Video game maker Take-Two Interactive blew past analyst expectations for its latest quarter that it reported Tuesday and just completed its best fiscal year ever, with revenue of $3.4 billion. To keep the momentum going, though, CEO Strauss Zelnick says he’s focusing squarely on games.
Take-Two plans to release 62 titles in the next three years – 21 of which will come before March. Four of those 21 are “core” titles – releases that are the type of games that tend to get the gamer audience especially excited. (Previous ones include Grand Theft Auto, Borderlands, and Bioshock.) And two of those will be based on new franchises.
Put another way, Zelnick’s not just going back to the well.
“If you only rely on the properties you currently have, over time you’re burning the furniture, because every title has a life cycle, even if it appears some of them don’t,” he told Fortune. “Ultimately, the biggest hits are the ones that are unexpected. And consumers are hungry for new, great hits.”
Details about most of the new games aren’t public. One game, however, is from Gearbox Software, the makers of the Borderlands series, Take-Two’s third most successful franchise with over 70 million copies sold.
Some of the new games will likely premiere next month at E3, the video game industry’s annual trade show, which is being held virtually this year. One title that won’t be included in that batch is the NFL game that was originally to be released this year, but has since been delayed until March for unknown reasons.
Unlike many gaming companies, Zelnick made clear that Take-Two won’t chase trends. That includes going big on virtual reality, a technology some said would shake up gaming, but has had a muted impact. He’s also steering clear of parking Take-Two’s cash in cryptocurrencies, something a handful of tech companies like Tesla and Square have recently started doing as a way to capitalize on what they see as a its huge potential for appreciating in value.
Additionally, Zelnick isn’t a fan of gaming metaverses, a series of interconnected virtual worlds that offer a variety of planned and spontaneous social experiences, ranging from get-togethers to concerts. (Fortnite creator Epic Games has been the leading proponent of this, closing a $1 billion funding round in April to support its plans.)
“I’m always allergic to buzzwords,” Zelnick said on an earnings call Tuesday after being asked about creating a bigger type of play experience for players. “The buzzwords of VR [virtual reality] didn’t get this industry too far and AR [augmented reality] hasn’t improved matters either. 3D hasn’t done much for us.”
Then, speaking more broadly about following trends, including metaverses, cryptocurrencies, and SPACs, a recently popular alternative for companies to go public instead of pursuing initial public offerings, Zelnick says: “Put them all together in five years, will any of this matter? I’m not sure it will.”
Take-Two saw a huge influx of new players last year during the pandemic. And the company’s priority is to retain as many of those customers as possible. That could be, in part, why Take-Two has such a large number of new titles planned.
“We think the audience is larger post-pandemic than pre-pandemic,” says Zelnick, while acknowledging that the increase in people gaming and the hours they spend is moderating now that the pandemic is over.
He continues: “The good news is we have a larger audience than ever before and great products coming for them.” Considering that people have so many other leisure options beyond staying home, the challenge will be to “give them something spectacular that’s unexpected,” he adds.
Of course, not everything Take-Two has in the pipeline is new or unexpected. Versions of Grand Theft Auto V, which has already sold 145 million copies over the past eight years, will come out for the PlayStation 5 and Xbox Series X in November.
Analysts applaud how Take-Two is experimenting with trying to retain more customers, but not give away its most valuable games. A standalone version of Grand Theft Auto Online will come out for both new consoles in November as well—only this version will be free to play for at least the first three months.
It’s a new strategy by the company to try and hook players before asking them to pay to play. And if it works, it could extend the already impressive lifespan of the game.
“We can only surmise that the company will experiment and see what happens if it charges a nominal amount (assuming $15–20) after three months, and if that doesn’t work, Take-Two will try something else,” said Michael Pachter, an analyst with Wedbush Securities, in a research note
After all, new game franchises are certainly valuable, but it makes sense to keep the golden goose well fed.
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