L.A. City Attorney Rocky Delgadillo has filed a civil lawsuit against New York-based video game publisher Take-Two Interactive Inc., maker of the popular video game “Grand Theft Auto: San Andreas.”
The game achieved notoriety last summer when a hot-tub sex scene was discovered hidden in the game’s code. Already a violent game, “GTA: San Andreas” encouraged players to have their characters perform “a variety of criminal acts, including murder, pimping, home robbery, tagging and drug-dealing,” according to the attorney’s statement. The claim accuses Take-Two of “deceptive marketing acts” and “fraudulent manipulation of an industry ratings system,” by concealing the pornographic content.
The game initially received a “Mature” rating from the Entertainment Software Ratings Board, suitable for those 17 and older. The game sold more than 200,000 copies to California gamers, amounting to about $10 million. Once the hidden sex scene was revealed, the game’s rating shot up to “Adults Only,” meaning only those 18 and older could buy it. The AO rating kicked it off the shelves of some of the nations’ largest retailers, like Best Buy Stores Inc. and Wal-Mart Stores Inc., which have a company policy against carrying AO games. Sales plummeted and Take-Two recalled more than $50 million of software from stores.
The suit charges the company with violating two sections of the state’s Business and Professions Codes. Each code violation carries a maximum penalty of $2,500, and Delgadillo is seeking penalties for each game unit sold. The suit also requests that Take-Two be ordered to return a portion of the profits that resulted from sales of the mis-rated game.
“This is the first suit of its kind in the nation and is part of a wider, ongoing investigation by this office into video game marketing,” spokesman Jonathan Diamond wrote in an e-mail. “More will follow. This is the start.”
Stock Reply
Insiders at video game publisher THQ Inc. are usually pretty quiet but since November, Chief Executive Brian Farrell has sold off almost $5 million of THQ stock. The company said the sales were part of a vesting plan covering options scheduled to expire over a nine-month period. “The plan calls for sales at specific times regardless of the price of the stock,” company spokeswoman Liz Pieri said in an e-mail. The sales added almost 125,000 shares into the market place, one-tenth of one percent of outstanding shares. THQ was the only video game publisher to emerge from the holiday season with its earnings projections intact. Competitors Electronic Arts Inc. and Santa Monica-based Activision Inc. saw shares plummet after revising earnings expectations due to disappointing holiday sales.
LAVA Awards
The Los Angeles Venture Association named the LAVA award winners for 2005. Startup mobile phone network Amp’d Mobile Inc., based in L.A., won the award for best venture funding, raising more than $100 million in venture capital last year. Chief Executive Peter Adderton, an Australian and founder of Boost Mobile, accepted the award. Santa Barbara-based FastClick Inc. won for its $78 million IPO in April, which was followed by a $284 million acquisition by ValueClick Inc. in August. Best exit went to Intermix Media, creators of MySpace.com, which was acquired by News Corp. last year for a total of $580 million. Chief executive Richard Rosenblatt accepted the award. El Segundo-based media search firm Vendare Media, an Idealab company, won an award for best software financing.
*Staff Reporter Hilary Potkewitz can be reached at (323) 549-5225, ext. 226, or by e-mail at
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