The specter of gambling has hung over the video game industry lately as loot boxes have been brought into question, but more traditional gambling may soon enter the scene. In a post-earnings investor call today, Take-Two Interactive CEO Strauss Zelnick talked about how the recent Supreme Court ruling allowing states to determine their own laws regarding sports gambling could have just as big an impact on esports.
"We certainly think it's a good decision. We think there may indeed be a meaningfully positive influence on our business," Zelnick said.
However, Zelnick was not able to share any detailed ideas about how esports gambling would be implemented or on how much impact it could have on future earnings, saying, "We don't have any expectations right now. We're simply observing that there are potential opportunities in the future and I'd be very surprised if sports gambling didn't intersect with the industry at some point in the relatively near future."
According to ESPN, before the Supreme Court ruling lifted the federal ban on sports gambling, Take-Two's partner in the NBA 2K eLeague, the National Basketball Association, said it would seek a 1% payout from every bet placed on the league. No further steps have been taken by the NBA to ensure it receives such a payout, but if that does become a standard practice across states and sports leagues, video game companies might also look for a payout of their own for bets made in esports competitions regarding their properties.
As has been a common theme in investor calls, Fortnite was brought up on multiple occasions. Take-Two Interactive didn't hint about its own entry into the soon-to-be-bustling battle royale genre, though. "I don't think what one takes away from this properly is that a particular approach, a particular mode, has suddenly redefined the business," Zelnick said. "I don't believe that's the case. I think if one changes one's business to follow other people's big hits, to constantly be playing catch up, and to say that you wouldn't be in second place is an understatement. You might remain in last place. It's our job to constantly innovate, and more often than not, that has led to success.
"Big hits, by their very nature, are unexpected and what drives a big hit is innovation and not derivation. That's what we're proud of around here. When we put out Red Dead Redemption, the conventional wisdom was that Western titles don't work in the video game business. I think the fact that Fortnite surprised everyone is just a reflection of the fact that if you innovate and give consumers what they want, you can get an extraordinary result."
Elsewhere in the call, the prospect of Take-Two expanding beyond the video game space was brought up. "When you look at the quality of the intellectual property created and owned by ourselves and by some of our competitors, it's hard to imagine that there wouldn't be opportunities in other forms of entertainment," Zelnick said.
Even though such a partnership is possible (and was explored with the ill-fated BioShock film project), Zelnick may have soured on that idea. "If it makes sense to enter other forms of entertainment in which some traditional media companies are already experts, you would imagine that kind of consolidation would have some kind of industrial logic. But I would observe that not only has that not occurred but that some legacy entertainment companies have in fact exited interactive entertainment," Zelnick said.