BMG sells its games arm to Take-Two, and Rockstar Games is born

What happened

By early 1998 BMG Interactive, the games arm of Bertelsmann's music empire and the publisher that had put out Grand Theft Auto, was dormant. On March 12, 1998, the small New York publisher Take-Two Interactive announced it was acquiring substantially all of BMG Interactive's assets: the UK publishing group, distribution operations in France and Germany, rights to twelve upcoming releases, and, above all, the worldwide publishing and distribution rights and copyright to Grand Theft Auto. The price was paid in paper, with Take-Two issuing BMG 1,850,000 shares of convertible preferred stock, roughly a sixteen percent stake. The studio that made GTA was not part of the deal; DMA still belonged to Gremlin in Dundee, while its most famous creation was now owned in New York. A group of ex-BMG people followed the games across the Atlantic: Sam and Dan Houser, Jamie King, and Gary Foreman, joined by Terry Donovan from Arista Records. On January 22, 1999, Take-Two announced what they had been building, a new internal label called Rockstar Games with Sam Houser as president. The launch release promised an elite team drawn from music video, record labels, and night club promotion, and Houser declared the goal was to change the way the media looks at the game industry and give it some personality.

How we know

The acquisition terms come from Take-Two's own annual report for fiscal 1998, filed with the SEC in January 1999, which records the March 1998 purchase of substantially all BMG assets, the Grand Theft Auto copyright, and the 1,850,000 preferred shares issued as consideration. GameSpot's report from the day of the announcement matches the filing on every term and adds that BMG would hold about sixteen percent of the company. The Rockstar founding is documented by Take-Two's own press release of January 22, 1999, preserved by the Internet Archive, including Sam Houser's appointment and his launch statement. Wireframe's oral history supplies the human side, naming the five who moved to New York and the projects they kicked around first. Wireframe also reports the sale price as nine million dollars; the SEC filing and contemporary reporting show payment in stock, so we state the share terms and treat the cash figure as unverified. The founding is often dated to December 1998, but the primary record we hold is the January announcement, so we anchor on that.

Sources

• Take-Two Interactive Software, Inc.. Take-Two Interactive annual report (10-K) for fiscal year 1998, filed January 29, 1999 (SEC EDGAR) (1999) · Primary sourcesec.gov · Cited as a "primary" source (no stronger domain match).
• Take-Two Interactive Software, Inc.. Take-Two press release announcing the formation of Rockstar Games, January 22, 1999 (archived) (1999) · Primary sourceweb.archive.org · Cited as a "primary" source (no stronger domain match).
• Chris Johnston, GameSpot. Take 2 Takes BMG (GameSpot News, contemporary, March 12, 1998, archived) (1998) · Reputable sourceweb.archive.org · The domain "web.archive.org" is on our Reputable source registry.
• Wireframe (Raspberry Pi Press). The chaotic origins of Grand Theft Auto (Wireframe magazine, archived) (2021) · Reputable sourceweb.archive.org · The domain "web.archive.org" is on our Reputable source registry.