INTERVIEW: Strauss Zelnick, Take-Two

Where is Grand Theft Auto V? When is it? What platforms will it be released on? Can it claim back its title of ‘biggest franchise in the world’ from Call of Duty?

The answers to these questions have been rumoured, suggested, speculated on and debunked over and over since Rockstar sent the internet into meltdown with a mere logo in October last year.

And Strauss Zelnick – the CEO of Rockstar’s parent Take-Two – is hardly about to leak any of the details here.

Yet the biggest clue to the game’s whereabouts came in the publisher’s recent financial report. The firm says in its current fiscal year (which ends March 31st, 2013) it expects to generate between $1.75 and $1.85 billion in revenue. That’s significantly more than usual. Something pretty big must be coming to make that kind of money. And we can’t imagine it is a new Carnival Games.

But then it’s not just a new Grand Theft Auto, either. Take-Two has long left behind that ‘one trick pony’ label. Its software line-up for the next 12 months includes the return of XCOM, the thoroughly anticipated new BioShock and the sequel to the cult 2009 hit, Borderlands.

In the words of Zelnick: This year’s release schedule is probably the best in our company’s history.”

DELAY TACTICS

At least, the release schedule as it stands is probably the best in its history. Take-Two has a notorious habit of delaying its games. This isthe publisher of Duke Nukem Forever, after all. And last month the company pushed back both BioShock: Infinite and its XCOM FPS to 2013.

While we don’t take release date slippage lightly, delivering the highest quality games sometimes can take longer than originally expected,” explains Zelnick.

We had a lot of slippage last year and it hurt our short-term financial results. Our strategy is to be the most creative and innovative company in our industry – and when I say that I mean it. We’re fortunate to have a rock-solid organisation and balance sheet that enables us to bear short-term economic pain in order to ensure long-term creative excellence and strong financial results. When we decide to make our releases the best they can be, that decision always pays off. Fiscal 2013 is now set up to be one of our best years ever.”

BioShock: Infinite is perhaps the biggest delay. The new game from acclaimed developer Irrational was scheduled to be one of this October’s most exciting releases, but Take-Two has moved the title back until February 2013.

But unlike its rivals, releasing games outside of the potentially lucrative yet congested Q4 sales window is not something Take-Two has any fear of. This is the publisher that has released the last four Rockstar blockbusters in May, and will debut its new IP – Spec Ops: The Line – later this month.

Our industry started decades ago as a toy business and it made sense then to focus on the holiday season,” explains Zelnick.

Today, we’re a grown-up entertainment business and perhaps with the exception of the height of summer, the calendar is much less important than the quality of the title. We believe that if you give consumers what they want, they’ll come out for it year-round.”

TAKE-TWO TABLETS

Take-Two is all about the big blockbuster. The huge retail launches.

But the publisher hasn’t neglected the digital space. It made $107m from download, mobile and DLC sales in its last financial year,around 13 per cent of the company’s overall revenue.

And mobile is becoming a major pillar in Take-Two’s digital offering. The firm’s biggest brands – GTA, Max Payne and Civilization – have made the jump to smartphones and tablets. Last year’s GTA III: 10th Anniversary Edition marked Take-Two’s Android debut and is the firm’s best-selling iOS game to-date.

Zelnick says: The handheld market has changed a lot with the introduction of smartphones and tablets and I’ve made no secret of my belief that high quality tablets will be ubiquitous – and will be superb entertainment devices.

As long as the business model makes sense, you can expect to see more and more Take-Two products on tablets.”

Yet away from mobile and download, terms such as free-to-play, social and browser are still very much alien words to Take-Two. Whereas many of its rivals have quite advanced strategies in these areas, Take-Two has only just started to test the waters.

We’re very mindful of what we know and more importantly, what we don’t,” adds Zelnick.

With respect to social games, we recognised that this was a segment of the industry that we wanted to explore; however, we would only do so with minimal financial risk and the opportunity to effectively learn the space so that we could best leverage our proven expertise over the long-term. Last summer 2K launched Civ World for Facebook, which received excellent reviews and is probably the most immersive game available on Facebook. While not a meaningful contributor to revenue, this project was invaluable in helping us understand what drives success on social platforms. We will apply this knowledge to our future social gaming initiatives.

In addition, we currently have three online initiatives in Asia that are making significant progress. NBA 2K Online is in development with Tencent for China and other key markets. We’re excited about the potential of this game and expect to have some exciting news to share regarding its upcoming commercial beta in the very near future. In addition, our projects to develop an online baseball game with Nexon Corporation and an MMOG with XL Games are both showing great progress. If they’re successful, these initiatives will provide a more predictable and recurring revenue stream to complement our core business.”

NEXT STEPS

In comparison to its noisier rivals over at EA, Ubisoft and Activision, Take-Two is quite a modest company. Whereas many of the publishing giants are already making big statements on the next generation of PlayStation and Xbox, Zelnick and his team have stayed focused on its immediate line-up.

Take-Two is a company that specialises in big budget, high-end blockbusters and it has some of the most renowned development talent on the planet. Surely the firm must be thinking about and investing in whatever super-powered platforms Microsoft and Sony are working on?

With respect to the next generation, we’ll let our partners speak to that – however, whenever there is a new cycle, consumers can count on us to be there with incredible experiences,” says Zelnick.

Hardware transitions historically have created both challenges and opportunities for third-party publishers. In order to succeed, it seems to me that any company needs: superb talent; industry-leading technology; owned high-quality intellectual property; and a strong balance sheet. Take-Two has all four. That said, those elements are necessary but insufficient conditions for success. As always, we’ll need to make triple-A titles that delight consumers. Frankly, our creative folks will be thrilled to have an opportunity to do just that.”

But for Take-Two, the next generation is a long way away. Its current ‘best ever’ line-up – XCOM, Spec Ops, Borderlands, BioShock, NBA and Grand Theft Auto – is very much about the here and now.

Zelnick concludes: There isstill ample opportunity in the market with the current generation of hardware, provided that you deliver the highest quality entertainment experiences – which we always aim to do.