Take-Two CEO Strauss Zelnick says including a game like Call of Duty on Game Pass will inevitably push consumers to subscribe, at least for a while.
Take-Two supports subscription services through its traditional titles, but has been skeptical of the idea of bringing new AAA games to the service on the same day they launch.
In 2022, Zelnick told us, “For us, that doesn't make any sense, because, economically, we don't think consumers are willing to pay for that. And we can't afford to turn our business upside down in a way that doesn't make economic sense.”
But with Xbox continuing to significantly push Game Pass with the inclusion of Call of Duty: Black Ops 6 to the service this October, does Zelnick expect consumer habits to change?
“I think offering a top-tier title at a premium price on a subscription service, day and date, will push consumers to that subscription service at least for a period of time,” Zelnick said. Gaming Industry.biz.
However, he added that Microsoft's decision does not change the way Take-Two views the subscription opportunity. “No, it will not affect our decisions,” Zelnick said. “Because our decisions are rational.”
Zelnick was talking to Gaming Industry.biz Following the company's latest financial results, which showed modest growth in the first quarter, it's definitely been a quiet year for Take-Two, with some of its core properties, such as GTA Online and NBA 2K, not seeing the growth we've seen in previous years, which has been offset by success in the mobile sector, particularly around Match Factory and Toon Blast.
“We have narrowed down the pipeline to focus on the titles we believe will be most successful”
The company had undertaken three separate sets of cost cuts (including layoffs) over the past 18 months, some of which were related to its $12.7 billion acquisition of Zynga and others due to the new realities facing the video game industry post-pandemic (i.e. slower growth, higher costs, and a highly competitive landscape). Zelnick tells us that he believes Take-Two is now right-sized for the current market situation.
“Yes, a lot,” he says. “We just went through another cost-cutting exercise. We announced that we've cut about $165 million from the annual operating run rate of the business. We have a three-part strategy: to be the most creative, the most innovative and the most efficient entertainment company. And we've just improved that efficiency even further.”
One of Take-Two’s hardest-hit business areas has been its Private Division label, which specializes in smaller indie titles. The company has laid off members of its publishing team and closed its in-house studios, Private Division, Roll7 and Intercept Games. It is, however, still supporting some indie releases, including two titles for this fiscal year and one more over the next two.
“We've narrowed down the slate to focus on the titles we think will be most successful,” Zelnick said.
The big talking point for Take-Two is Grand Theft Auto 6. Rockstar's game is expected to be the biggest entertainment launch in history, and the firm has reiterated that its release window is later this year in 2025.
One of the challenges the game potentially faces is that there are many players, including GTA Online players, who are still playing on previous-generation machines, particularly the PlayStation 4. Meanwhile, GTA 6 is only slated for the new consoles.
Overall, though, Zelnick says this trend isn't a negative for Take-Two, noting strong sales of the company's older titles.
“No, it’s not a challenge,” he insists. “You’re right, there are certain players who are really interested in traditional titles. We have an excellent catalogue in this company, it’s reliable and it generates a lot of net bookings every year. So we’re delighted that there are players interested in traditional titles and even in traditional systems. That said, new blockbuster titles generate a huge amount of net bookings in the industry. Not just ours, but everyone else’s. At the end of the day, it’s really a Top Ten title business.”
Ultimately, he believes that while it may take longer for gamers to upgrade with this generation, they will eventually.
“In the couple of years since the release of a new hardware, the use of the previous generation hardware usually decreases significantly. But I think that will be the case here as well, it is just a matter of time.”
Zelnick has spoken a number of times about Take-Two’s quest to be the “most efficient” entertainment company, but when you look at the schedule, there are some games that seem like they’ve been a long time coming. GTA 6 will be the first new game in the series in 12 years, and Rockstar has only released one other major title in that time (2018’s Red Dead Redemption 2). Meanwhile, another game on the schedule, Ghost Story Games’ Judas, began life a decade ago and still has no release date.
There's been a lot of talk in the industry about shorter development times for video games, but Zelnick says that for Take-Two, games like Judas and GTA 6 don't reflect the business as a whole.
“In the mobile space, that's not really the case[that development cycles are longer],” he says. “We're seeing that in certain cases you can get to market quicker than you'd expect for mobile. When it comes to a very large, robust title, development cycles can obviously be very long, and we have some of those in-house, that's no secret. But we also have some titles that are annualized, like NBA 2K and WWE 2K. So those development cycles have remained consistent, even though the quality of the titles continues to improve.”
Take-Two’s financial results speak volumes about what’s to come. Grand Theft Auto 6 is clearly the biggest one, but the company has announced it will release 15 “immersive” games, one standalone game, five mobile releases, and three remasters during the 2026 and 2027 financial years, with Civilization VII also coming later this year. And while the broader video game market has faced a brutal two years in terms of layoffs, Zelnick has seen some improvements in the market that give him confidence that growth is on the way.
“There are some modest positives,” he concludes. “Our task is to outperform the industry and the only way to do that is to create big hits, and I think we have all the elements necessary to do that.”