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Games industry is going 100% digital - Take-Two

President Karl Slatoff says physical game sales are probably going away on a 5-20 year timeline, weighs in on loot boxes

Don't expect NBA 2K38 to come on a disc. Speaking at the Credit Suisse 21st Annual Technology, Media & Telecom Conference today, Take-Two Interactive president Karl Slatoff said he ultimately sees the mix of physical/digital sales tipping entirely to one side.

"I think over the long-term, it will be 100% [digital]," Slatoff said. "I just can't predict whether that's five years, 10 years, or 20 years. It's probably less than 20 and maybe more than five, but I think it ultimately gets there. That's the zeitgeist. Things are moving in that direction.

"Why I think it's a little quicker than people imagined is honestly, Sony and Microsoft have done a really nice job with their services. You've got more people on Xbox Live, more people on PSN, and it helps. The friction is going away at a quicker rate because these platforms have been really well developed, and the consumers love it."

Even if the brick and mortar retailers of the world won't be playing a large role in Take-Two's future, Slatoff acknowledged the company still relies heavily on them in the present.

"The truth is physical retail is still the majority of our business, and very important partners of ours," he said. "And we want to do everything we can to support that environment. And we do. They're very strong marketing and distribution partners for us. But again, it's out of our control. Whether we want it or not, it looks like it's going to happen eventually."

The shift to digital has also enabled publishers to pursue business models including loot box-driven microtransactions. But as EA recently discovered with Star Wars Battlefront II, players aren't always enthusiastic about how they're incorporated. Slatoff acknowledged recent consumer uproar over the practice, but suggested their objections were not with microtransactions themselves, but the game around them.

"The whole gambling regulator thing, we don't view that sort of thing as gambling. Our view of it is the same as the ESA statement for the most part," Slatoff said. "That's going to play its course, but in terms of the consumer and the noise you hear in the market right now, it's all about content. It's about overdelivering on content and making sure you're focused on engagement. That has been our strategy and where we're focused, and as long as you keep your eye on that ball, you're going to be OK. The consumer's going to be really happy with what they get."

He added, "You can't force the consumer to do anything. You try to do your best to create the best experience you possibly can to drive engagement. And driving engagement creates value in entertainment. That's just how it's always been and always will be."

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Latest comments (8)

Andrew Whitehead Content & Community Manager, Mobcrush19 days ago
Nobody will buy books anymore. Vinyl is gone forever. Forget single-player games, people want to be online all the time. 3DTVs are going to take over.

Any of that sound familiar?
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Adam Campbell Game Production Manager, Azoomee19 days ago
I'll add a couple of different perspectives here.

Once upon a time your physical game purchase was completely stored on the disc. Now its perfectly normal to get home and download 30GB of game content as a patch. Its also perfectly normal for large portions of game functionality like multiplayer to be bundled separately on digital stores like PSN.

In the case of the PC, its perfectly normal to buy a physical DVD (i.e. Doom) and find that there's no actual game on there, you have to download it from Steam. The nature of physical games are changing.

Secondly, digital has been artificially held back in the console sector due to pricing issues and a tug of war with physical retailers. It would be interesting to see what would happen if digital retailers (i.e. the console platform holders) and publishers like Take-Two were more aggressive on console.

What ever happens, its unlikely to literally mean a complete death of physical formats, but Vinyl is hardly competing with Spotify and these formats do have a habit of fading when the market changes.
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Richard Browne Partner & Head of Interactive, Many Rivers Productions19 days ago
@Andrew Whitehead: Book retailers are almost extinct, Vinyl record stores are a novelty, neither is subserviant to a controlled platform.
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Show all comments (8)
Jeff Kleist Writer, Marketing, Licensing 19 days ago
@Adam Campbell: @Andrew if they try that, the retailers will dump the consoles and accessories. This is very bad for the console business
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Adam Campbell Game Production Manager, Azoomee18 days ago
@Jeff Kleist Without consoles and accessories there would be even less reason for their existence. Most people, not least the retailers don't want to see that happen as its their business. Someone has to concede and I don't see it going the way it is forever. Digital console game prices are not really acceptable.

Edited 1 times. Last edit by Adam Campbell on 30th November 2017 10:38pm

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Bjorn Larsson CEO/EP/CD, Legendo Entertainment18 days ago
A lot of kids still want disc-based games. Maybe it's because it's fun and interesting to loan/borrow games to friends while discovering new ones in return. With 50 GB download sizes on 4K gaming consoles, yeah, I'd borrow that disc thank you very much.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.18 days ago
Retailers sell the hardware at very narrow margins and make their bulk profit from software. Take away the high margin physical software and they will demand higher margins on hardware.

If the hardware margins do not change, we will only buy our hardware from big box or online retailers that can still live on narrow margins as the boutiques and specialty stores simply will not survive.
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Jordan Lund Columnist 18 days ago
When consoles try to do predominantly digital sales, they fail. See the Vita as a good recent example.
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Why? Because people still buy the hardware in stores and when they don't see games on the shelf, or worse, they see the SAME 8 or 10 games on the shelf, over and over month after month, hey don't bother to check the online offerings. It very quickly becomes "this sucks! there are no games!"
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