During Take-Two Interactive Software's financial conference call, CEO Strauss Zelnick and CFO Lainie Goldstein talked about Grand Theft Auto 6, but also about a much more ominous topic.
Speaking of GTA6, which is slated for release in 2025 for PS5 and Xbox Series X|S, Zelnick mentioned during the livestreamed conference that with 93 million views in 24 hours, the first trailer of Grand Theft Auto 6 broke YouTube's records for a non-music video launch. Summed to partner channels, this was the "biggest video debut ever."
Afterward, during the Q&A session, he mentioned that Take-Two was really gratified that not only the trailer was so successful, but even the announcement that it would come was a huge event online.
Zelnick also mentioned that the company believes that the anticipation is much higher compared to Grand Theft Auto V.
Our sense is that the anticipation is much higher. Umh, much, much higher. On the other hand, you know, 195 million units to date is nothing to sneeze at. So we stop short of making predictions about how the title will do, but clearly anticipation is running very, very high.
He was also asked how the decision about the timing of the launch window for the game is made.
You know, we're seeking perfection and when we feel we've optimized creatively, that's the time to release. So, and we're all in this together. In terms of motivations and incentives, and the financial incentives of everyone who works at this company are alogne with those of the shareholders.
So we essentially have we have profit sharing plans throughout the company at the operating level and at the senior level our compensation is driven largely by TSR [Total Shareholder Return].
So our goal is to align the interest of everyone who works here with the interests of the shareholders that keeps us all pointing in the same direction. So you're right there. There is a inherent tension potentially between getting something to market and creating perfection, but this company errs on the side of perfection.
Ominous Cost-Reduction Program May Mean More Layoffs
Unfortunately, not everything is peachy at Take-Two, and Zelnick mentioned that the company is currently working on a "significant cost reduction program" across its entire business to maximize margins while still investing for growth. These measures are "incremental to and even more robust" than the cost-cutting program that the company has recently implemented.
Goldstein stressed that looking ahead, Take-Two's teams remain committed to efficiency, and the company has begun "a rigorous analysis to identify additional areas for cost optimization." She also confirmed that this action is expected to be more expansive than the previous cost-reduction program.
Later in the Q&A session, Zelnick gave more color on the initiative.
In terms of cost reduction, as I said and as you know, we have a three-part strategy that's supported us well, through thick and thin. That is first and foremost to be the most creative company, also to be the most Innovative, and finally, always to be the most efficient company in the entertainment business and that's a big challenge and we mean it. And everyone here means it.
I think that it's time to take another look at efficiency and make sure that everyone is focused on the things are really matter and only the things that really matter, and put ourselves in a position where we have the opportunity for great operating leverage as these titles come to market and as the revenues flow through the system.
It's worth mentioning that the term "layoffs" was never used during the conference, so it's not known whether the cost reduction program mentioned by Take-Two will be focused entirely on layoffs, but it's certainly concerning.
We just heard that Visual Concept Austin (developer of NBA 2K24, Lego 2K Drive, and more) has been hit by layoffs, and today's news definitely makes it feel that it may be just the tip of the iceberg.
This is part of a tragic industry trend that surfaced between the end of 2023 and the beginning of 2024, affecting many companies like Microsoft, Sony, Bungie, Epic Games, Tencent, Amazon, Frontier, Team17, People can Fly, and more, on top of several of Embracer's studios.
As a final note of color, Zelnick was asked to comment on the recent rumors that allege that Microsoft may be going multiplatform with some of its titles (which the company appears to be poised to address next week). He declined to comment specifically, but he wouldn't bet against Microsoft.
Well, the big console titles are expensive and time considering to create and if you want to make the very, very best, it takes a long time and it costs a lot of money.
I really don't want to speak for Microsoft and their strategy. There has been a lot of noise around that lately. I I've no doubt that they'll express where they're heading. I would just say that if you take a look at their market cap now compared to a few years ago, you don't want to bet against that management team.
If you're interested in learning more about the financial performance of Take-Two, you can read our dedicated article from earlier today.