[IMGW]http://media.1up.com/media?id=3328706[/IMGW]Much of the 'net -- 1UP included -- jumped the gun over Take-Two Interactive's reveal that Microsoft had handed $50 million over for the rights to exclusive episodic Grand Theft Auto IV content for Xbox 360. Rather, the money is better understood as an advance, not unlike what an author, musician or software company would receive before the release of a product. The higher the sales expectations for the product, the higher the advance; the company expects they'll make back their investment.

The confusion comes from the term "deferred revenue," initially mentioned in the Take-Two conference call during a Q&A session by Evan Wilson of Pacific Crest Securities, in regards to Microsoft's advance. Time for a little Econ 101.
"deferred revenue: Revenue that is considered a liability until it becomes relevant to the business at hand, such as a payment received for work that has not yet been performed" -- investorwords.com

Take-Two has not yet delivered the episodic content -- it's simply been promised. "[deferred revenue] doesn't get recorded as straight revenue because, if something goes wrong with the job, the money is at risk," reads investopedia. Consequently, if GTA IV were to unexpectedly bomb at retail and the episodic content subsequently sold terribly, as well, Take-Two would potentially have to "refund" Microsoft. This is not an uncommon practice within the videogames industry in the developer/publisher relationship.

Whether this is what ultimately swayed the publisher to keep the content on Xbox 360 exclusively, we don't know, but Take-Two hasn't exactly been floating in a sea of money lately. Speaking to Next Gen, Microsoft said it "does not comment on business arrangements with our partners," and Take-Two denied a further explanation to GamesIndustry.biz. For now, everyone's keeping their mouths shut.

Thanks to 1UP.com for sharing the news with us!