Jack Thompson has been teasing a planned lawsuit which he says will be announced Monday.

On Friday GP was treated to a subject-line only e-mail which read, "So, Dennis, you going to my big news conference Monday?"

Not if you don't tell me where it is, Jack.

Later, GP and GameSpot received a similar message, saying only, "Big news conference by Jack Thompson Monday. Hooah!"

Hooah, indeed. This morning the anti-game activist dropped a little more news in the comments section of GP's The Political Game column on Joystiq. Thompson wrote:

"On Monday, September 25, Thompson will journey to another state and announce, with his co-counsel, the filing of what will likely prove to be hugely significant wrongful death action against Sony and Take-Two..."

So, it's a GTA case...
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More corporate problems for Take-Two Interactive?

According to financial site TheStreet.com, the publisher of GTA and Bully has been notified by NASDAQ that it is not in compliance with filing requirements.

This was not unexpected, according to the game publisher, due to an ongoing internal review of employee stock options. The investigation delayed filing of third quarter paperwork. Take-Two says it plans to request a hearing with NASDAQ to review the situation and will file the paperwork at issue as soon as practical.

Take-Two is among several high-profile firms, including Apple, Dell and Novell to have received such notices from NASDAQ.

GamePolitics has confirmed that the Peaceoholics, a Washington, D.C.-based community group, will stage a protest demonstration outside the Lower Manhattan offices of Take-Two Interactive later today.

Ronald Moten, co-founder and chief operating officer of the Peaceoholics, confirmed to GamePolitics last night that group members would board buses this morning for the trip to the Big Apple. The Peaceoholics are cooperating with anti-game activist Jack Thompson on the action, which is designed to draw attention to the upcoming release of Bully by Take-Two subsidiary Rockstar Games.

The grass roots community group is quite active in the D.C. area on anti-violence initiatives, including a failed 2005 attempt by City Councilman Adrian Fenty to regulate the sale of violent games. Thompson and the Peaceoholics teamed up to stage a similar demonstration outside Take-Two headquarters last August. That effort received coverage by New York television stations and newspapers.

Controversial Miami attorney Jack Thompson has indicated that there will be a demonstration, apparently against the upcoming release of Bully, this Friday outside Take-Two Interactive's Manhattan HQ.

According to a terse e-mail from the activist lawyer, the protest will be staged by " a group of children protesting Take-Two's targeting of kids with their adult entertainment."

Thompson, who cc'd Manhattan District Attorney Robert Morgenthau on the message, did not respond to GP's e-mail request for more information. As reported previously by GamePolitics, Morgenthau' office is conducting a grand jury investigation into Take-Two.
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These days, Rockstar Games and parent company Take-Two Interactive seem to get more court time that the average NBA team.

Gamasutra is reporting that E.S.S. Entertainment, owners of the Play Pen, a Los Angeles "gentleman's club," filed suit against Rockstar in April 2005 for trademark infringement over the inclusion of a strip bar in Grand Theft Auto: San Andreas called the Pig Pen.

At issue was the Pig Pen's similar awning and logo (both pictured) which, like those of the Play Pen, feature the nude silhouette of a female dancer in the stem of the first letter "P". Additionally, the GTA Pig Pen's exterior displayed the words "Totally Nude," a phrase also used by the real-world Play Pen.

AE: Maybe things are different up in L.A. but down here in San Diego, all the strip clubs feature the words "Totally Nude" somewhere on their signs. I only know this because I, um... can see them from the freeway.

Displaying a clear grasp on the concept of parody, Judge Margaret Morrow said in her ruling, "Any visual work that seeks to offer an artistic commentary on a particular subject must use identifiable features of that subject so that the commentary will be understood and appreciated by the consumer."
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Like many gamers, controversial Miami attorney Jack Thompson is hoping for a sneak peek at Bully.

Thompson's interest in the much-discussed game however, is hardly that of a fan.

In a lengthy, rambling suit filed earlier today with the Miami-Dade Circuit Court, Thompson has demanded that publisher Take-Two Interactive supply him with a copy of Bully "so that its content can be fairly assessed by someone, prior to its commercial release, other than a) a hand-picked member of the media and b) the ESRB with its history of, at best, ineptitude in analyzing the content of Take-Two products... If Bully is indeed safe for children's play, then petitioner (Thompson) will be the first to say so."

The request that a game publisher supply a multi-million dollar development project to an outside source for evaluation is unprecedented, and is certain be turned down, if not ignored completely. Attorneys for Take-Two will no doubt move for a dismissal of Thompson's suit.
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That whoosh you're hearing is the sound of Take-Two Interactive's stock price (NASDAQ: TTWO) in free fall.

Shares in the Grand Theft Auto publisher closed at 12.87 yesterday following news that a grand jury in New York had subpoenaed corporate records including those relating to last year's Hot Coffee scandal. 12.87 represents Take-Two's lowest stock price since early 2003. In after-hours trading prices dropped even more, to 10.30.

Bad news continues to pile up for T2. As reported by today's New York Post, the firm is in the crosshairs of D.A. Robert Morgenthau not just over Hot Coffee, but for the way it reported what the Post terms "key financial information."

The paper reported that the subpoenas served on T2 were "unusually wide-ranging" and demanded paperwork related to "acquisitions, partnerships and the recent dismissal of its longtime auditor, PricewaterhouseCoopers."
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Someone in the New York District Attorney's Office must be an avid GP reader...

Last week, in response to a public tongue-lashing handed out by Congress to the ESRB and FTC, GamePolitics ran an editorial calling on the House to subpoena Take-Two Interactive and Rockstar directly, since they were the companies at the center of the Hot Coffee fiasco.

A short time ago Reuters reported that Take-Two Interactive received grand jury subpoenas, not from Congress, but from New York's D.A. for documents relating to the Hot Coffee incident, as well as other financial information dating back to October, 2001. The subpoenas were served on the publisher on June 19th.

Specifically, the grand jury is seeking documents related to "company officers' and directors' knowledge about the creation and inclusion" of the Hot Coffee sex mini-game, as well as information about the submission of Grand Theft Auto: San Andreas to the ESRB for rating.
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From Manhunt to Grand Theft Auto to State of Emergency to Bully, Take-Two Interactive is no stranger to publishing controversial games that push both political and parental buttons.

So when 2K Games quietly shelves development of a PC strategy title in which the player manages an international drug smuggling operation, you have to wonder, has parent corporation Take-Two, long the industry's wild child, decided to tone its act down?

CNN: Money's Chris Morris recently reported that 2K Games quietly canceled Snow, a PC-only title in which players seek to advance from small-time pot dealer to drug kingpin.

Although Take-Two was characteristically tight-lipped, Morris speculated several reasons for the move. The first is that Take-Two has taken a P.R. as well as financial beating lately over edgy game content, in particular the Hot Coffee scandal surrounding GTA San Andrea. It's very possible that the certain public outcry over a drug-dealing game might have been enough to make T2 rethink its marketing strategy and game catalog.
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When a company happily accepts a public thrashing from the Federal Trade Commission along with the threat of crippling fines for future violations, you know they must have been really worried about the alternatives.

According to Next Generation, Take-Two CEO Paul Eibeler said yesterday, "We are pleased that the FTC has concluded its very thorough investigation, and that the matter has been resolved. We recognize the importance of the FTC investigation, and the necessity of maintaining public confidence in the ESRB rating system, and helping the ESRB educate parents and consumers about the rating system. We look forward to putting this behind us."

The embattled CEO was reacting to Thursday's FTC Hot Coffee report which said that Take-Two and its Rockstar subsidiary had engaged in deceptive marketing practices and circumvented the industry's rating system. The FTC threatened fines up of to $11,000 per unit sold for future servings of Hot Coffee.

Eibeler made the remarks during a quarterly conference call with investment analysts in which the firm disclosed a $50 million loss for the second quarter of 2006.

Take-Two stock (NASDAQ: TTWO) dropped nearly 14% in overnight trading to 14.45. TTWO has lost roughly half of its equity value since its pre-Hot Coffee high point.

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In a long-awaited ruling, the Federal Trade Commission has found that the companies behind Grand Theft Auto San Andreas engaged in deceptive marketing practices.

The FTC issued a press release this morning, wrapping up a 10-month investigation into the so-called "Hot Coffee" scandal.

Although the FTC concluded that Take-Two and Rockstar used deceptive marketing practices by not revealing that hidden sex animations were on the GTA San Andreas disc, the proposed penalty was quite moderate, at least in economic terms. The ruling is a blow, however, to the public image of both companies as well as the video game industry.

Under terms of a proposed consent decree, the FTC will require Take-Two and Rockstar going forward to clearly disclose all content relevant to a game's rating on its packaging. The companies must also set up a content review system to spare the gaming public additional servings of Hot Coffee. Finally, the companies agreed that they would be subject to fines of up to $11,000 per game sold if they commit such violations in the future.

Essentially, the FTC is saying, "Don't do it again."
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What just happened?

Did the ESRB really re-rate Elder Scrolls IV Oblivion from "Teen" to "Mature"?

Damn right they did. And, hey, let's talk about that. But... but... but... E3 starts tomorrow and we all want to know about the PS3 and the Wii and Halo 3 and Spore and The Sopranos and all the rest of the cacophony of press releases, deal announcements, game trailers, celebrity sightings and attendant hoopla that E3 generates.

Don't color me too X-Files here, but maybe the announcement was timed that way? A couple of business days worth of chatter (the re-rating news hit late on Wednesday) and then, like everything else game-related, the Oblivion story gets vaporized by the ever-expanding mushroom cloud of news that is E3.

If you think about it, the timing is quite interesting.

Oblivion hit retail on March 20th, a full six weeks before the re-rating. That means developer Bethesa and co-publisher Take-Two Interactive already realized the great majority of potential Oblivion sales before the re-rating took effect. (most titles sell heavily just after release and tail off quickly from there).

Nor would the logistics of the re-rating seem to cause major financial problems for Bethesda, since there was no recall and no removal of the game from retail shelves. You may remember that last year's Hot Coffee scandal cost Take-Two and developer Rockstar an estimated $25-30 million in recall, relabeling and re-mastering expenses.

But let's go back to E3 for a minute.

The industry has been taking steps to polish its image of late, including redefining how provocative booth babes can be. Mainstream media attention is likely to be higher than usual, since this is the first post-Hot Coffee E3. Having Oblivion's industry-imposed re-rating as a notch on the ESRB's belt certainly can't hurt when the talking heads begin to ask the inevitable tough questions about game content.

There's also the issue of the Xbox 360 version. The ESRB press release cites the now-infamous topless mod, applicable to the PC version only, as well as "more detailed depictions of blood and gore than were considered in the original rating of the game." Both versions - PC and Xbox 360 - were re-rated, but only the PC version will receive a new content description for "nudity." Both versions already carried descriptors for "blood and gore," and these will remain in effect.From here, it really smells like the topless mod was the key to the re-rating decision, not the blood and gore.

The ESRB's action has caused a low-key, but obvious dust-up between Bethesda and the ratings board. The wording of a Bethesda press release seems almost bewildered by the decision:

"Bethesda Softworks made what it believes was a full, accurate, and comprehensive submission on Oblivion to the ESRB months before the game's release. Bethesda used the ESRB's application forms and believes it adhered closely to their requirements. Nothing was hidden from the ratings agency."

ESRB boss Pat Vance fired back, putting the onus on Bethesda in an interview with GameDaily BIZ.

"Bethesda is fully aware that the content in question," Vance said, "both the more extreme depictions of blood and gore as well as the locked-out content, should have been disclosed to ESRB, which is part of why they have wisely chosen not to contest the rating change."

The various possible scenarios are all very confusing to GP, who admittedly confuses easily. One possibility is that everything is just as reported.

Another view, let's call it the grassy knoll theory, might be that this is as much about strategy, timing and public relations as it is about game content. After all, since Oblivion has pretty much run through the bulk of its retail sales and doesn't have to implement a recall, who really gets hurt here?

Only Bethesda's pride, it would seem.

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Whatever you think of the Elder Scrolls IV Oblivion ratings mess, give Bethesda Softworks points for standing tall.

In a press release posted on Bethesda's website, the Oblivion developer admits that it - and not co-publisher Take-Two Interactive - handled the ESRB rating application process. Take-Two, of course, took a major hit over last year's Hot Coffee scandal, and their involvement - however peripheral - with Oblivion has already caught the attention of some game industry critics.

Bethesda reports that it will "will promptly implement the ratings change that the ESRB has ordered for Oblivion."

The company does not plan a product recall or a change in Oblivion to meet T (teen) rating standards. Nor will Bethesda contest the ESRB's decision. The company will work with Take-Two (whose name is, curiously enough, completely absent from the press release, which refers to it only as "co-publisher") to re-sticker existing inventory. New copies will be printed with the M (mature) rating ordered by the ESRB.

As far as it role, Bethesda said it made what it believes was a "full, accurate, and comprehensive submission on Oblivion to the ESRB months before the game's release. Bethesda used the ESRB's application forms and believes it adhered closely to their requirements. Nothing was hidden from the ratings agency. No effort was made by Bethesda to lobby or influence the agency for any particular rating."

Bethesda goes on to say, "There is no nudity in Oblivion without a third party modification. In the PC version of the game only... some modders have used a third party tool to hack into and modify an art archive file to make it possible to create a mesh for a partially nude (topless) female that they add into the game. Bethesda didn't create a game with nudity and does not intend that nudity appear in Oblivion. There is no nude female character in a section of the game that can be 'unlocked.'"

The Oblivion ratings issue does not bode well for the mod community, as witnessed by Bethesda's comment that, "Bethesda can not control tampering with Oblivion by third parties. Bethesda is taking steps to ensure that modders can not continue to hack into Oblivion's art archives to create partially nude figures."

Depite the problems presented by this rather messy episode, Bethesda reaffirms its support for the ESRB as well as for Elder Scrolls IV Oblivion.

GP: ...and well they should. It's a fantastic game. As far as their comments about the mod community, it's a concern, but who can blame Bethesda?

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A Take-Two Interactive game re-rated by the ESRB for naughty content...

Sound familiar?

This time, however, the game is top-selling RPG Elder Scrolls IV Oblivion, which was released last month by publisher Take-Two Interactive. The ESRB announced today that it was revising its original rating for Oblivion from "T" (13 and older) to "M" (17 and older). The sudden change was based on what the game industry's content rating body describes as "more detailed depictions of blood and gore than were considered in the original rating, as well as the presence of a locked-out art file or 'skin' that, if accessed through a third party modification to the PC version of the game, allows the user to play with topless versions of female characters."

A patch to disable access to the topless characters will be made available shortly. The Xbox 360 version is not affected.

"Parents across the country depend on ESRB ratings every day to make sensible choices about the games they bring home for their families," said Patricia Vance in an ESRB press release. "Rating changes are extraordinarily rare, but if ever one does occur, ESRB recognizes that parents must be made aware of the change as quickly as possible so they are certain to have the most current and accurate information."

The ESRB also alerted parents to the increasing availability of mods for PC titles.

UPDATES: Although the ESRB press release doesn't mention it, GameSpot is reporting that the ratings change will pertain to the Xbox 360 version as well.

Meanwhile, retailers were quick to react to the change. IEMA president Hal Halpin issued a statement saying, "The pace at which the IEMA retailers reacted to the change in the ESRB rating for The Elder Scrolls IV: Oblivion today stands as testament to the effectiveness and commitment to the industry's self-regulatory efforts... When we were notified of the game's ratings change today, we alerted our member company representatives who communicated to their stores the change in the game's rating..."

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Some observers believe that on the heels of the highly successful Elder Scrolls IV: Oblivion, Take-Two Interactive may finally be on the rebound. But not all observers are so sanguine about the company's future.

Writing in the Consumer Electronics Stock Blog, former Editor-in-Chief and Publisher of Financial World Magazine, Douglas McIntyre adds Take-Two (NASDAQ: TTWO) to his list of Ten Worst Managed Tech Companies.

McIntyre writes, :The train wreck that is Take-Two Interactive (TTWO), the big time video game company, is a screw-up of the first order. The Audit Committee Chairman resigns, the company dismisses its auditors, the company asks for an extension for its 10-K, the company is hit with multiple shareholder class action suits, the company has a loss in fiscal Q1 loss (1/31/06) compared to a profit a year ago. By the way, the departing director left a little present in the form of a letter critical of the way senior management communicated with the board."

Take your pick.

The financial prognosis for Take-Two (NASDAQ: TTWO) is either rosy or moribund, depending on whose analysis you believe.

In an article titled, "Three Video Game Firms with Long-Term Tailwinds," Morningstar lists TTWO along with Activision and EA as stocks investors should consider purchasing. While Morningstar lists Take-Two's risk as "above average" and cites "poor corporate governance" as "an ongoing issue for the firm," its report essentially argues that the stock is underpriced: "There is a reasonable argument to be made that Take-Two trades for a modest premium over the value of its GTA franchise alone, so a corporate event may help realize value for shareholders."

Here at GPHQ we'd call that unexpectedly good news for a company buffeted by board defections, shareholder suits, bad press and government investigations. But here comes the pain:

Marketwatch columnist Herb Greenberg reports that Take-Two has dumped its auditing firm, PriceWaterhouseCoopers, and hired Ernst & Young in its place. As Greenberg writes:

"...the timing of the dismissal, on the heels of a delayed 10-K with disclosures of multiple material weaknesses, suggests otherwise. You think Take-Two, without prodding from its auditors, wanted to disclose that it 'did not maintain effective controls over the existence and valuation of its accounts payable related to inventory purchases?' I think not."
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Kotaku is reporting that the site of the next GTA title is up; that the game will be GTA Chicago; that it will be a PlayStation 3 exclusive planned for release in October, 2007.

OOPS! It's an April Fools joke. GP did a quick check of the domain registration info and found it is confidential, not corporate Rockstar or Take-Two as might be expected. Also, here's a great, big clue from the last few lines of the domain registration:

Domain servers in listed order:
APRIL.GTACHICAGO.COM
FOOLS.GTACHICAGO.COM

As I type this, Kotaku's servers are crashed and Brian Crecente can't make the necessary corrections to the apocryphal GTA Chicago story. Here's what Brian told GP moments ago:

"I just heard back from Rockstar. I asked them if the site was for real or a joke or perhaps a bit of fan fiction. Their reply: 'This is not a R* site, and as such, is a hoax.'"

Good gag. Now whoever perpetrated this April Fools mischief must atone for their sins by purchasing one dozen assorted Pixelante T-shirts.

Troubles continue to pile up for Take-Two Interactive.

The latest bad news is a class action suit filed this morning in federal court by the City of Flint (MI) and its pension fund. The suit alleges securities fraud and insider stock trading. According to allegations in the suit, Take-Two deceived the city's pension fund as well as other investors, by misrepresenting the assets of the corporation and hiding the financial damage done by the Hot Coffee scandal.

The suit also alleges that while the Flint pension administrators were buying TTWO in hopes of raising the value of its portfolio, insiders dumped $18 million worth of shares based on knowledge that Hot Coffee would cause the stock to tank.

Mayor Don Williamson (left) said, "Fraud against the taxpayers of Flint and our retired Flint police officers and firefighters will not be tolerated. Not only was the city pension fund deceived as to the value of the stock, but the true nature of what this company was selling was being concealed too."

The Associated Press has more on this story, including word that Flint invested $524,000 in TTWO, ultimately taking a $176,000 loss.

"This is the kind of investment you did not want to make," city attorney George Peck told retirement board members Tuesday. "The bottom line is you were deceived."