Rebekah Valentine
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In recent weeks, a flurry of Xbox rumors about everything from platform exclusivity, the future of the company as a hardware maker, and more have prompted fans to start speculating whether or not there will even be an Xbox console for the next hardware generation. Xbox head Phil Spencer has been gearing up to explain the company’s business plan in an update next week, but in the meantime, Take-Two CEO Strauss Zelnick is keeping a relatively cool head about how any of it will impact his company’s business.
Speaking to IGN ahead of the release of Take-Two’s Q3 earnings, Zelnick spoke about both the future of physical games media as well as whether or not having two competing consoles was a necessity. We pointed out the persistent rumors that Xbox seems to be backing away from selling physical games, and asked Zelnick if Take-Two still saw value in releasing physical games on Xbox in light of that – especially since 95% of the company’s net bookings last quarter were digital anyway.
Zelnick answered with a line he’s used before when asked about other types of business models: “We’ll be where the consumer is.”
” I think I said, I think ten years ago, I was asked what will be the market share of digital distribution in ten years and I said, most of it. [Author’s Note: We couldn’t find this precise quote, but he did predict digital would grow significantly.] But there will almost certainly be a physical market that extends for quite a long time. There still is in the recorded music business, for example. We’ll support that if it makes sense to support it. We don’t make our decisions based on opinions. We base our decisions on where the consumer is.”
I pressed him on the situation with Xbox specifically, and Zelnick reiterated his stance. Xbox’s own moves will certainly inform their decision, he said, because they can’t publish physical games on a console if it doesn’t support them. But what it all comes down to is still consumer behavior.
Then, he added:
“It’s not costly to master something for physical distribution. As long as you don’t produce too much inventory, it’s not costly…So this isn’t a big decision for us. It was a big decision 30 years ago in the business when we had to produce cartridges, and you couldn’t do anything with them…but today we can order a disc and five days later it can be on the shelf.”
Finally, I asked Zelnick if he felt it was important to his business and the health of the video game market to have an Xbox console competing with PlayStation. He replied: “I think it’s a benefit. Do I think ultimately it’s a necessity? No. But I do think it’s a benefit.”
Take-Two reported net bookings of $1.34 billion in the last quarter, down 3% year-over-year, and 95% of which were digital. Grand Theft Auto 5 sold yet another five million copies, bringing it up to over 195 million total units, and NBA 2K24 crossed the 7 million units sold mark as well. The company lowered its fiscal outlook for the full year due to a mix of factors including the delay of No Rest for the Wicked, weakening mobile ad spend, and lower than expected performance of NBA 2K. The new outlook expects between $5.25 billion to $5.3 billion in net bookings.
We also spoke to Zelnick in the same interview about the GTA 6 trailer leak last December, and asked the CEO about the company’s plans for cost reduction, and whether or not those would include layoffs.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.