NBA 2K21 drives Take-Two earnings
Revenues and bookings flat but net income hops as CEO Zelnick reports pandemic-driven engagement boost hasn't let up at all
The NBA 2K franchise continues to be a Take-Two All-Star, as NBA 2K20 and NBA 2K21 helped sustain the publisher's quarterly revenues despite a difficult comparison to the year-ago quarter.
Take-Two reported its financial results for the quarter ended September 30 today, revealing net revenue down 2% to $841.1 million and net bookings up less than 1% to $957.5 million.
The publisher credited the past two NBA titles as the largest contributors to its revenue, along with a bench of familiar faces including Grand Theft Auto Online, Grand Theft Auto 5, Red Dead Redemption 2, Red Dead Online, and Borderlands 3.
Despite that performance, the lack of top-line growth can likely be attributed to a difficult comparison to the year-ago quarter, when the debut of Borderlands 3 and its 5 million copies sold within five days of launch helped push quarterly revenues up 74% year-over-year.
This year, the quarter's biggest releases were NBA 2K21, PGA Tour 2K21, Mafia 1 Definitive Edition, and WWE 2K Battlegrounds, a more arcade-style spin-off replacing the annualized WWE 2K sim game as that series gets overhauled.
The NBA 2K franchise ordinarily launches around the beginning of the season, but thanks to a pandemic-induced pause, NBA 2K21 hit shelves in the middle of the post-season. Speaking with GamesIndustry.biz ahead of the earnings release, Take-Two CEO Strauss Zelnick said the altered timing didn't seem to affect sales.
"Remarkably enough, it's had no impact," Zelnick said. "The title's just crushing it. NBA 2K20 also continued to perform, so it's been great. The series is just doing fantastically well."
NBA 2K21 has sold-in 5 million copies to date, and next-gen native versions of the game are set to debut with the Xbox Series X|S and PlayStation 5 consoles next week.
As for other new releases, PGA Tour 2K21 sold in more than 1 million units and the Mafia Definitive Edition trilogy of titles have combined to sell-in more than 2 million units, while WWE 2K Battlegrounds simply "exceeded expectations."
Take-Two's catalog titles also continued to perform, with Grand Theft Auto 5 now having sold-in more than 135 million copies and its Grand Theft Auto Online component posting its best second quarter ever in terms of active players.
Red Dead Redemption 2 has sold-in more than 34 million units now, while net bookings from Red Dead Redemption Online were up 96% year-over-year in the quarter. Finally, the Private Division title The Outer Worlds has sold-in over 3 million units.
While overall revenue barely budged for the publisher, recurrent consumer spending grew 56% year-over-year and accounted for 59% of total revenues.
Part of that is due to increased engagement with the company's titles since the beginning of the pandemic, and while some companies have seen a return to pre-pandemic engagement metrics in recent quarters, Zelnick said Take-Two's numbers haven't slipped.
"Very much across the board we're seeing exceptionally high engagement," Zelnick said. "We haven't seen anything return to pre-pandemic levels or even seen the growth rate decline, frankly. It doesn't mean we won't... If anything, we're expecting that we'll see some softening. But we haven't seen it yet."
With the Xbox Series X|S and PS5 launching next week, we asked Zelnick about the plan for optimizing existing games to take advantage of the new technology, and he suggested there was no one blanket strategy for it.
"We have found that we've been able to take beloved games from our core franchises and bring them to new generations very successfully, but that's because the games have always looked better, different, we add content," Zelnick said. "It isn't what one thinks of when you think of a port. We don't port titles. We up-res them, we upgrade them, we update them."
And while he believes the next-gen systems will be "hugely successful" and have no problems selling out this holiday season, he expects there might be a wait for a critical mass of frontline AAA system-sellers to arrive.
"You always have to balance the desire to work on these great new platforms -- which your teams really want to do on the on hand -- but on the other hand you want to make sure there's enough of an installed base to make it make sense," Zelnick said. "Usually it's the second Christmas after the initial launch that you see it hit its stride. You'll see more titles next year."
Looking forward, Take-Two increased its full-year forecast to $3.05 to $3.15 billion from $2.8 to $2.9 billion, with net income now expected to range from $372 to $403 million rather than $349 to $380 million.