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GT Interactive

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GT Interactive

Type	Predecessor to Atari, Inc.
Founded	1993
Founder	Ron Chaimowitz^[1] and the Cayre Family
Headquarters	New York, NY, USA
Area served	World
Key people	Cayre Family and CEO Ron Chaimowitz
Industry	Interactive Entertainment
Products	Unreal Tournament, Mortal Kombat III, Doom II, Quake
Revenue	$408 million (1999)^[2]
Operating income	$-267 million (1999)^[3]^[4]
Net income	$-254 million (1999)^[5]^[6]
Owner	NASDAQ traded
Employees	1,168 (August, 1999) ^[7]
Subsidiaries	Humongous Entertainment, Legend Entertainment, Reflections Interactive, Cavedog Entertainment

GT Interactive (Good Times^[1] or GTI^[1]) was an American video game publisher and distributor, which later became also a developer of video games and PC games. Founded in 1993, it ceased to exist in December 1999.

History

1993 - GT Interactive is founded

GT Interactive was founded in 1993 as a division of Good Times Home Video, a video-tape distributor owned by the Cayre family. First year's revenue reached $10.3 million.^[8] Doom was released, it sold 2.9 million copies.^[9] But GT Interactive didn't publish Doom exclusively.

1994 - 880% revenue growth

GT Interactive revenue soared 880% and reached $101 million on its second year of existence and profits reached $18 million.^[10] GT Interactive's partnership with id Software scored another hit with Doom II: Hell on Earth, which was released in October and sold over 2 million copies.

1995 - GT Interactive's IPO

In February, GTIS obtained the publishing rights to games based on Mercer Mayer property, which included Little Critter and Little Monster.^[11] GT Interactive began to set up displays at K-Mart and Wal-Mart for low cost software.^[12] GTIS signed with Wal Mart an exclusive software supplier agreement,^[13], that meant according to UBS Securities analyst Michael Wallace: "All software developers have to deal with GT if they want to sell in a Wal-Mart."^[14] In December, GT Interactive debuted on Nasdaq, its IPO raised $140 million and was one the biggest IPOs of the year only losing to the IPO of Netscape.^[15]^[16]GT Interactive Software Corporation was listed on Nasdaq as GTIS.^[17] GT Interactive offered 10 million shares to the public at $14 each.^[18] During GT Interactive's IPO, Appellee Cayre sold more than 1.4 million shares, 9.2% of his shares, for a $20 million return. ^[19] GTIS reported a strong revenue growth of 134% in the year to $234.4 million, but in the first sign of trouble ahead profits increase a meager 23% to $22.6 million.^[20]

1996 - Humongous Entertainment is acquired

In January, GT Interactive obtained the publish rights for the highly antecipated Quake from id Software.^[21] In February, GTIS and Target signed an agreement in which GT Interactive became the primary consumer software supplier to all Target's 675 stores.^[22] In June 1996 GTIS acquired WizardWorks, which developed Deer Hunter, for 2.4 million shares and FormGen, which had the publishing rights of Duke Nukem, for 1 million shares ^[23] or $17 million.^[24] Quake was also released in June by GT Interactive for PC game. Quake sold 1.8 million copies and became a classic PC game.^[25] In July, the game developer Humongous Entertainment was bought by GT Interactive for 3.5 million shares or $76 million ^[26]. In 1995, Humongous Entertainment's revenue had risen to $10 million an increase of 233% over 1994's revenue of $3 million.^[27] The deal gave GT Interactive rights to successful children's software titles such as Putt-Putt and Freddie the Fish. In November, GTIS acquired Warner Interactive Europe for $6.3 million in cash, with this acquisition GTIS gained access to software markets in Western Europe.^[28] In a further sign of uncertainty about GT's future, GTIS, for the year, reported a net income increase of only 11% over the previous year to $25.1 million. Revenue growth also decelerated to 56%, revenue for the year was $365 million. Making matters worse, net income in the fourth quarter reduced 16.8% to $8.5 million when compared to 1995's fourth quarter.^[29]

1997 - $530 million in revenues but $25 million net loss

In January, GT bought One Stop, a European value software publisher, for $800,000 in cash. ^[30] In June, GTIS signed adeal with MTV, the deal gave GTIS the rights to publish games based on Beavis and Butt-head and Aeon Flux.^[31] On October, GTIS bought game developer SingleTrac for $14.7 million, $5.4 million in cash and $9.3 million in stock. SingleTrac owned and developed such games as Twisted Metal and Jet Moto.^[32] In September game developer Cavedog Entertainment made its first release, Total Annihilation^[33], which sold more than 1 million copies.^[34] Cavedog Entertainment was a divisision of Humongous Entertainment^[35] On October 5th 1997, GTIS announced that it had signed an definitive agreement to acquire MicroProse for $250 million in stock, the deal had even been unanimously approved by the Board of Directors of both companies. The deal was expected to be completed by the end of that year.^[36]^[37] But on December 5th the acquisition was cancelled, according to both CEOs "the time is simply not right" for the deal. MicroProse's stock plummeted after the announcement of the deal's cancellation.^[38]^[39] GTIS's result was negatively affected because GTIS stopped being the exclusive computer software distributor to Wal Mart in March, Wal Mart decided to buy its software directly form the publishers.^[40] In 1997 GT Interactive's share of the Entertaiment software market reached a historical low of 6.4% down from the record highs of 9% and 10% years earlier. GT Interactive was leader only on the arcade/action category, with a 20.3% market share. Making matters worse, GT Interactive also had a high debt/equity ratio of 41%, Eletronic Arts had a debt/equity ratio of just 8%. For 1997 GTIS's return on equity was a dismal -16.14%.^[41] For the year, GTIS 's revenue growth continued to decelerate, increased only 45% to $530 million.^[42] GT Interactive posted its first net loss, during 1997 GTIS lost $25 million.^[43]

1998 - Revenue growth falls to 10%

Legend Entertainment was acquired for around $2 million,^[44] while Reflections Interactive was acquired for 2.3 million shares or $13.5 million.^[45]. Both companies were bought in December of 1998.^[46] In May, Epic Games's Unreal was published by GT Interactive, in the first 10 months over 800,000 copies were sold. Coincidentally Deer Hunter II, which was released in October also sold 800,000 copies.^[47] In November, GTIS bought for $17.2 million in stock One Zero Media, becaming the first game publisher to own a entertaiment Internet website.^[48] In the fourth quarter of 1998 GT Interactive posted a net loss of $72.3 million on revenues of $93.5 million^[49]. For the year, GT Interactive reported revenues were almost flat rinsing 10% to $584 million but GT Interactive swung into black by posting a $20.3 million net income.^[50]^[51] Results with the fiscal year ending on December 31, 1998.

1999 - Infogrames buys GT Interactive

The year of 1999 brought bad news for GT Interactive's shareholders, it posted first quarter losses of $90 million due to restructuring costs.^[52] In February, in light of the bad results CEO Ron Chaimowitz was replaced.^[53] Games sales in 1999 fell in comparison to 1998, this fact had dire consequences on GTIS's finances. In April, GTIS predicted for 2000 a first quarter loss of $55 million on revenues of around just $95 million. A failure to release 5 major games and a planed relocation to Los Angeles added to the losses.^[54] In June, GTIS announced it had hired Bear Stearns to look into the possibility of either a merger or a sale of the company and in October GT Interactive fired 35% of its workforce or 650 employees mostly from its distribution section.^[55] In June Reflection's Driver was released it sold approximately 1 million copies.^[56] In July One Zero Media was sold for $5.2 million in cash, just six months after it was purchased. ^[57] In November 16, Infogrames announced that it was buying for $135 million 70% of GT Interactive, Infogrames assumed the new subsidiary's $75 million bank debt and had invested $30 million at GT Interactive by June 2000.^[58]^[59]. Ten days later GT Interactive made one of its last releases, the classic Unreal Tournament which went on to sell more than 1 million copies.^[60] IESA's acquisition came just in time because GT Interactive's 1999 result were dismal. Revenues fell 30% to $408 million in 1999 and GT Interactive posted a net loss of $254 million for 1999. ^[61]^[62] Results with the fiscal year ending on December 31, 1999. On December 16th the deal was consummated and GT Interactive was no more, it became Infogrames, Inc., a subsidiary of IESA.^[63] GT Interactive became Infogrames, Inc, then Atari, Inc in 2003.^[64]And IESA has since retired the GT Interactive brand.