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Live games propel Take-Two toward quiet holiday as GTA V reaches 115m units sold

CEO Strauss Zelnick: "There's no rulebook around how you create transitions or new products in a world of live services"

Take-Two had a lot to brag about in its Q2 financials released today, including new unit sales milestones and considerable year-over-year growth in net bookings and net revenue.

The publisher reports net revenue up 74% year-over-year to $859 million, with net bookings up 63% to $950 million. This was largely due to the launches of Borderlands 3 and NBA 2K20, as well as ongoing revenue from NBA 2K19, Grand Theft Auto V, and mobile offerings from Social Point.

Digital share remains unsurprisingly on the rise, with digitally-delivered net bookings at $695 million -- up 63% year-over-year, and making up 73% of total net bookings.

Several Take-Two titles reached new major sales milestones during the quarter, including Borderlands 3 reaching seven million total sales (it sold five million in the first five days after launch), and Red Dead Redemption 2 reaching 26.5 million copies sold worldwide.

Grand Theft Auto V also hit a milestone at over 115 million copies sold. That's over five million copies of GTA V sold since its last milestone back in May.

In a conversation discussing these financial results with CEO Strauss Zelnick, I asked him (perhaps belaboring a question he gets asked often) how he thought the game was still driving not just live service revenues, but also such high unit sales six years after release.

"I think as the install base grows, if you're over the age of 17, it's a must-have title," Zelnick said. "This title, remember, was developed for the last generation originally and then a new version was developed for this generation. And it's pretty amazing that a title originally developed for last generation remains the standard-bearer for quality more than six years later."

In response, I brought up that Ubisoft had recently struggled with the transition of bringing an active community in a live game (Ghost Recon Wildlands) to a sequel (Breakpoint), with Guillemot noting that players were reluctant due to a lack of differentiation between the two. I asked if that was a concern for Take-Two in its live games, especially with the console generation on the horizon.

"Let me give you an example," he said. "We had NBA 2K Online in China, and it was doing well, but it was time to update the game. So we launched NBA 2K Online 2 in China, and we continued to support NBA 2K Online. In fact, to this day, we continue to support both of them. We have to meet the consumer where the consumer is, and there's no rulebook around how you create transitions or new products in a world of live services. And I think we have to be mindful of what the consumer wants, and what our developers have in mind, and we will find a path forward that makes sense to whatever project we take on."

Looking ahead to Q3, Take-Two expects net bookings ranging from $860 million to $910 million, with net revenue from $915 million to $965 million. Notably, Take-Two expects Outer Worlds to be one of its largest contributors to Q3 new bookings alongside expected staples like NBA 2K20, GTA V and Online, Red Dead Redemption 2 and Online, and Borderlands 3.

Additionally, it is raising its full-year guidance to $2.75 billion to $2.85 billion in net bookings (up from $2.6 billion to $2.7 billion) and net revenue to $2.93 billion to $3.03 billion (up from $2.83 billion to $2.92 billion).

I asked Zelnick if he thought Take-Two's outlook would be especially optimistic on the basis that there are few other major releases happening during the holidays this year to compete with their titles, especially considering his previously-stated views that one game being successful doesn't preclude others from being successful in the same launch window.

"It isn't a strongly competitive holiday season, and given that we're actively in the market with Red Dead Redemption 2 and Borderlands 3 and most recently with Outer Worlds, I think there's some benefit to having less competition," he replied. "But...everything's got to stand on its own. When you have a very thin quarter, if what you put out isn't the highest possible quality, it's not going to perform. Consumers will not show up unless it's the highest quality, even if there's nothing else out there. So our strategy is to create the highest quality entertainment experience worldwide of any type."

During our call, I also asked Zelnick if he had seen any impact on NBA 2K Online the controversy with Houston Rockets GM Daryl Morey's comments on Hong Kong. Zelnick said they hadn't, and declined to comment on the 2K League's policies toward players speaking out on non-esports issues -- something publishers like Activision-Blizzard will not permit on their esports platforms.

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