quarter, that'd be helpful too.
So we did have very successful release of the gun running update in the quarter. And that generated a lot of enthusiasm and net sales reflected that enthusiasm.
So I think
you properly captured that. And in terms of your question regarding catalog, Lainie, you'll take that one.
The catalog sales are about 94% in the quarter.
94% of the total?
Yes. So it was $326,200,000 of net sales.
Okay, great. Thank you.
Our next question is from Sam Pham from Mizuho. Please go ahead. Hi, thanks.
I was just curious, as you look ahead to Red Dead, is there any reason that you think the Geo mix for that game would change or be noticed a little different from what you've seen with GTA or maybe even the last, Red Dead game from your prior launch?
I understand why you're posing a question given the theme. We had a great worldwide, result with the Red Dead Redemption. We expect it'll have a similar geographical mix, to any titles of that scale. We pride ourselves on our worldwide marketing and distribution organization. The international markets continue to develop for us and for our competitors we're incredibly excited, for example, about what's going on in Asia, where there's a lot of growth.
So no, we don't, we don't have any reason to believe the geographical mix will differ.
Great. Thank you.
Our next question is from Drew Crum from Stifel. Please go ahead.
Okay, thanks. Good afternoon, everyone. Strauss, can you comment on your early expectations for the NBAE league? Is that an important piece of the confidence behind next year's guidance for record sales or is it not material? And then separately on the pipeline, I think you mentioned that there are a couple of games in development from Social Point will be out over the next 2 years.
Is that is anything embedded in fiscal 'eighteen guidance And as it relates to Red Dead, any contemplation in making that game available on PC? Thanks.
Well, let's distinguish our collective enthusiasm for the MBA Elite from our financial expectations because we've included no results. In our outlook from that. And that's again, not a reflection of a shortage of interest or enthusiasm. We have plenty of that But you know, our style around here is that we don't claim victory before it occurs. We work really hard to create something and really diligently to do so.
And then we tell you how it goes afterwards candidly. For what it's worth, we think it's an amazing opportunity. The MBA is a great partner. Brendan Donah, he's doing a fantastic job building a team to exploit the opportunity. We have a schedule coming in 'eighteen.
We have 17 teams who are assigned to participate But the business model is still uncertain in the space, as I've said before, and there's really only one game in the space that generates a whole lot of revenue right now. And again, we think there's a wonderful opportunity, but we're not yet at the point where we would include that in our results. In terms of social point games that are in development, Those are included in our outlook. And as I mentioned, that deal is not very old around here, but it's still already performing much better than our expectations. Net sales were up double digits in the quarter.
And Red Dead on PC, Strauss, any update
there? Any updates about any of our titles will come from our labels.
Our next question is from Stephen Chu from Credit Suisse. Please go ahead.
Okay. Thanks. Congratulations guys on a great quarter. So Strouse and Lenny, when the business was completely physical discs, you were in a position where you had to predict the number of units sold, but now you only have to predict units, but you also have to predict consumer engagement and monetization. So where the business is now, is it inherently more predictable or predictable.
So I guess another way to ask the question is, is the cycle of new content drops, the rise in engagement and the monetization that follows, is that a pre predictable business? Thanks. I don't, I actually don't think it's any more or less predictable The vagaries of creative businesses though are well known to all of us. When you're putting out the next iteration in the beloved franchise. Generally, as you come to completion, between the installed base, which is information that we have, and the experience we had in the prior release within the franchise, we come pretty close, I think, in a sense.
Well, the biggest benefit of a movement to digital, of course, is that we don't have any sort of economic order quantity concerns. We don't have to worry about how many units we produce overproducing or underproducing because digital digital game is always available. There's also an enormous benefit for our catalog because a catalog title that isn't selling a lot of won't be on shelves or may not be on shelves, but it's always available in digital form. And finally, of course, our margins, both percentage in dollars or higher with digital distribution. So, this is one of one of these situations where it's all good news.
Perhaps the only bad news, if there is bad news is obviously when you buy a digital the game, you don't have the ability to trade in the use title later. So from a consumer point of view, it could be seen that it's more expense to buy a frontline title. How do we deal with that? We weren't really, really we weren't particularly subject to use gaming sales at all because we pride ourselves in having the highest quality titles in the marketplace, people don't like trading in our games, typically. So I think from this company's point of view, the movements of digital, which to be clear, we have no influence over.
We had need to be where the consumer is. We don't try to order the market. We try to be responsive and be of service to our consumers. However, the movement to digital distribution is definitely a very good thing for our company for the industry.
Hey, Steven. And in terms of engagement, which is kind of code for recurrent consumer spending, again, that's not really necessarily a a, has an effect on our predictability. It just, it really impacts the factor of extending the life of the product and then enable it to monetize more effectively and for a longer period of time. So when we know we have a hit and we know engagement is high, then we can consider that we're going to have, obviously, have better results for a longer period time. So it's really not about predictability.
It's more about how effectively you monetize.
Our next question is from Evan Wingren from KeyBanc Capital Markets. Please go ahead. Thanks.
Can you do 2 platform questions? I guess just how important is PC as a platform for your major titles on a go forward basis? From maybe a few years ago?
So the answer to that is it really depends title. I mean, some titles are actually heavily weighted to PC, for example, Civilization And Excom. Some titles are less weighted to PC. It really depends on a kind of like titled basis. The great news is that the PC market is vibrant for us.
It's a great market for us. It's a big market. It's a core market. These are consumers that are highly engaged. It's a predominantly digital market, which also, removes friction in terms of ongoing engagement with the consumer.
So for us, the PC market as a company is very important and very exciting and something we focus on.
Okay. And then secondarily, obviously, you're supporting the switch. Can you maybe just give us an idea of how your perspective on that platform has evolved over the past, call it, 6 months and where you see its potential?
We were excited 6 months ago and supportive. We're excited now. We have NBA 2K and WWE 2K coming for Switch. The sales have been great. We expect the sales to continue to be great.
We were very optimistic around the platform. We were very port of Nintendo. So the only thing that's changed in the last 6 months is our initial belief has been reinforced by the early, very strong results.
Thank you.
Thank you all for joining us. Thanks for your your questions really appreciate it. We're really pleased with and proud of the results, from the quarter and as always, we appreciate your attention and your support. Thank you very much.
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