The video game industry on Wednesday changed to adults-only the rating of "Grand Theft Auto: San Andreas," a best-selling game in which explicit sexual content can be unlocked with an Internet download.
The decision followed intense pressure from politicians and media watch groups, and retailers reacted swiftly - Wal-Mart Stores Inc., Target Corp. and Best Buy Co. said they would immediately pull all copies from their store shelves nationwide.
The game's producer, Rockstar Games, said it stopped making the current version and would provide new labels to any retailer willing to keep selling the games, which had been rated "M" for mature. The company also will offer a downloadable patch to fix the sex issue in PC versions, and is working on a new, more secure version, to be rated "M."
Rockstar's parent company, New York-based Take Two Interactive Software Inc., also admitted for the first time that the sex scenes had been built into the retail version of that game - not just the PC version but also those written for XBox and Playstation2 consoles.
Company officials had previously suggested that a modification created by outsiders added the scenes.
Take-Two spokesman Jim Ankner acknowledged in an Associated Press interview that the questioned scenes were created by Rockstar programmers. "The editing and finalization of any game is a complicated task and it's not uncommon for unused and unfinished content to remain on the disc," he said.
In a statement, the president of the Entertainment Software Rating Board said the sex scenes were programmed by Rockstar "to be inaccessible to the player."
But ESRB chief Patricia Vance also acknowledged that the "credibility and utility" of the industry-run board's initial "M" rating had been "seriously undermined."
Many retailers sell "M" rated games, which "may be suitable for persons ages 17 and older," according to the Entertainment Software Rating Board, but won't sell "AO"-labeled games at all.
"Grand Theft Auto: San Andreas" was last year's top console game, selling more than 5.1 million copies in the U.S. after its October release, according to market analyst NPD Group. Xbox and PC versions were released last month.
Take-Two said net sales could drop by more than $50 million this quarter, and lowered its financial expectations for the year to set aside funds for returns of the games. Guidance was reduced to $1.05 to $1.12 per share on $1.26 billion to $1.31 billion in sales from a prior estimate of $1.40 to $1.47 per share and sales of $1.3 billion to $1.35 billion.
Shares of Take-Two rose 12 cents to close at $27.07 on the Nasdaq, but later dropped $1.81, or 6.7 percent, to $25.26 in after-hours activity after falling more than 11 percent when the decision was announced. The stock has traded between $19.26 and $29.60 over the past year.
The rating change is vindication for Patrick Wildenborg, the Dutch programmer who developed the "hot coffee" modification and made downloads freely available on the Internet. Wildenborg had told the AP that his "mod" merely allowed the user to gain access to pre-existing content in game.
Such "mods" are wildly popular among the hardcore gaming community, and have been shown to extend the retail longevity of games like "Half-Life," which is still sold years after its first release because of a popular "Counter-Strike" mod that allows for detailed counter-terrorist shoot'em-up action.
Take-Two president Paul Eibeler said in a statement that "the decision to re-rate a game based on an unauthorized third party modification presents a new challenge for parents, the interactive entertainment industry and anyone who distributes or consumes digital content."
The developments did little to appease Sen. Hilary Rodham Clinton, D-New York, who applauded the ESRB investigation but remained disturbed that the sex content appeared on store shelves in the first place.
"Apparently the sexual material was embedded in the game. The company admitted that," Clinton said. "But the fact remains that the company gamed the ratings system."
Clinton has asked the Federal Trade Commission to investigate, and said the ESRB must do more to police content.
"I think that the rating board has to be vigilant and really make sure that it's as thorough as it can be and not just take the game makers' word as to what's on there," Clinton said.
Best Buy echoed that, saying it hopes its decision to stop selling the game will "send a strong message to game developers encouraging full cooperation with the ESRB."
The Parents Television Council, one of several media watchdogs that have criticized Rockstar and the ESRB, called on the game publisher to voluntarily recall the game and offer refunds to purchasers. Instead, Rockstar has agreed to exchange unsold inventory with new, "M" rated versions that "have the hidden content removed," the ESRB said.
"I tip my cap to that first step of showing responsibility," said Tim Winter, the council's executive director. "Phase two needs to be absolutely getting to the bottom of this coding issue. How did it get into that game? How did it get past the ratings board?"