Pints of beer after work in a cosy London pub. A glass of wine in the evening at a villa in the Sunset Marquis hotel, West Hollywood. A phone call in the dark outside a Chinese restaurant in Windsor, England.
These three disparate scenes, all more than 5,000 miles from Sony's headquarters in Tokyo, were backdrops for a decision that helped define the PlayStation 2, Sony's landmark console that celebrates its 25th anniversary in North America today.
It's the best-selling console of all time for well-documented reasons: its massive library, its headstart on the Xbox, its mid-life price cut, and its affordability as a DVD player. But the deal that brought a trio of Grand Theft Auto games – GTA 3, Vice City, and San Andreas – to the PS2 before any other platform was also vital. They collectively make up three of its top six sellers. Some people bought the PS2 just to play GTA and if you didn't have one, you were nagging a friend who did.
Chris Deering, the then-president of Sony Computer Entertainment Europe, estimates the deal boosted console sales in Europe by a fifth – a huge margin.
We've heard snippets about this deal and about that key meeting at the Sunset Marquis before. But IGN has now spoken to four people at the centre of it all who can tell the story in more detail than ever. They reveal previously unknown twists and turns in negotiations: how Sony nearly missed out on exclusivity in the US, how Take Two got cash and a discount on production costs from Sony, and how Microsoft could've derailed the whole thing.
The original 2D, top-down GTA games sold decently but scored middling reviews, and Deering's interest in GTA 3 was only sparked by a chance conversation.
“We used to have these company pub nights,” he says. “It gave me a chance to deal with people I would never talk to and ask them some dumb questions.”
He asked one such dumb question to the “very sharp” Sarah Thompson, who oversaw a Sony team evaluating third-party games. “I said: ‘You seen anything?' She said: ‘Yeah, GTA is looking really cool.' It put it at the back of my mind.”
It was actually a contractor called Andy Macoy who had first flagged a GTA 3 test build as impressive. As well as being filed in Deering's brain, it sat on the team's shortlist of games that Sony might want to secure as an exclusive at E3 2000, according to the then-vice president of publisher and developer relations at SCEE, Zeno Colaço, who was Thompson's boss.
Deering went to LA that June knowing he needed exclusives in order to win a second console generation in a row. Microsoft’s Xbox was on the horizon and Bill Gates had showed off a prototype in March.
“They get a billion dollars a year from Windows licenses. They can do anything they want – they just have to want,” he says. “How do we get out ahead of this? That was in the back of my mind. I didn't want them to come in and take away the chance of getting two console [generations] in a row. It was almost like a personal, I don't want to say vendetta, but it could have rained on my parade. So that was a hidden motivation.”
Deering and David Reeves, then head of marketing at SCEE and later Deering's replacement as president, met various publishers at a villa in the Sunset Marquis hotel. Take Two, the owner of Rockstar Games, was on the list.
Every person at that meeting tells a slightly different version of the story. Non-disclosure agreements obscure some of the details and the intervening 25 years have clouded memories. It's not clear what was negotiated in the room and what was handled in follow-up phone calls.
But we know at least six people attended. From Take Two it was Kelly Sumner, who led the company outside of the USA and would become CEO in 2001, and Gary Lewis, who was COO and later president of international. From Sony it was Deering, Reeves, Colaço, John Brunning from the legal team, and possibly also Jim Ryan, who later led Sony's gaming division.
Colaço claims Sumner initiated the meeting “to complain that another one of Take Two's games was getting a knock back from our content group” – the same group that had earmarked GTA 3 as a winner. He thinks that game may have been State of Emergency, which Sony thought was “gratuitously violent”.
“Anyway, we listened to their complaints,” he says. “I explained our position and thoughts of what adjustments might be an acceptable compromise.” Then, “to smooth the meeting over and throw them a bone, we asked them whether we could do an exclusivity deal on GTA and another game, with the background knowledge that GTA was doing something original”.
Sumner rejects this version of events. “I'm not saying we were happy about the approval process” for games, he says, but any discussion of that was not linked in “any way at all” to the GTA deal. Exclusivity would never have been used as any kind of “sweetener” for Take Two, he says, because “Sony needed [it] more than we did”. (It's also worth pointing out that Deering intended to bring up exclusivity at the meeting anyway, and that Lewis, from Take Two, also says he doesn't recall what Colaço describes).
In any case, the starting point of the offer, Colaço says, was “co-marketing” for GTA 3. Basically, Sony would match $1m of Take Two's marketing money. It offered the same deal for another Rockstar game, but he doesn't recall which one.
There were at least two other elements to the deal, although they appear to have been negotiated after that initial E3 meeting, likely back in the UK between Deering and Sumner. First, cash up front. Second, what Sumner describes as a “reduction on production costs”.
“In those days, production costs were really, really expensive,” he explains. “Basically for the right to buy a disc and have it packaged and delivered to your warehouse, I think in around 2000 is about $11 per disc… And when you're selling millions and millions of discs, which hopefully we were, any reduction on that is very nice, thank you very much.”
He won't say how much of a discount it was, but Deering says it was “in the neighbourhood of a couple of pounds a unit, maybe $3”.
GTA 3 sold 8.5 million copies on PS2 – which, at $3 a unit, would represent more than $25m in potential savings for Take Two and Rockstar.
Take Two also negotiated incentives in exchange for, among other things, Sony getting the rights to sell exclusive software bundles that would include GTA, Colaço says. And as for the cash, Sumner recalls Sony agreeing to pay a “significant amount of money” up front – back then, Take Two was not the mega multi-billion dollar company that it is today, and “any millions that were coming in were gratefully received at that stage”.
Neither side characterises negotiations as tough. “It wasn't like the United Nations, it was more, ‘Would you like another glass of wine?'” says Deering. “It wasn't intense.”
“There's very few formal meetings with Chris [Deering],” adds Sumner.
It'd be a mistake to think that this deal was purely about money. From speaking to all sides, it's clear that these men got on well, respected each other, and shared a common outlook on gaming's future.
Deering wanted more “mature” games on PS2 to make the console more relevant to adults – Rockstar fit the mold. Take Two, for its part, knew the PS2's power could match Rockstar's creative ambitions. It also knew that Rockstar's games were edgy and, at times, controversial, so it needed a company that understood its vision and wouldn't meddle. Sony, which had experience managing stars like Mariah Carey, were ideal, says Take Two's Lewis.
“So we were keen to get into bed, so to speak, with and work alongside Sony. And interestingly enough, they felt the same,” he says. “You sit down sometimes, if you're lucky to do so, with certain people in a room and you realize, okay, we're comfortable with this deal… we knew we could work with them.”
“Everyone knew what they wanted from it,” says Sumner. Sony was “massively supportive… and we just absolutely believed in what they were going to deliver.”
Sumner couldn't sign the deal off alone, though: he needed his CEO and, crucially, Rockstar to agree. It felt like a “massive, massive bet” to cut off Xbox and to focus on the PS2 as a platform. “It had to be a team decision… but Sam [Houser] and the guys were like, ‘Well, if we want to deliver what we really want to deliver, we can't keep on PS1. And it has to be PS2.'”
The deal for GTA 3 to have two years of console exclusivity with PlayStation was finalized with an evening phone call. “I was standing outside a Chinese restaurant in Windsor and doing the final negotiation,” Sumner says. “The deal was done at eight or nine o'clock at night, out in the dark, in Windsor.”
Does it look like a fair deal looking back? In a 2013 interview with Eurogamer, David Reeves described it as “remarkably cheap”. Sumner chuckles at the notion.
“I think that's in hindsight, either that or he's the best poker player in the world. He certainly squeaked a bit when we did the deal,” Sumner says.
“We were very, very happy at the time. And I think Sony were very happy as well. Yes, it was cheap from what we now know… I wish I could go back in time and renegotiate it and get a few more quid,” he says, chuckling again. “[But] also, it was more beneficial for Take Two and Rockstar than we thought it was going to be. So everyone won.”
Deering, for his part, says he does not think it was cheap, and that it was broadly in line with other exclusive deals negotiated at the time – including securing Tomb Raider as a PS1 exclusive. The concept of the deal, he says, was to “make up what they would've made by having the other versions”.
But that wasn't the end of the saga.
This deal only secured exclusivity in Europe: in the US, Sony was “not as massively supportive” of it, Sumner recalls. In fact, GTA 3 could've easily launched in October 2001 as a PS2 exclusive in Europe only. That would have, theoretically, allowed it to release on Xbox in the US far earlier than its eventual November 2003 arrival.
The US “were ambivalent at first,” Deering says. “I don't think they were focusing on the franchise, and hadn't had that same tip from their third party team on the rumoured power of the game.
“Then word got out around the industry that this is going to be a good game,” he says. “And finally, I think at the very last minute, the US came in and joined on. ‘Can we hitchhike on this deal?'” He claims they did so “reluctantly.”
Colaço says it may have even been after GTA 3's initial release. Sony Computer Entertainment America “only really got on board when they saw GTA’s sales impact and the relationship we had established with Take Two flourishing,” he says.
As the Xbox's release approached, Sony and Take Two's partnership was tested again.
Microsoft has previously revealed that, in 2001, it rejected Rockstar's pitch to put GTA 3 on the console. It's not clear how an alternate version of events would've jived with Sony's exclusivity deal, but Sumner believes that, ultimately, a deal with Microsoft was “never going to happen” even if it was “ridiculously large”.
“There were conversations about doing something with them. But that just didn't, in my mind, my memory, didn't seem right,” he says. “They weren't heavy and they weren't aggressive about it, Microsoft, but… we were happy with the bed we're lying in. And there was no reason to change and also, you know, PlayStation were doing better than Microsoft at that stage.”
He also claims Microsoft just “didn't understand what made us tick”.
“Sony made you feel warm and in my memory, that's not what we got with Microsoft. They weren't aloof, but they just really didn't get it. I don't think they really understood the market. And they weren't certainly putting their arms around us. You do business with people you like, or you trust. And that's what we did. We just trusted [Sony], absolutely trusted them.”
That trust, and those flourishing relationships, glued Take Two and Sony together, says Lewis. “You could ring any of the senior management there and they would answer your call and they would listen to what your concern was, whether it be getting approval for the game, whether it be production and marketing, whatever it is… I was speaking to someone from Sony probably daily.”
Sony also helped on the development side, recalls Obbe Vermeij, who was then a technical director at Rockstar North. GTA 3 famously began development on the Dreamcast, and while he was initially sad to leave it behind, Sony made the switch easy by sending 20 PS2 dev kits, which were rare.
Sony didn't lend Rockstar engineers but it did have what Vermeij describes as a “weird room full of electronics” at its London HQ, where third-party developers could test their games.
“They would be able to find the bottlenecks and tell you, at a very detailed level, these instructions [to fix it],” he explains. “Sony were just super supportive whenever we asked for something, they would give it to us.”
Deering and Sumner's relationship was particularly strong. They only have good things to say about each other, and, Sumner says, still occasionally meet for beers.
“I have very fond memories of Chris Deering singing outside my hotel in Reykjavik at four o'clock in the morning. He was serenading the whole hotel… And he's not a bad singer, to be fair.” But those trips – those “jollies” – weren't nearly as important as the support Sony provided.
“They really went out there to support the company… and I hate to say, in my opinion, unlike Nintendo, unlike Xbox, and unlike Sega,” he says.
“It felt like someone putting their arm around you and saying, actually, guys, you're part of the team. I mean, it sounds like I'm in the Sony fan club. And I'm not saying that just because it's about PlayStation 2, I actually truly believe it.”
That trust lasted far beyond GTA 3. It's not clear when timed exclusivity discussions for GTA Vice City and San Andreas began. Deering remembers the initial agreement as a “three-game deal.” Sumner says each of the games was negotiated separately. Colaço says it was when SCEA joined the GTA 3 exclusivity deal.
There was, at the very least, a renegotiation of terms following GTA 3's release, Colaço says. “Once the game came out and was a success, much bigger than anyone expected, then to maintain the arrangement the financial numbers went up considerably.”
Take Two, he says, made the argument that losing out on sales on other platforms was becoming more and more costly as GTA's popularity surged. He says that was “partially true”, but that Take Two also enjoyed being a close partner with Sony.
“So the conversations became much more about becoming strategic partners than transactional ones.” That includes, he says, discussions about exclusivity for future GTA games.
While we don't know the terms of the Vice City or San Andreas deals, it's safe to say they were far bigger than GTA 3's. And, as we know, the exclusivity periods shrunk with each new game. Sony secured a full year for Vice City, but just seven months for San Andreas – both down from GTA 3’s two years. As time went on, the people attending meetings “changed a little as discussions were more global and the financial numbers dwarfed the original deal,” Colaço says.
The impact of GTA 3 on wider gaming culture and on the PS2's sales was not immediate, nor guaranteed. Before release, Rockstar was worried that GTA 3 wouldn't cut through, Vermeij says.
“At the last E3 show before [release], maybe six or eight months before the game came out, it had a really poor showing. People weren't really that interested. I remember the guys in New York, Sam Houser and others, they were all like, ‘Oh my God, it's not doing well.'
“But of course, we did know that Sony were into it, and they promised a lot of marketing and they totally delivered on that.”
It wasn't until six months after release that its success was obvious, he says.
“Typically a game would sell well for three or four months and then it would just die out. With GTA 3, it wasn't like that. It sold okay, but then it just didn't die out. It just kept going because people told their friends and it was just picked up organically. It just kept going.”
Sumner and Lewis both say Take Two played into that by keeping the product “tight”: if demand was one million units, they'd ship 600,000. “People were saying it was going to be banned. It was never ever going to be banned, but people believed that, and so what we did is we kept the product really, really tight, so when you saw it in Electronics Boutique, you had to buy it, because if you didn't buy it they may not be here tomorrow,” Sumner says.
Grand Theft Auto was soon a phenomenon with cultural cache. Sumner, who had moved to New York, was called onto primetime TV shows to defend GTA's violence. He also recalls putting a music budget together of $600,000, only for Tommy Matola, the head of Sony Music Entertainment, to say he'd do it for free. “He said, ‘I will get you the tracks, I just want to release the CD.' That was the power of Grand Theft Auto.”
Lewis recalls the joy of success following GTA 3's release. “You get a sigh of relief, I think is fair to say initially, and then this euphoria, because it keeps happening. We really had arrived when these products continued day in, day out, to sell… every 100,000 new PS2s we could pretty much say, ‘Well, we got to sell another 10,000 GTA 3s.'”
It's impossible to say exactly how much GTA exclusivity contributed to the PS2's success, but everyone agrees it helped.
“Of course they would have been successful [without it],” Sumner says. “Would they have been as successful without Grand Theft Auto? Probably not, because the amount of coverage and the desirability of that product just sucked people in at a ridiculous rate.
“Sony delivered a great platform but it's a piece of plastic unless you have something like Grand Theft Auto on it and that was fundamental to people's understanding or awakening to the opportunities, cultural opportunities that the PlayStation could deliver.”
Deering adds that, in Europe, “all things considered, recognising and trying to be self critical and not inflating everything, we probably did 20% more than we would've without it, at least through PS2 and 3.”
Not bad for what started as evening drinks at a Los Angeles hotel. “They came to the Sunset to complain,” says Colaço. “They went out with $2m they weren't expecting. And we did the best exclusivity deal of all time!”
Samuel Horti is a journalist with bylines at the BBC, IGN, Insider Business, and Edge.
