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Take-Two CEO Discusses Next-Generation and The Future; Argues that Cloud Isn’t a Game-Changer

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Take-Two CEO Discusses Next-Generation and The Future; Argues that Cloud Isn’t a Game-Changer

During the Bernstein Annual Strategic Decisions Conference Take-Two CEO Strauss Zelnick talked about the next generation of consoles and the future.

During the Bernstein Annual Strategic Decisions Conference Take-Two CEO Strauss Zelnick talked about the next generation of consoles and the future.

Zelnick mentioned that Take-Two is “very excited” about the new consoles will allow the publisher’s creative teams to do. They’ve been developing with new tech for some time and they’re very familiar with where that can lead.

Usually, this includes better memory, better graphics, more fidelity, more beauty, more subtlety, more speed, more richness, more depth, and more characters.

Zelnick brought up the example that the increase in background interactivity in Red Dead Redemption 2 compared to the first game is huge. There is way more happening in the world leading to more realism.

He believes that over time tech will be so sophisticated that you won’t be able to distinguish between computer-generated entertainment and live-action. He admitted that we’re not there yet, but we’re getting closer, and a point will come when photorealism will be possible.

This doesn’t mean that it’ll always be used, Zelnick doesn’t think Borderlands is ever going to be photorealistic as it wouldn’t make any sense. Despite that, Take-two’s creative would be thrilled to make something that would look “totally real.”

According to Zelnick, the more engaging a title is, the more people can play it simultaneously, the more there is to do in the world (this especially for open-world games in which Rockstar excels), the bigger the audience is going to be, the more they will engage with the games, and as a consequence, the more they will pay and the more they will be loyal.

Zelnick believes that coming out of the COVID-19 crisis the gaming industry will be even more important and grow even faster compared to linear entertainment. He thinks technology will continue to explode for at least the next ten years.

Asked whether the success of Grand Theft Auto Online could somehow cause issues when it comes to releasing the next game of the franchise, Zelnick responded more broadly since he doesn’t usually talk about specific unannounced releases, and mentioned that if a company doesn’t innovate and doesn’t continue generating extraordinary new entertainment experience for its consumers, they’ll be left behind.

He argued that every time you look at your business and take the position ” this is great and the gift that keeps on giving” and stick with it without worrying about innovating, you’re “just moments away from being destroyed by your competitors.”

“Since your lunch is going to get eaten anyhow, I prefer to eat it myself, get out in front of my competitors, and always get to market when the time is right with the next great thing and not worry about the possibility to somehow have a negative influence on what was previously in the market.”

He is “Not remotely worried” about being in a position in which there is a great line of live services and then a new release somehow causes some internal competition.

Speaking of Stadia, Zelnick admitted that the launch of Google Stadia has been slow, he believes there was some overpromising which caused consumer disappointment.

While he believes that every time a company broadens distribution it also potentially broaden its audience, which is why Take-Two supported the release of Stadia with three titles and will keep supporting high-quality streaming services as long as the business model makes sense.

Over time, he believes streaming will work but Zelnick believes it’s “not a game-changer.”

“People who want our games now can get our games now. The fact that you could stream them and not have a console interface is not that big a deal. People have PCs and you can get all of our big titles on PC – maybe not immediately but eventually 40% of what used to be a console release now goes over to PC, and it’s going to grow – The world is moving into an open system.

If you’re going to pay 60+ dollars for a frontline release and more internationally, are you really unwilling to buy a $300 console?

The belief that streaming was going to be transformative was based on a view that there were loads of people who really had an interest in interactive entertainment, really wanted to pay for it, but just didn’t want to have a console. Mmmmh… I’m not sure that turned out to be the case.”

While he’s excited about the technology and what it’s going to do, he doesn’t believe it will multiply the market by ten or twenty times. Of course, it’d be great if it did.

About subscriptions, Zelnick mentioned that for many gamers that play for 45 hours a month on average involving between 1 and 3 titles that might be played for one to six months or more, buying a game for $60 is a pretty good deal compared to paying a $10-15 subscription.

His view of what would drive subscription would be an intersection of what’s good for consumers and for the publishers. That has not been found yet for frontline subscriptions (IE: subscription including new games).

That may be good for avid consumers but not for publishers. While take-two believes there is a sweet spot to be found, it’s for “deep catalog” (IE: older games).

Frontline subscriptions probably don’t make a sense for hits, while they may make sense for flops, but they’re still going to be flops and thankfully Take-Two doesn’t have many flops.

That’s why Zelnick is “very skeptical on frontline subscriptions” and “enthusiastic for deep catalog subscriptions.” Yet, at the end of the day, Take-Two is going to do what the consumer wants anyhow.

If you’re intersted in Take-Two Interactive Software’s financial performance, you can read our dedicated article from a few days ago.

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