eSports "more a promotional tool than anything else" - Zelnick

Take-Two CEO doesn't see trend as a profitable stand-alone business yet, believes physical goods will continue to be "lion's share" of revenue in future

While some publishers establish their own eSports divisions and appoint chief competition officers, Take-Two is approaching the competitive gaming trend with a bit more caution. Speaking with in advance of the company's financial earnings report today, CEO and chairman Strauss Zelnick said the field was promising, but still unproven.

"eSports we find very interesting," Zelnick said. "It is, however, still more a promotional tool than anything else. And most people see eSports as an opportunity to increase consumer engagement in their titles, and depending on the title, to increase consumer spending within the title."

To date, Take-Two's biggest eSports endeavor has been an NBA 2K tournament with 92,000 teams competing for a $250,000 prize. The final 16 teams are set to compete in a single-elimination tournament this weekend, with the finals taking place during the NBA Finals next month.

"It's just the beginning for us," Zelnick said of the tournament. "It's very gratifying so far, but we have yet to see it as a stand-alone profitable business. We see it more as an adjunct to consumer engagement in our titles."

Zelnick also addressed the company's digital revenues, which for the first time made up more than half of its revenues for the year. While the industry has shifted heavily toward digital in recent years, Zelnick doesn't see this as some sort of tipping point or a harbinger that physical goods are in for declines from here on out.

"This year was a little different because we had a very significant portion of this year's revenue through digital distribution," Zelnick said. "And that's a reflection of the power of titles like Grand Theft Auto Online as well as PC titles, 90 percent of which are digitally delivered. With frontline console releases, your numbers are more like 20 percent from digital distribution. So physical distribution remains the lion's share of our revenue."

While Zelnick acknowledged the growth of digital distribution is a good thing for Take-Two, he specified that it wasn't a strategy for the company because it's ultimately out of his hands.

"We want to be where the consumer is, and we're not really the ones who vote," Zelnick said.

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Latest comments (3)

Mark Reed Chairman, Heaven Media Ltd5 years ago
I think we have to take this comment into the context that this is from a CEO that has no eSports titles, because to be clear, this Basketball one will never be one. Sports based eSports does not work currently and this game will not change that. Even FIFA is eclipsed by the top eSports titles I am not sure anything he has said make any sense, it would suggest that Riot, Blizzard and Valve do not have successful business models for eSports. Clearly they, really, really do.

Right now eSports is 'bigger that almost any other game Genre' or 'a stupid business model that does not make sense' just depends on your agenda or knowledge. eSports has always been big, it just got the 'Super Bowl' treatment now so people 'think' they can talk about it with some degree of knowledge. They usually don't. These comments here would be an example of that.
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Klaus Preisinger Freelance Writing 5 years ago
Riot earns its money from the people playing their game. Not from the top players, but from the masses. FIFA, or UEFA, they do not earn their money from the people who play football. They earn it from the people watching football. This makes all the difference.

For League of Legend to become a sport, one thing is not necessary at all: RIOT. You need players at tournaments and people willing to watch them; then you have a sport. Sure, to attract the best players you need price money and you refinance that money from the audience and sponsors. But at no point do you really need an active development team, boxed products, subscriptions, season passes, or microtransactions and all the other things that come with your typical eSport. Sure, you need a game, but it can be a SNES cartridge from 1992, it does not have to be the latest game from a studio of 300 people or more.

Sport is attractive for TV stations because it is cheap to produce, creates endless hours of content and is consumed by people who are into watching competitive things happen. Sport also scales incredible well, from very low prices per minute produced, to sports bringing in advertisement money justifying very expensive productions. That is the real formula at work here, physical activity has nothing to do with it.

In short, a video game broadcasting a tournament that is refinanced by people then spending money on the game itself, is still a long way removed from a sport, such as football. Tune into the Champions League final, you will not see ads suggesting you should play football and pay the FIFA $70, you will see giant ads for Uncharted 4. That and sport bets. eSports bets for teenage demographics anyone?
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Emily Rose Artist 5 years ago
esports betting is already a thing, complete with several matchfixing scandals.

I think the closest sports game with esports potential is Rocket League, which if I recall correctly is going to be at some big events this year.
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