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Take-Two "blessed" by less competition - Zelnick

Head of Grand Theft Auto publisher says there are really only four companies left in AAA business, doesn't mind being a fast follower in VR

Mobile and downloadable developers are struggling to cope with an abundance of competition in the market, but crowded shelves have become a less pressing concern in the AAA world, according to Take-Two chairman and CEO Strauss Zelnick. Speaking at the Cowen and Company's 43rd Annual Technology, Media, and Telecom Conference today, Zelnick said it's become noticeably easier of late to make sure his games aren't releasing against direct competitors.

"The truth is that we're blessed in that the shelf is way less crowded today than it was at the beginning of the last console cycle," Zelnick said. "There's been a big shake out. It's pretty hard to make AAA products that are really competitive. We are not the only company that does it, but we're one of four companies, really, that do it. And we see ourselves as number three in the business. I think most people see it that way, and our revenue certainly stacks up that way."

Zelnick reiterated the sentiment later in the event when discussing how the current console generation has gone better than the company expected, saying, "you look at the relatively thin field at the top and we've sort of died and gone to heaven in terms of the opportunity."

"[Y]ou look at the relatively thin field at the top and we've sort of died and gone to heaven in terms of the opportunity."

As for the proliferation of smaller developers and indie offerings in recent years, Zelnick doesn't see them as competition.

"I was asked recently in a similar setting, 'What do you think about all these entrepreneurs who are working independently to create independent games?' And the answer is I think it's really interesting and we're aiming to learn more," Zelnick said. "But to be clear, they cannot do what we do. There is no opportunity to make a AAA game in a garage. Those days are long gone. You need at least 100 people working on a title for at least two or three years. That is a very expensive, complex, difficult undertaking."

While the executive seems secure in his company's station within the industry, Zelnick said Take-Two never takes its success for granted.

"I never want to leave people with the impression that I believe because we say it, everything we do will be fantastic and will be a hit," Zelnick said. "To the contrary, our people are worried all the time, led by me worrying all the time, looking over our shoulder at the competition and making sure we try harder so we're still leading the charge creatively and from a business point of view. And that, ultimately, is what leads to our continued growth and success."

Zelnick also talked about a couple markets Take-Two has been lukewarm on in mobile and virtual reality. In the mobile space--smartphones, specifically--Take-Two has options like WWE Supercard or the NBA 2K companion app, but it isn't pursuing the market in a big way.

"The hit ratio in that business is teeny, even for the very best people, which really means you can't sensibly look at it as an area to invest against, in my opinion, which is why companies that are doing that I think are fraught with risk," Zelnick said. "Even the successful ones are just fraught with risk. There is no successful entertainment business that has a 1 percent hit ratio that I know of, over time. Our hit ratio is in the 80s, a well-known movie company is in the 30s. 1 percent? Good luck to you. You better be spending about 10 bucks to make the title, which they're not."

"We will not be the leader. We will not be the first ones coming out and saying, 'Here's a BioShock for VR game that goes like this.'"

As for virtual reality, Zelnick talked about his initial VR experiences, saying he was blown away by the tech but said the idea of spending an hour in that environment would have been overwhelming and even sickening.

"We will not be the leader. We will not be the first ones coming out and saying, 'Here's a BioShock for VR game that goes like this.' That's probably unlikely because we will allow others to lead the way, because only we can make a BioShock game. (And I use that title just for example.)"

Take-Two isn't incentivized to invest in the tech when it's still such an unproven risk, Zelnick said. He'd rather wait until he sees there's consumer demand for a certain type of experience in VR and then come on board as a fast follower.

"That does not mean we're going to be 10 years behind someone else," Zelnick said. "We'll be a year behind someone else. And that's OK. We'll also avoid losing money. We're not going to lose money doing it. It's not going to happen."

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Latest comments (6)

John Scalzo Editor-In-Chief, Warp Zoned6 years ago
Take-Two, Activision, EA, Ubisoft, WB Games, Bethesda, Square Enix, Sony, Microsoft, Nintendo...

I know Zelnick is a ridiculous homer, but ignoring a half dozen companies that are just as big as you and produce games that are just as good, if not better, is bizarre.
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Quincy Ward Studying Computer Science, University of Arkansas6 years ago
I think he meant 3rd party but square hasn't been as a big of player this generation as before.
WB has a lot of games in development for this generation so far Wichter and Middle Earth were big releases.

I see your point but I see his too

Edited 1 times. Last edit by Quincy Ward on 28th May 2015 7:19pm

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James Berg Games User Researcher 6 years ago
One of four AAA? What? Are they ignoring the 1st party folks? Even in that case (which is silly), it'd go something like EA, Acti/Blizz, Ubi, Take2, with Take2 being a distant fourth to Ubi. Then a whole lot more true AAA devs.
http://www.newzoo.com/free/rankings/top-25-companies-by-game-revenues/

Not seeing indies and smaller devs as competition doesn't make sense to me. They might not be putting out the AAA games, but it doesn't mean gamers aren't spending tons and tons of time playing smaller games instead of the blockbusters.
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Show all comments (6)
John Scalzo Editor-In-Chief, Warp Zoned6 years ago
I think he meant 3rd party but square hasn't been as a big of player this generation as before.
Square Enix owns Eidos, so they're also responsible for Tomb Raider, Deus Ex, Hitman, Just Cause, and Sleeping Dogs. How are they not a AAA player?
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Quincy Ward Studying Computer Science, University of Arkansas6 years ago
Square Enix is a AAA player but as of recent has not had many big releases. Sleeping dogs current gen is a remake, just Cause , hitman, deus ex are last gen or older. Tomb Raider is the only game you mentioned that is current gen.

Edited 1 times. Last edit by Quincy Ward on 29th May 2015 5:58pm

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John Scalzo Editor-In-Chief, Warp Zoned6 years ago
just Cause , hitman, deus ex are last gen or older.
Just Cause 3, Deux Ex 4, and Hitman 6 will all be released this year or next year. Square Enix's western studios give it a much bigger AAA footprint. Sometimes bigger than Take-Two's depending on the calendar year.
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