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The video game industry is having a watershed year, marked by disruptions of the traditional console retail game business and the rise of social, mobile, and online titles. Karl Slatoff, the chief operating officer of Take-Two Interactive, welcomes this kind of change because he believes his company has the right strategy to succeed in the long term. It is focusing on original, blockbuster games such as Max Payne 3.
Right now, the quickest way to make Slatoff go quiet is to mention Grand Theft Auto V, the highly anticipated next installment in a series that has set records for blockbuster video game sales. Take-Two’s Rockstar Games label is expected to release GTAV sometime this year, though an exact launch date hasn’t been revealed. It’s just the kind of title that could get the game industry out of its funk — a result of the lack of new consoles.
The game isn’t at the Electronic Entertainment Expo (E3) video game trade show this year, and neither is Rockstar. There’s plenty of speculation about the title, but Take-Two has to keep mum. Slatoff still had plenty to talk about, however, when we caught up with him at the E3 this week in Los Angeles.
GamesBeat: Now that it’s out in the open, what do you think of all the console makers and their announcements at E3?
Karl Slatoff: You mean the lack of announcements? Well, let me ask you a question. What do you mean by their announcements?
GamesBeat: Anything that’s interesting to you as far as what your people are going to have to do. Platform-level things, the Wii U…
Slatoff: We’ve talked about the Wii U for quite some time now. We’re doing NBA on the Wii U, so we think it’s a pretty interesting platform, and it could have some good features that work well with certain games. We’re actually really excited to support it.
GamesBeat: It seemed like it was going to have just one tablet per Wii U machine, and now they’re talking about two. I’m not sure if they’re really prepared to tell everybody, here’s how you do a game for two gamepad tablets.
Slatoff: It might. I can’t really talk about the tech because that’s not what I do. I’m sure the guys at Nintendo have figured out a way to make that work pretty seamlessly.
GamesBeat: Tablet against tablet for two players seems fundamentally necessary, especially for the game you’re talking about.
Slatoff: Yes, but that’s interesting, we’re excited about that.
GamesBeat: And the asymmetric stuff, does that have some appeal as well? One tablet against for Wii controllers?
Slatoff: I think it could. Again, I haven’t seen any iterations of it specifically as it applies to any of the things that we’re prepping on at this point. Any feature that’s new is interesting. I think it could have interesting applications depending on how people work with it.
GamesBeat: And now the level of the tech is on par with the Xbox 360 and PS3, and that might make cross-platform games easier [from a dev perspective].
Slatoff: It’s HD, right? That’s a lot of development right there. From that perspective I think it will. But every platform has its own unique challenges and opportunities. It’s a more powerful machine that we can use, that could be a core gaming machine, that’s obviously something that’s really appealing to us.
GamesBeat: How’s the lineup for you guys?
Slatoff: You’ve seen it. Between Spec Ops: The Line, we’ve got a fantastic lineup. I think it’s the best lineup the company’s had in this short period of the its history. Following up we’ve got Borderlands, we’ve got XCOM: Enemy Unkon, BioShock Infinite, GTA as well. I think we’re in pretty good shape. I don’t think we’ve been in this position before, so we’re excited.
GamesBeat: But you’re not telling people enough about GTA.
Slatoff: We’re not telling them anything. We’ve said all we’re gonna say about GTA. It is in development, and obviously it’s very important for us.
GamesBeat: Are you preparing to deal with all the gamers that are here at E3 going, “I WANNA SEE IT”?
Slatoff: Every year we do it … and the thing I always find interesting [is] you’ve got people who are always predicting, “Are they going to announce something about that title during E3?” And I’m not sure that’s ever happened. I don’t see why they’re so surprised that Rockstar’s not here and they’re not saying anything about the title. But we’re used to dealing with the questions.
GamesBeat: The balancing out of the portfolio, does that still look good for you guys as far as non-GTA years and GTA years? There’s been an imbalance in the past.
Slatoff: I think it does. We’ve had a profitable year without GTA releases. We did not do that this past year. We had planned on doing that, but we had to move some titles around. So I would say that it depends on when releases come out. Whether it’s going to be profitable or not without GTA really depends on that. But one thing for sure is, I think it’s hard to argue that we are 100 percent dependent on any one given title. Because we do have so many titles that have performed as well as they have. I think our intellectual property at this point in time is unmatched in the industry. We’ve got a huge franchise with NBA, BioShock, Borderlands, Red Dead, GTA, Civilization… What else? I’m missing some, there are other ones out there, but those are pretty big titles, like Mafia. All of them I think are capable of going into the next generation and beyond.
GamesBeat: How many people are you guys now, how many studios?
Slatoff: What did we say the official studio count is now? It’s like 15, and about 1700 employees, development employees worldwide? It depends on what you count.
GamesBeat: It sounds like it’s more than this time a year ago.
Slatoff: No? I think it’s probably about the same. Slightly more?
GamesBeat: It seems like some of the competition might be getting smaller in the core console space. THQ is weak right now. They’re still doing games, but… Does it feel like there’s a thinning-out of the console competition?
Slatoff: Well, look, there are people announcing studio closures all the time. Doing the shovelware doesn’t work anymore. You need to actually have something that’s going to get consumers out of the chairs and into the stores or online to download a new game experience. That takes a big investment, and it takes a sophisticated marketing organization to do it, and I don’t think that every studio or publishing system… We’re not all created equal that way. I think that you’ve seen some of the shakeout … at this point the consumers are really looking for something that’s compelling and unique every time they go out to buy a game. For us, I think that positions us very well, because that’s really been our strategy for a good number of years.
We don’t come out with a thousand releases a year, and we never have. We’re obviously focused on profitability, but quality, we believe, drives profitability at the end of the day. So for us this is a good thing.
GamesBeat: And at the same time there’s this growing competition in the mobile-social-online…
Slatoff: We get that question a lot, and we are active in the mobile space, we’ve released a good number of titles in the mobile space. We’re only talking about iOS and Android, in that regard. But we really think about the games first. We don’t think about platform first. We think, first and foremost, is it a casual experience or is it a core gaming experience? And then the second lens, is it a single-player experience or is it a multiplayer experience? Those four components, that axis, that’s how we manage our business.
If we’re looking to build a core single-player experience, we’re going to think about that experience creatively and then we’re going to build it for the platform that can support that experience. So for us, whether it’s an iOS and Android platform, a console platform, a PC platform, it really doesn’t matter. We don’t care. Obviously platform will dictate how you develop to a certain degree, but for us it’s always judging the creative experience. I would say that something like Max Payne or GTA is actually a core gaming experience that you can experience on tablet platforms. They’re just from older generations. But for the most part, tablet gaming has been more casual. I think that will change over time, and should the tablet ultimately become a core gaming platform, obviously we’re going to be there, because we’re there now doing it.
I don’t really see it as competition from tablet, I see it more as the platform is evolving. That presents an opportunity for us, because I think they will be ubiquitous, and the barrier to entry for the consumer to get into the gaming space may be lower now. Because you’ve got a tablet that has multiple functions. If you have a tablet and that’s your gaming device, that’s fantastic for us, because that barrier is gone for the consumer.
PR: One thing that’s interesting to note, too, as we’ve taken advantage on the PC platform with things like Steam, tablets give us great opportunities, Karl mentioned GTA3… We have this incredible catalog of titles that we can go back and see, you know, what classic games, if you will, that were amazing experiences, can we bring back to these tablet platforms? I think our position of being able to create AAA games gives us the added strength of, those become AA catalog titles over time. It’s been a very important part of our business.
GamesBeat: Like on Steam as well, and OnLive?
Slatoff: Yes. Everyone says they’re platform agnostic, and you can’t be 100 percent platform agnostic and be in this business. So that’s a little bit of hyperbole. But we try to be as much as we possibly can. We don’t really care how it’s delivered. Because there’s nothing on the horizon that we see from a development perspective that we don’t feel like we’re prepared to develop for. And I actually don’t believe in the notion of certain devices having natural price point limitations. I think that what people are willing to pay has to do with the content that they’re getting. Today, you may not be able to sell a game for more than 10 dollars or 6 dollars or $4.99 or whatever the price point may be on iOS, but that’s because the game’s probably not worth that much. It’s not delivering the kind of experience that you’ll get when you play BioShock Infinite. The day it does deliver that experience, then I think there will be plenty of opportunity for us.
GamesBeat: It seems like the console guys are sort of differentiating themselves with variations of tablet, touch, and gesture.
Slatoff: There’s some of that.
GamesBeat: It looks like everybody’s still trying to find exactly what it is.
Slatoff: It depends on what the functionality is meant to do. My personal opinion is, having played a lot of games on tablets, SmartGlass is kind of a tough thing to use for a core gaming experience. We’re used to the controller.
GamesBeat: Real time.
Slatoff: If you play Max Payne, it works, but is it the same as holding that controller in your hand? Really having that tactile control over your character? I think for real-time experience, you need that kind of control. And if you’re playing Call of Duty, without the fine motions… I think that certain platforms have limitations. I think SmartGlass is one of them. But they can be overcome with peripherals and software and so on.
GamesBeat: Faster speed.
Slatoff: Yes, there’s processing power limitations as well. We know that will improve. Tomorrow’s tablet will be as fast as today’s gaming PC, someday.
GamesBeat: Are you officially investing in next-generation R&D?
Slatoff: We haven’t really talked about next gen, specifically because our first-party partners haven’t talked about it. But it’s obviously coming at one point in the future, and we’ll be ready for it. Just like anybody else. Obviously it’s something we think about, something that we’ll be well-prepared for.
GamesBeat: The Nvidia guys are talking about a resurgence in the PC. Do you see that happening as the console generation stretches out?
Slatoff: Depending on the titles that are coming out in this period of time, I think that there’s always an opportunity for PC gaming to grab a little bit of share of the market. I’m not sure if that’s a function of the PC gaming market growing, or if it’s a function of people buying fewer consoles during that period of time. I do think the PC market is robust, and things like Steam help, because that’s a much better experience. Obviously the PC gaming audience has embraced that. And I think those platforms are getting better and better. There’s more than just Steam, there are other platforms as well.
That’s the most powerful gaming device on the planet, the PC gaming device, so it’s a good gaming device. I think there’s always opportunities for that segment to grow.
GamesBeat: In the core space, it looks like there’s your model. And then there’s the come-out-with-the-same-franchise-every-year model.
Slatoff: That’s right.
GamesBeat: That’s all that’s left. It sounds like you guys are not believers in…
Slatoff: Well, it depends on the title. Look, we put an NBA game out every year. So obviously for that type of title, that makes sense. We have not gone the route of Call of Duty with any of our franchises. Call of Duty is also becoming less and less about that single-player experience and more about that multiplayer experience. They’re fantastic at what they do. I think it may make more sense for something like Call of Duty to just iterate on a yearly basis. You can almost see it iterating into an online, a pure online play someday. Who knows what Activision is thinking about doing? But for that type of franchise that may make sense, because it is so much about the multiplayer.
When you’ve got a solid, narrative-driven single-player experience, it’s difficult to come out with something fresh and new every year. Every time we release something, we’d love to take the IP to the next level, so we start building franchises. And doing that every year is something that we find very difficult to do.
PR: We’ve used the James Bond analogy. One of the reasons the James Bond movie franchise is so successful is that they’ll come out with this amazing experience, and then they go away for a period of time, and people are really clamoring for it, and then when it comes it’s bigger and better than the previous one. The audience is really hungry for it. I think part and parcel with our commitment to high quality titles that are really leading-edge.
GamesBeat: You want to stay away from the James Bond video game model.
Slatoff: No, we’re not doing a James Bond video game. But you know, the other outline, as well, is that we also really strongly believe in investing in new IP. There is a finite amount of resources that any game company has. You can always do more deals and more deals, but any given company has a finite number of resources. And if we dedicated everything to just doing sequels, trying to get something out year after year, that may work for a period of time in terms of exploiting the profitability, but if you’re not investing in the future, you run the risk of becoming irrelevant. We do strongly believe, I think you know that, and I think the industry understands that too, that investing in new IP is something that you have to do continuously. If you have to take some resources off sequel IP to do so, we’re willing to do that.
GamesBeat: Did you read David Kushner’s book [“Jacked: The Outlaw Story of Grand Theft Auto, about Rockstar games and the evolution of Grand Theft Auto”]?
PR: We’re not gonna comment on that.
GamesBeat: You’re more at the edge of that, although Take-Two was right in the middle of it…
Slatoff: You mean from a timing perspective?
GamesBeat: Your experience personally.
Slatoff: I didn’t read the book, so I don’t really have any answers. Did you read it?
GamesBeat: Yes. I didn’t realize how much of the inner circle conversations came out in the FTC paperwork. It seems like a lot of it came from just looking through emails that had to be disclosed in the FTC investigations. I was surprised. At least it was a decent portrait of the whole idea of a game company just pushing for content that adults like. As developers get older, they like Game of Thrones on HBO. There’s this content there that people don’t associate with kids, right? He got this point across, that these guys were pioneers in that sense.
Slatoff: I can’t speak to the book at all, but in terms of the industry evolving, there are segments, like any entertainment industry… We used to get this thing about video games as a toy. Obviously they don’t do that anymore. I think the technology’s evolved and the storytelling, the art has evolved, to the point where video games have arrived, and we’ve got kids’ stuff, we’ve got teen stuff, we’ve got adult stuff. And I think that’s an indication that the video game industry is becoming a traditional entertainment business.
PR: There’s less of a disconnect. As somebody who’s been in the industry for 15 years, as Karl said, there was definitely that connotation of, it’s toys, it’s for kids, and even though the products are rated, even though the FTC keeps complimenting our industry on self-regulating and empowering consumers with more information than most other entertainment properties to make educated decisions, there’s still that perception of… These are kids’s toys and such. I also think the ESA has done a pretty good job of helping to get that messaging out about… Really letting the broader media and population know that the vast amount of people playing these games are adults. As you said, as your tastes evolve, they’re going towards experiences that are relevant and on par with the films they go see, or TV shows they watch.
Slatoff: And the channel’s done a pretty good job of enforcing it. I’m not all on top of it, but I’ve read articles on people looking at it, that video games are better than movies at actually self-regulating. Not allowing content that’s not supposed to go to minors get into the hands of teens.
GamesBeat: The cinematic part of Max Payne 3 — I love it. I was sort of getting a feel for it, Max Payne 3, a shooting game, lots and lots of shooting, and then this Last of Us that Sony’s been showing. There are differences — you kill one person in a scene here, or you kill eight people in The Last of Us, and that’s a very gut-wrenching scene. In Max Payne you’re killing thousands of people. One of them is a game, one is almost more like a movie. The thing that strikes me is this is a little more moving, because it’s like a life and death struggle for every kill, every death. Games that are really upping the drama of each situation — it seems like a very compelling way to make games. But it doesn’t always make the gamer happy.
Slatoff: It’s hard to find that balance. And I think Max Payne does a great job of finding that balance, because you can feel the angst as you’re playing. But it’s a shooter. In a shooter you want to be able to shoot stuff, and I think it’s pretty good at delivering both. I think what you find out, when you play Spec Ops, is you’re going to feel some of that drama. There’s a big element of that in Spec Ops, and I think that’s one of the differentiating factors of the narrative, the single-player narrative is so strong compared to some of the other military shooters that are out there. You’re going to see some of that. I agree, I think that’s exciting, and I think that helps evolve the art form, but at the end of the day, it’s a game and you want it to be fun. You want to be able to shoot stuff if you’re playing a shooter.
GamesBeat: The storytelling front seems like it’s a really interesting place for differentiation in the space.
Slatoff: The Rockstar guys have always been about storytelling, too. They make great games as well. But the writing and the underlying stories have always been a huge part of what they do. So I agree. I think that the combination of both is really where you go. Sometimes I think you can go too heavy one way or the other.