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Publisher Take-Two Interactive held a conference call today to discuss its third-quarter earnings for fiscal 2013 with investors. During the question-and-answer session, and when the company’s executives weren’t talking about Grand Theft Auto, they faced a lot of inquiries about next-gen systems and the future of the gaming industry.
Take-Two chief executive officer Strauss Zelnick and chief financial officer Karl Slatoff talked confidently about gaming as a whole and their company in particular.
“The retail landscape is interesting,” said Zelnick. “The industry has its disappointments. We’ve had disappointments. It’s a hit-driven business. But there’s a huge install base. If you give people what they want, they will come out for it.”
The CEO then pointed to its big third-quarter numbers as an example of giving people what they want. Take-Two released XCOM: Enemy Unknown and NBA 2K13 during the quarter and saw continued success with its Borderlands 2 first-person shooter. As a result, the publisher generated more than $415 million in revenue in Q3.
An investor asked if Take-Two was worried about the multiple nongaming features of next-gen consoles taking a focus away from gaming.
“It doesn’t really influence us, ” said Zelnick, who said he would debate that the consoles are becoming set-top boxes. “People have access to a full array of media choices as it is, and we’re thrilled by that because the launch of new platforms is great for a company positioned the way we are positioned.”
The executive went on to say that it’s Take-Two’s job to make high-quality entertainment and to meet consumers wherever they are playing games.
“[Expanded features] also gives the consoles the opportunity to penetrate deeper than they have before,” said Slatoff. “Folks might pick it up not as a gaming machine, but they might begin using it as a gaming machine.”
Alternatives to consoles
“We’re not rule based. We’ll try anything that works,” Zelnick told an investor who asked about the Android-based Ouya gaming system and Valve’s Steam Box. “We go with the audience, but we don’t spend resources unless there’s a demonstrated audience. [At the same time,] we’ve always been willing to support meaningful initiatives without a large install base.”
The executive used smartphones and tablets as an example of going with the audience. Take-Two has released many of its high-profile properties on iOS and Android, including Civilization, Grand Theft Auto, and Borderlands.
Further outside the box, Zelnick commented on Facebook, calling it a great platform. The publisher didn’t talk about any new initiatives involving the social-media website, but the CEO didn’t rule anything out.
In 2012, Take-Two developer Visual Studios worked with Tencent Games to release NBA 2K Online in China. It’s a massively multiplayer online game based on the full NBA 2K games but designed as free-to-play. Take-Two wouldn’t talk about rolling out this to any other regions but assured investors that it was happy with its performance in the emerging Chinese market.
The generational shift
As the next gen pulls closer, the transition to new hardware presents a challenge for publishers. Many investors asked the Take-Two leadership if they planned on releasing Grand Theft Auto V as a cross-gen game, or a title that works on current consoles and on the next systems with some improvements. The publisher poured cold water on that idea while stating that they are prepared for the generational shift.
“Navigating this part of the cycle is a challenge,” said Zelnick. “We released our major release schedule for the year, but we can’t talk about next-gen. I’m confident We’ll navigate the transition.”
The executive pointed to four elements that he believes will push the publisher through to the next gen. The company’s strong franchises, experienced developers, cutting-edge technology, and a strong balance sheet.
Take-Two currently has more than $450 million in cash on hand.
Finally, Zelnick said he doesn’t expect the new hardware to inflate budgets, at least not at Take-Two. The CEO said his teams have developed a lot of knowledge that should keep costs within reason.