Take-Two CEO Credits "Highest-Quality" Titles, Recurrent Spending for Major Revenue Bump

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Strauss Zelnick

"Consumers don’t just want to be entertained, they want a fair deal,” Strauss Zelnick tells The Hollywood Reporter.

Take-Two Interactive, the parent company of Rockstar Games and 2K Games, saw a major increase in net revenue over its most recent fiscal quarter, up 74 percent year-over-year to $857.8 million.

"Our strategy is to create the highest-quality entertainment of any type on Earth," Take-Two CEO Strauss Zelnick tells The Hollywood Reporter. "Over and over again our labels continue to deliver great products that exceed expectations."

The increase was fueled by recent releases such as Borderlands 3, from developer Gearbox Software and publisher 2K, launched in September, and NBA 2K20, which also bowed in September. Recurrent consumer spending in older titles such as Rockstar's Grand Theft Auto V and Red Dead Redemption 2 (and their online counterparts, GTA Online and Red Dead Online) also contributed to the bump in revenue. 

Overall, recurrent consumer spending (which includes in-game purchases) increased 32 percent over the quarter and accounted for 37 percent of the company's total GAAP net revenue.

How does Take-Two balance the “highest-quality entertainment” with in-game spending mechanics that often receive backlash from fans? “Our goal is to entertain and engage consumers,” says Zelnick. “We only think about monetization after we’ve already focused on that engagement. Our approach is that we don’t believe in having toll booths. We want to create a great experience you can enjoy without regard to whether you spend or not.”

“We know that, anecdotally, consumers don’t just want to be entertained, they want a fair deal,” he says. “We don’t always get it right but I think compared to the marketplace we tend to get it right more than others. Occasionally we get criticized, but if we are we take a look at the in-game economy and make adjustments."

Borderlands 3 exceeded the company's expectations, selling more five million units in its first week of release, the fastest-selling title in 2K's history. NBA 2K20, meanwhile, debuted as the best-selling game of September and is currently the highest-selling game of 2019

As a result of its Q2 performance, Take-Two is adjusting its outlook for next quarter and the rest of the fiscal year, raising its expected revenue to $915 million-$965 million for Q3, while fiscal year revenue totals are now expected to be within the $2.9 billion-$3 billion range.

In September, Rockstar debuted its own digital storefront, the Rockstar Games Launcher. Zelnick says he is "happy to see [Rockstar] develop a direct-to-consumer relationship" but says Take-Two hasn't "made any other announcements" about further plans for digital storefronts from its other subsidiaries. 

As Google's Stadia officially bows later this month on Nov. 19, Take-Two has lined up a number of its games as launch titles for the tech giant's new service, such as Red Dead Redemption 2, Borderlands 3 and NBA 2K20.

"Our strategy is to be where the consumer is," Zelnick says of Stadia. "Generally speaking, in the entertainment business, broader distribution is a good thing for consumers and customers. We’re excited by the opportunity and we’ll see how it goes."

On the horizon for Take-Two, the company has strategy game Sid Meier's Civilization VI, which first debuted on PC in 2016, set to launch on the PS4 and Xbox one on Nov. 22.

The company's stock closed the day up 0.2 percent to $116.91. However, in after-hours trading, shares were down more than 4.8 percent to $111.22.