Greetings, and welcome to the Take-Two Interactive Software First Quarter Fiscal Year 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Hank Diamond, Senior Vice President of Investor Relations. Thank you. You may begin.

Good afternoon. Welcome, and thank you for joining Take-Two's conference call to discuss its results for the first quarter of fiscal year 2018 ended June 30, 2017. Today's call will be led by Strauss Zelnick, Take-Two's Chairman and Chief Executive Officer; Karl Slatoff, our President; and Lainie Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that the statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us. We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent annual report on Form 10-K and quarterly report on Form 10-Q, including the risks summarized in the section entitled Risk Factors. I'd also like to note that, unless otherwise stated, all numbers we will be discussing today are GAAP. And unless otherwise stated, all comparisons are year-over-year. Our press release and filings with the SEC may be obtained from our website at www.take2games.com. And now, I'll turn the call over to Strauss.

Thanks, Hank. Good afternoon, and thank you for joining us today. I'm pleased to report this fiscal 2018 is off to an excellent start, with our business' positive momentum continuing to exceed our expectations in the first quarter. Take-Two delivered growth in both net sales and net revenue as well as margin expansion. Grand Theft Auto V and Grand Theft Auto Online continued to outperform our expectations during the first quarter, nearly 4 years after their initial release. Grand Theft Auto V remains the highest-rated game of the current console generation and the must-have title for gamers on both console and PC. Grand Theft Auto Online delivered its best quarter ever, substantially exceeding our next sales expectations and was once again the single largest contributor to recurrent consumer spending. Rockstar Games has continued to drive sustained engagement and growth in recurring consumer spending through the ongoing release of free additional content, most recently the Dawn Raid, Overtime Rumble and Power Mad updates. On the heels of the June 13 release of the substantial Gunrunning update, June and July successfully became our 2 biggest months ever for Grand Theft Auto Online monthly active users. And Rockstar Games will continue to support the game going forward. As a result of Grand Theft Auto Online's performance in the first quarter, we now expect the game to deliver net sales growth during fiscal 2018 and another consecutive year of record results. NBA 2K17 remains the top-rated sports game of the current console generation and is now our highest selling sports title ever with selling to date of more than 8.5 million units. In addition to robust demand for the game itself, net sales from our NBA 2K series continue to benefit from strong engagement and recurrent consumer spending. During the first quarter, recurrent consumer spending on NBA 2K once again exceeded our expectations and grew 64%. NBA 2K has been a tremendous success, and we believe that the series can continue to grow both unit sales and recurrent consumer spending for years to come. In addition, a number of other titles from our diverse portfolio contributed to our first quarter results, including Social Point's redeploying mobile titles, WWE 2K17 and WWE SuperCard, Mafia III and Sid Meier's Civilization VI. Digitally delivered net sales exceeded our expectations in the first quarter, driven by growth in both recurrent consumer spending and full-game downloads. Recurrent consumer spending increased 71% and accounted for 58% of total net sales. In addition to virtual currency for Grand Theft Auto Online and NBA 2K, a variety of other offerings contributed to recurrent consumer spending. In the free-to-play category, Social Point continues to outperform our expectations, with net sales from its 2 biggest games, Dragon City and Monster Legends, growing double digits in the first quarter. We view Social Point as an important long-term growth opportunity for Take-Two. WWE SuperCard also continued to grow with net sales up more than 50% and total downloads now exceeding 15 million. And NBA 2K Online remains the #1 PC online sports game in China, with over 35 million registered users. Downloadable add-on content also contributed to the growth in recurrent consumer spending, led by offerings for Sid Meier's Civilization, Mafia III and WWE 2K17. We expect fiscal 2018 to be another strong year for Take-Two, and we've raised our outlook for net sales and net cash provided by operating activities. Looking ahead to fiscal 2019, we expect to deliver both record net sales and net cash provided by operating activities, led by the launches of Rockstar Games, Red Dead Redemption 2 and a highly anticipated new title from one of 2K's biggest franchises. Today, our industry is only just beginning to realize its vast potential. From the introduction of exciting new hardware platforms to the continued growth of digital distribution, we now have the ability to reach and captivate audiences like never before. In addition, the ways in which consumers engage with interactive entertainment are continuing to evolve, including through mobile devices and the fast-growing world of competitive gaming. Take-Two is exceedingly well positioned creatively, operationally and financially to capitalize on all of these opportunities and to deliver value to our customers and returns for our shareholders over the long term. I'll now turn the call over to Karl.

Thanks, Strauss. I'd like to begin by providing an update on our recent strategic accomplishments and then review our lineup for fiscal 2018. In May, we further diversified our industry-leading portfolio of owned intellectual property through the acquisition of Kerbal Space Program, the critically acclaimed physics-based space simulation game. Created by independent developer Squad, Kerbal Space Program was originally released on PC in April 2015 and has sold over 2 million units to date. The title has been widely popular with critics and consumers alike, earning a Metacritic rating of 88 and a Steam user score of 97%. In Kerbal Space Program, players must build a space-worthy craft capable of flying its crew of lovable beings called Kerbals into space. Players who successfully launch their spacecraft can explore their planets, moons and solar system as well as shares the unique creations and advice with a vibrant and growing online community. Kerbal Space Program is currently available solely through digital download for PC. The team at Squad will continue to provide support and ongoing development for the title through updates and additional content, including the previously announced Kerbal Space Program: Making History Expansion, which we will launch later this calendar year. Since completing the acquisition, sales of Kerbal Space Program outperformed their expectations. We view the brand as a new, long-term franchise that adds a well-respected and beloved IP to our portfolio as we continue to capitalize on opportunities across the independent development landscape. Turning to the exciting and growing world of eSports. Our team and the NBA remain hard at work on setting the foundation for the launch of the NBA 2K eSports league in 2018. This joint venture builds upon the success of our NBA 2K brand and relationship with the NBA to bring together the best basketball gamers in the world, marking the first official competitive gaming league that is jointly owned by a U.S. professional sports league. We are thrilled to expand our presence in competitive gaming, and believe that the NBA 2K eSports league has a long-term potential to be a meaningful driver of profits for our company. I'll now discuss our fiscal 2018 lineup. On September 19, 2K and Visual Concepts will launch NBA 2K18, the latest installment of our industry's #1 rated and #1 selling basketball series. The title will be available for PlayStation 4, PlayStation 3, Xbox One, Xbox 360, Windows PC and will also be our first offering for the Nintendo Switch. This year, the Cleveland Cavaliers, Kyrie Irving, will grace the cover of the NBA 2K18's Standard Edition, while the Toronto Raptors, DeMar DeRozan, will be the game's first ever cover athlete, specifically for the Canadian addition. In addition, 2016 Hall of Famer and 15-time NBA All-Star, Shaquille O'Neal, will be on the cover of the Legend Edition and Legend Edition Gold, which will retail for $99 and $149, respectively. Fans who preorder the standard edition of NBA 2K18 at participating North American retail and online vendors will receive Early Tip-Off access, ensuring that they receive their copy and in-game bonuses 4 days early on September 15. On October 17, 2K, Visual Concepts and Yuke's will launch WWE 2K18, the newest offering from our popular simulation-based WWE series for PlayStation 4 and Xbox One. The title will also be available this fall for the Nintendo Switch, marking the first time in 5 years that the series has been released for a Nintendo platform. WWE superstar, Seth Rollins, will be the game's cover athlete, and decorated Olympian, WWE Hall of Famer and current Raw General Manager, Kurt Angle, will return to WWE in ring action virtually for the first time in more than a decade as a bonus character for those who preordered WWE 2K18 at participating retailers. In addition, 2K will celebrate the 15-year career of WWE superstar, John Cena to the limited worldwide release of the Cena Nuff Edition, which includes exclusive memorabilia and in-game content. WWE 2K18 will be supported with a series of post-launch downloadable content, including a Season Pass. On August 29, 2K and Firaxis Games will release XCOM 2: War of the Chosen. The expansion pack for the 2016 award-winning strategy title for Windows PC, PlayStation 4 and Xbox One. XCOM 2: War of the Chosen greatly expands upon XCOM 2's campaign and also includes new enemies, missions, environments and increased depth of strategic gameplay. In the coming months, 2K and Firaxis Games will release an additional civilization and scenario packs for Sid Meier's Civilization VI, that will introduce 2 new leaders representing civilizations from Southeast Asia. This content will be available automatically at no extra cost for purchasers of the Civilization VI - Digital Deluxe edition. Social Point is also hard at work. It has a number of exciting games planned for launch over the next 2 years. Looking ahead, we have an exceptional development pipeline across our labels, including new releases from our popular series and groundbreaking original intellectual property. In addition, we remain focused on finding new and innovative ways to increase consumer engagement and drive recurrent consumer spending as well as enhance our growth through emerging platforms, business models and geographies. The long-term opportunities for both our company and industry are more exciting than ever. I'll now turn the call over to Lainie.

Thanks, Karl, and good afternoon, everyone. Today, I'll discuss our first quarter results and then review our financial outlook for the second quarter and fiscal year 2018. Please note that additional details regarding our actual results and financial outlook are contained in our press release, including the items that our management uses internally to adjust our GAAP financial results in order to evaluate our operating performance. As mentioned by Strauss, our fiscal first quarter provided an excellent start to the year. Sales of our offerings exceeded our expectations, due primarily to the continued outperformance of Grand Theft Auto V and Grand Theft Auto Online as well as recurrent consumer spending on NBA 2K17. Total net sales grew 28% to $348 million. Of this amount, 81% were digitally delivered net sales, which grew 47% to $281 million as we continue to benefit from growth in recurrent consumer spending as well as our industry's ongoing transition to full-game downloads. While the operating performance of our business exceeded our expectations, this outperformance is not reflected in our GAAP results for 2 reasons. First, our better-than-expected net sales was driven by titles that we have acquired to defer, and therefore, our GAAP revenues and profits will not benefit from these sales until future period. And second, because of the better-than-expected performance of Grand Theft Auto V and Grand Theft Auto Online, we recorded higher-than-forecasted internal royalties, which are calculated using results that are adjusted to exclude the impact of deferrals and unlike certain other costs of goods sold are not deferred. Turning to some details from our first quarter income statement. GAAP net revenue grew by 34% to $480 million, and cost of goods sold increased by 2% to $195 million. Operating expenses increased by 9% to $173 million, due primarily to higher stock-based compensation, reorganization cost and inclusion of Social Point, partially offset by lower marketing expense. And GAAP net income increased to $60 million, or $0.56 per share, up from a net loss of $39 million or $0.46 per share. In the first quarter, we recognized a $60 million GAAP tax benefit related to tax deductions from stock compensation expense. These [indiscernible] tax deductions were due to the increase in our stock price from the date that stock was granted through the dates that it backed it. Previously, these excess benefits were recorded in additional paid in capital. The new accounting guidelines require that they now be recognized in income tax expense. This benefit had no effect on our management reporting tax rates, which is 22%. Now I will review the highlights of our fiscal 2018 financial outlook, starting with the fiscal second quarter. We expect net sales to range from $465 million to $550 million. At the midpoint, this represents 2% growth versus the prior year. The largest contributor to net sales is expected to be NBA 2K18, along with Grand Theft Auto V and Grand Theft Auto Online. We expect GAAP net revenue to range from $400 million to $450 million, and cost of goods sold to range from $194 million to $222 million. Operating expenses are expected to range from $185 million to $195 million. At the midpoint, this represents a 14% increase over last year, driven by the inclusion of Social Point as well as higher R&D and stock compensation expense. And we expect GAAP net income to range from $17 million to $27 million or $0.15 to $0.25 per share. Turning to our outlook for the full fiscal year. As a result of our better-than-expected first quarter operating results and improved forecast for the remainder of the year, we are increasing our outlook for both net sales and net cash provided by operating activities. We now expect net sales to range from $1.65 billion to $1.75 billion, up from our prior outlook of $1.42 billion to $1.52 billion. Net sales are expected to be down from fiscal 2017 due to fewer new releases and moderating sales from Grand Theft Auto V, partially offset by growth in sales from NBA 2K and Grand Theft Auto Online as well as the acquisition of Social Point. We now expect digitally delivered net sales to grow in the high single digits, driven by approximately 30% growth in the current [indiscernible]. The largest contributor to net sales are expected to be NBA 2K, Grand Theft Auto V and Grand Theft Auto Online and WWE 2K18. We expect the net sales breakdown from our label to be roughly 55% 2K, 39% Rockstar Games and 6% Social Point and other. And we expect our geographic net sales split to be about 65% United States and 35% international. We now expect to generate approximately $200 million in net cash provided by operating activities, up from our prior outlook of approximately $150 million. And we plan to deploy approximately $60 million for capital expenditure. Although our operating performance is exceeding expectations and we are increasing our fiscal 2018 outlook, we are reducing our forecast for GAAP net revenue and net income. This is due to 2 factors. First, as a result of the continued success of Grand Theft Auto Online, we have determined that it is necessary to extend the life of Grand Theft Auto V and Grand Theft Auto Online for purposes of calculating deferral. This change has no effect on our net sales, cash flow or management reporting results, but it does extend the period over which we recognize GAAP net revenue. And second, because of this strong ongoing performance of Grand Theft Auto, we expect to report higher internal royalties, which unlike certain other costs of goods sold are not deferred. As a result, we now expect GAAP net revenues to range from $1.62 billion to $1.72 billion, and cost of goods sold to range from $732 million to $781 million. Total operating expenses are expected to range from $770 million to $790 million. At the midpoint, this represents a 17% increase over the prior year, driven by the inclusion of Social Point and higher R&D expense. And we now expect GAAP net income to range from $112 million to $140 million or $1 to $1.25 per share. In closing, we are very pleased with the start to fiscal 2018, which is poised to be another strong year for our organization. And we believe that fiscal 2019 will be a record year for both net sales and net cash provided by operating activities, which are expected to exceed $2.5 billion and $700 million, respectively. Over the long term, Take-Two is well positioned to capitalize on our many exciting opportunities around the world, and to generate growth and margin expansion for our shareholders. Thank you. Now I'll turn the call back to Strauss.

Thanks, Karl and Lainie. On behalf of our entire management team, I'd like to thank our colleagues for delivering such a strong start to the year. To our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator?

[Operator Instructions] Our first question is from Eric Handler from MKM Partners.

Just in case I didn't miss it, I just want to make one quick question on GTA Online. So the full year is going to be up, first year -- the first quarter was the best quarter ever. Are you assuming that second, third and fourth quarters, we see declines? Or are you sort of begrudgingly admitting this game just continues to grow unbelievably quarter-after-quarter? And then secondly, I wondered if you could talk a little bit about the growth that you're seeing, put some numbers for us -- provide some numbers for us on the NBA 2K digital numbers?

So I'll start with GTA Online. And it has really performed unbelievably. Q1, it outperformed, it beat our expectations. And -- we're heading into Q2. We see that Q2 will also be up over last year. But for Q3 and Q4, we still have it moderating slightly. But overall, we'll be up for the full year. And then for the NBA information, we haven't given out that level of detail.

Okay. You can't give like a directional number, double digits or anything along that line.

Recurrent consumer spending, [indiscernible] as we mentioned, was up 64%.

Our next question is from Tim O'Shea from Jefferies. Timothy O'Shea: So by my math, you guys are increasing full year non-GAAP EPS outlook by around 30% to 41% from the outlook that you provided last quarter. So just given the relatively light release slate, it does seem like this growth is coming from recurrent consumer spending. And I know that Strauss spoke about how GTA Online should grow this year, given the record MAU levels in June and July, and obviously, NBA also sounds very strong. But I'd just love to hear your thoughts on what's driving this level of optimism around this non-GAAP EPS outlook?

So for the full year, we are looking the [indiscernible] due to our Q1 beat and then our improved outlook for the reminder of the year, which is driven by the improved forecast for GTA 5, GTA Online and NBA 2K. And we also increased our marketing expense for certain titles, GTA Online and some of the rest of the titles that are in our pipeline.

Our next question is from Michael Olson from Piper Jaffray.

I have 2 questions, if I could. First, as we're talking about here, GTA Online, obviously, continues to beat expectations. Just curious what, if anything, do you think could slow it down? Is there a reason to believe that the launch of Red Dead is actually maybe the largest threat to GTA Online engagement? And then second, you mentioned full-game downloads exceed expectations. Can you share what percent of current gen sales or full-game downloads and what you would expect that to be by year-end?

I think 4 years after its initial release, we're immensely gratified that Grand Theft Auto V continues to sell, sold in more than 80 million units and that -- it looks like Grand Theft Auto Online will have another record year. Beyond that, we're not making any projections. However, we have observed that when Rockstar Games drops additional robust content, people are enthusiastic about playing the game and monetization follows appropriately. And that's kind of how we look at the world. In terms of the competitive landscape going forward, look, our view is that all entertainment titles compete against every other, possible use of your time. And they don't compete specifically against our games or anyone else's games. They compete against everything, against text messaging, going to the movies, reading a book, doing your work, whatever else can occupy your time. Entertainment is a nice to have, not a must have. However, when there is more than one title in the marketplace that compels people, the market also expands to take advantage of it. So the marketplace can be competitive, but it's rarely directly competitive title, whether that's a title that comes out under the Take-Two umbrella or any of our competitors or anything else for that matter. That's sort of a roundabout way of saying, we're really looking forward to the release of Red Dead Redemption 2. We're really excited and enthusiastic, of course. We don't think that has anything to do at all with how Grand Theft Auto and Grand Theft Auto Online will perform.

Yes. In terms of our full-game downloads for our new consoles, for Q1, we had -- it was at 40%, which is higher than usual for us because we were so heavily weighted towards our catalog titles during the quarter. But before the full year, we see it being at around 30%.

Our next question is from Justin Post from Merrill Lynch.

Couple of questions. I was just wondering about the online MAUs for Grand Theft Auto relative to the new game sales. So do you see that ratio changing a lot as you sell more units of GTA 5 and you watch your online users? Is that ratio staying about the same? And is there still a lot of room to grow the online universe based on the game sales? And then the second thing, any updates on Red Dead for next year? And how -- what kind of lessons are you learning from GTA? Can you apply those to the Red Dead online universe?

Yes. We haven't given out many statistics in terms of the connection between purchases and users and how that's developed, except, of course, to say that we've experienced another record and expect to have a record result this fiscal year, which Lainie gave detail on. And -- I'm sorry, your second question was?

Just any update on Red Dead and how do you think about that online universe, given what's going on with GTA?

Yes. There are no updates apart from our enthusiasm about the release in spring of 2018. And what Rockstar Games has said is there will be an online component, no more details have been given. We've said as a company that our hope and expectation is that all of our significant releases offer consumers an opportunity to stay engaged after the initial release. And it's our belief that if you surprise and delight and excite consumers, then monetization can't be far behind and that's been our experience. Beyond that, we're not giving out any more details.

Our next question is from Ben Schachter from Macquarie Group.

Few questions. Strauss, I'd love to hear your high level views on exclusive content for the various platforms. It seems like over the recent past, we haven't seen a lot of exclusives, but -- as app stores and potentially new services become more important, do you think that will change? And then separately, AR versus VR, Strauss -- I think you were correctly skeptical of virtual reality's growth. So far it hasn't done much. Now just wondering what your views are on augmented reality. And then finally, just definitionally, I consider Borderlands, a 2K title, is that correct? Or because it's developed by Gearbox, should I not think of it as a 2K title?

So I'll just give the third one, the easiest one. Yes, Borderlands is a 2K title. So it's published by 2K, developed by Gearbox. So that's quick answer to that question. In terms of platform exclusivities, we don't really focus too much on that. I think, for us, the priority for us is to make sure that our entertainment -- our products are available as widely as possible on as many platforms as possible. There may be specific game-related reasons for us to do a certain level of exclusivity by platform, but there really is no strategic focus on increasing or decreasing that going forward.

Ben, it's Strauss. In terms of AR versus VR, they're completely different user experiences. And the concerns that I raise regarding VR are not applicable to AR. In order to have an AR experience, you don't necessarily have to be wearing glasses or a headset. You're not burdened by being in a particular location. And the discomfort factor doesn't exist necessarily. And we've already seen a very successful AR title with Pokemon GO, a very successful title. And one can talk endlessly about their trajectory of that title, how it peaked relatively quickly, separate issue. But I have no skepticism about the possibilities for AR. It's in the hands of the developers. Are they passionate about an idea, and is the idea brought to reality in a spectacular, exciting and compelling way? So I think there is great opportunity. Remains to be seen if the AR technology itself is what creates the opportunity. This entertainment business that we're in here is a sort of -- is unique and that it's this combination of technology and what that means in terms of gameplay, character, story and graphics. It's unusual that so many moving parts in any given time and for the full history of this business since its inception, as one piece moves ahead, other pieces move ahead. So it's pretty hard to predict what will excite consumers, and we don't -- We, sitting here today, from a corporate point of view, don't propose to predict that. But that's what our 2,200 creative folks are in the business of doing and our strategy is to be the most creative, the most innovative and the most efficient. And I think what you're talking about is in innovation, and we're proud of the innovations that our creative teams are focused on every day. So more to come, but I don't have any skepticism, particularly about AR technology.

Our next question is from Ray Stochel from Consumer Edge Research.

The first question would be if there is any change to your initial 2019 outlook, given the increase in guidance for this year?

As I mentioned in my prepared remarks, there -- we don't have a change. We are reiterating what we said last quarter, and net sales above $2.5 billion and cash from operations above $700 million.

Got it. And I think you may have mentioned some marketing timing being put back into this year. Is that a timing shift or just additional marketing for your properties that you're trying to take end users for? And then separately, how are you guys thinking about your mix of marketing, whether that be from social influencers, whether that be from retail or whether that be more media-related ad spots?

So the marketing expense being higher that I mentioned in our new outlook, that is additional marketing for some of our titles.

And in terms of mix of marketing, I think we are seeing a change of mix. I -- and that doesn't -- that's not to say that we don't have the same kind of opportunities that we had in the past in traditional marketing, television, outdoor or otherwise. We are obviously seeing more opportunities to be more efficient on -- from a marketing perspective. Social media presents all kinds of new and interesting opportunities for us. But in terms of very significant meaningful changes that would impact your models or expectations, I would say no.

Our next question is from Mike Hickey from The Benchmark Company.

Yes. Strauss, I think you may have touched on this. I'm going to ask anyway. I guess when you look at GTA Online and your record MAU that you're seeing in June and July, I think you said, obviously, new content is important and clearly, that seems to be the case in this quarter. So I was thinking -- I guess I'm wondering how you sort of balance new content with continued catalog sales. They obviously both seem to be big drivers here, but you would expect, I guess, over time that catalog sales might slow. Then I have a quick follow-up.

One would expect that catalog sales would slow over time, certainly. And we also when we outlined our expectations for Grand Theft Auto Online for this fiscal year, we felt that sales would moderate, has not turned out to be the case in the first quarter. We're not expecting to be the case in the second. But as Lainie said, we are expecting sales to moderate in the third and fourth quarter, would still yield a record year. And of course, we have to see how it pencils out. But yes, unit sales of the full game would normally decline over time.

Okay. The -- and I guess on GTA Online, when you think about sort of the construct of monetization, obviously, record performance here, record MAU. Is that -- is the monies collected just primarily the growth there from increase in player base? Or are you also seeing some effects maybe in paid conversion rate or ARPU? And secondarily, I guess when you think about maybe medium to longer term, where you see the biggest opportunity for the game, geography wise or platform wise?

We're not giving out more color in terms of conversion and ARPPU or ARPU on the title except the information that we already gave in terms of where the game is going. Rockstar Games has said that there is more content to come for Grand Theft Auto Online and we're excited about that, and I think consumers are too. Beyond that, in terms of where the title goes creatively or where any franchise goes creatively, as you know, Mike, we leave those discussions and announcements to our labels.

Our next question is from Doug Creutz from Cowen and Company.

Yes. When I'm thinking about the size of the beat in the quarter and particularly in a quarter where you didn't have any new releases and where you were, I think 7 weeks deep in the quarter when you gave guidance. I'm just trying to wrap my head around, was there something that just really inflected positively in the back half of the quarter that you didn't expect? Was it more a case of you expected things to sort of really slow down in the back half of the quarter and they didn't? And then if you could let us know what your catalog net sales were in the quarter, that would be helpful too?

So we did have very successful release of the Gunrunning update in the quarter and that generated a lot of enthusiasm and net sales reflected that enthusiasm. So I think you properly capture that. And in terms of your question regarding catalog, Lainie will take that one.

The catalog sales are about 94% in the quarter.

94% of the total?

Yes. So it was $326.2 million of net sales.

Our next question is from San Phan from Mizuho.

I was just curious, as you look ahead to Red Dead, is there any reason that you think that geo mix for that game would change your -- the -- in order to speak different from what you're seeing with GTA or maybe even the last Red Dead game from your -- the prior launch?

I understand why you're posing the question given the theme. We had a great worldwide result with the Red Dead Redemption. We expect it'll have a similar geographical mix to any titles of that scale. We pride ourselves on our world-wide marketing and distribution organization. The international markets continue to develop for us and for our competitors. We're incredibly excited, for example, about what's going on in Asia, where there's a lot of growth. So no, we don't have any reason to believe that geographical mix will differ.

Our next question is from Drew Crum from Stifel.

Strauss, can you comment on your early expectations for the NBA eLeague? Is that an important piece of the confidence behind next year's guidance for record sales or is it not material? And then separately, on the pipeline, I think you mentioned that there are a couple of games in development from Social Point will be out over the next 2 years. Is that -- is anything embedded in fiscal '18 guidance? And as it relates to Red Dead, any contemplation in making that game available on PC?

Well, let's distinguish our collective enthusiasm for the NBA eLeague from our financial expectations because we've included no results in our outlook for -- from that. And that's, again, not a reflection of a shortage of interest or enthusiasm, we have plenty of that. But our style around here is that we don't claim victory before it occurs. We work really hard to create something and really diligently to do so, and then we tell you how it goes afterwards, candidly, for what it's worth. We think it's an amazing opportunity. The NBA is a great partner. Brandon [indiscernible] is doing a fantastic job, building a team to exploit the opportunity. We have a schedule coming in '18. We have 17 teams who are signed up to participate. But the business model is still uncertain in the space, as I've said before. And there's really only one game in this space that generates a whole lot of revenue right now. And again, we think there is a wonderful opportunity, but we're not yet at the point where we would include that in our results. In terms of Social Point games that are in development, those are included in our outlook. And as I mentioned, that deal is not very old around here, but it's still already performing much better than our expectations. Net sales are up double digits in the quarter.

And Red Dead on PC, Strauss, any update there?

Any updates about any of our titles will come from our labels.

Our next question is from Stephen Ju from Credit Suisse.

So Strauss and Lainie, when the business was completely physical discs, you were in a position where you had to predict the number of units sold, but now you not only have to predict units, but you also have to predict consumer engagement and monetization. So where the business is now, is it inherently more predictable or unpredictable? As I guess, another way to ask the question is, as the cycle of new content drops, the rise in engagement and the monetization that follows, is that a pretty predictable business?

I know -- I actually don't think it's any more or less predictable. The vagaries of creative businesses though are well known to all of us. When you're putting out the next iteration in a beloved franchise, generally, as you come to completion between the installed base, which is the information that we have and the experience we had in the prior release within the franchise, we come pretty close to, I think, the fence. We -- the biggest benefit of moving into digital, of course, is that we don't have any sort of economic order quantity concerns. We don't have to worry about how many units we produce or overproducing or underproducing because a digital game is always available. There is also an enormous benefit for our catalog because our catalog title that isn't selling a lot of units won't be on shelves or may not be on shelves, but it's always available in digital form. And finally, of course, our margins, both percentage and dollars are higher with digital distribution. So this is one of these situations where it's all good news. Perhaps, the only bad news, if there is bad news, is obviously when you buy a digital version of a game, you don't have the ability to trade in the used title later. So from a consumer point of view, I -- it could be seen that it's more expensive to buy a frontline title. How do we deal with about? We aren't really -- We weren't particularly subject to used game sales at all because we pride ourselves in having the highest quality titles in the marketplace, people don't like trading in our games, typically. So I think from this company's point of view, the movement to digital, which to be clear, we have no influence over. We need to be where the consumer is. We don't try to order the market. We try to be responsive and be at service to our consumers. However, the movement to digital distribution is definitely a very good thing for our company and for the industry.

Stephen, in the terms of engagement, which is kind of code for recurrent consumer spending, again, that's not really necessarily a -- has an effect on our predictability. It just -- it really -- that's a factor of extending the life of the product and then enabling to monetize more effectively and for a longer period of time. So when we know we have a hit and we know engagement is high, then we can consider that we're going to have -- obviously have better results for a longer period of time. So it's really not about predictability. It's more about how effectively we monetize.

Our next question is from Evan Wingren from KeyBanc Capital Markets.

Can you -- two platform questions. I guess just how important is PC as a platform for your major titles on a go-forward basis from maybe a few years ago?

So the answer to that is it really depends on a title. I mean, some titles are actually heavily weighted to PC, for example, Civilization and XCOM. Some titles are less weighted to PC. So it really depends on a title by title basis. The great news is that the PC market is vibrant for us. It's a great market for us, it's a big market, it's a core market. These are -- and consumers that are highly engaged. It's a predominantly digital market, which also removes friction in terms of ongoing engagement with a consumer. So for us, the PC market, as a company, is very important and very exciting and something we focus on.

Okay. And then secondarily, obviously, you're supporting the Switch. Can you maybe just give us an idea of how your perspective on that platform has evolved over the past, call it, 6 months and where you see its potential?

We're -- we were excited 6 months ago and supportive. We are excited now. We have NBA 2K and WWE 2K coming for Switch. The sales have been great. We expect the sales to continue to be great. We're very optimistic around the platform. We're very supportive of Nintendo. So the only thing that's changed in the last 6 months is our initial belief has been reinforced by the early very strong results. Thank you all for joining us. Thanks for your questions. Really appreciate it. We're really pleased with and proud of the results from the quarter and, as always, we appreciate your attention and your support. Thank you very much.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.