Entertainment
“Technology is not going to take people’s jobs, and the big tech companies who laid off thousands of people and said it was because of AI were not telling the truth”
Strauss Zelnick is not going to say anything substantial about GTA 6. This is something he has a great deal of practice at. Every journalist and analyst presses him on the topic whenever he makes himself available, which has been increasingly often; our conversation is taking place in a side room at iicon, where he was one of the headline speakers; he’s also been showing up at events and on TV. He has a lot to talk about: Take-Two stands in increasing isolation as a successful publicly-traded major game publisher, while its peers are acquired or struggling. It continues to ship successful PC and console games, and has a powerful mobile arm in Zynga that now represents half of its revenues.
Yet a lot still rides on GTA, and the November release of the latest instalment stands a sporting chance of being the most significant entertainment launch ever. Zelnick has been a CEO for over 35 years and at Take-Two for 19; he is not going to reveal anything that will upset the share price or the marketing plan. The best I can get from him is an admission that the marketing plan exists, despite the game arguably not needing one.
“I’ve been asked by investors whether we need to spend marketing dollars given the scale of the intellectual property and its reach and the sentiment,” he says. “And the answer is of course we need to market it.” We should expect “a very significant broad based marketing campaign that reflects where audiences and attention is today,” which is to say it won’t resemble the approach taken for GTA 5 back in 2013. “13 years ago we were still buying network television. We won’t be buying a lot of network television.”
So much for GTA. He is much more forthcoming on the other big question of the moment, AI, although as ever he chooses his words with care. “I prefer the word “technology” because technology encompasses AI, and using the word AI means different things to different people,” he says. “But everything that we create, we create inside computers and always have. And new technology and new tools are always a good thing for us.”
“If you interpret that to mean we should make cheap crap and hope people like it, then you’ve misinterpreted my comments”
“Our job is to make the very best creative properties that we can and bring them to consumers wherever they are and we use technology to try to do that. So of course as new, interesting technology comes along, we should be at the front of line in terms of trying it out, but if you interpret that to mean we should make cheap crap and hope people like it, then you’ve misinterpreted my comments.”
“We have to make the best entertainment on earth and if tools allow us to do that more efficiently and more effectively, we’re all in and we’re trying really hard to avail ourselves of new technology to do just that. We have a couple hundred projects across the company to do that.”
He is emphatically dismissive of the idea that it will remove the craft from game creation. “For those who believe you’ll press a button and make a competitive game, good luck. Technology doesn’t do that. Technology doesn’t create. Technology enables human beings to create.” He doesn’t believe that it’s going to take jobs, either.
“Technology is not going to take people’s jobs,” he says. “The big tech companies who laid off thousands of people and said it was because of AI were not telling the truth. It was because they overhired in the pandemic and they were sloppy about it and they haven’t addressed their headcount issues. And the market believing that all SaaS companies will go out of business because of AI – the market’s completely incorrect, as the market sometimes is. And if the market weren’t incorrect now and then, how could you invest in it? You’d never have an opportunity.”
“Technology is not going to take people’s jobs, and the big tech companies who laid off thousands of people and said it was because of AI were not telling the truth”
“So I’m all in on believing that technology will evolve, and I’m all in on believing that it will affect us, and I’m all in on believing it could also create some threats – but I think generally speaking, this new technology is going to be very beneficial for our industry and for our company.” Hence, those hundreds of projects looking at how AI can be used in production, although he says none of them are “existential” bets. “Why would we? We don’t need to. What we’re betting on is creativity.”
Take Two is also betting on platforms beyond the traditional industry staple of PC and console. Zynga remains a powerhouse. “Mobile is about half our business currently,” he says. “That may change in this fiscal year for obvious reasons, but generally speaking, mobile’s about half our business, which is probably exactly where it ought to be,” given the significant audiences in territories like India and Africa where phones are ubiquitous but PC and console is rare.
Of the mobile portfolio, Zelnick says that Take Two is “really pleased with how some of the legacy titles are performing,” although he highlights that the firm is also working on new IP which “we’re very excited about.”
“The team has proven they can create new hits,” he says. “That’s hard to do in mobile. We’re encouraging them to do just that in a highly disciplined fashion. We’re not trying out a hundred new titles a year or anything like it, but we are focused on sort of three to six new releases a year that are of scale.”
How about the other great growth opportunity of the moment, Roblox? Zelnick acknowledges the size of the space but has no plans to move into it despite its accelerating growth. “We’re not a platform company,” he says. “We’re an interactive entertainment company.”
“Roblox doesn’t offer their own interactive entertainment. They offer a place where you can experience interactive entertainment made by other creators and that’s just not the same as what we do, and we do not aim to do that. And it’s not because we don’t respect what they’ve done – to the contrary, it’s probably because we respect it so much. They’re in a different business than the one we’re in.”
The recent boom in smaller AA titles like Clair Obscur is not a business that Take-Two is in either, although not for want of trying. “When we had Private Division, we did a bunch of that,” he says, “and what we found was that given Take Two’s approach, which is trying to make the biggest hits on earth, we weren’t necessarily well suited to work on small independent projects.”
“Generally when we work on something, it’s because we believe we can build something huge, but I wouldn’t allow the possibility of working on other things if they’re exciting creatively.” He points to Mafia: The Old Country as “a smaller scale game that was very successful for us.” The company also has Ken Levine’s Judas waiting in the wings alongside new launch Project Ethos, which after our conversation announced a new direction following a lukewarm debut,
Zelnick sees the company as being stable enough to support mistakes, and backs its long-established leadership team to steer things right. “The fact that we have virtually no senior attrition at Take-Two and that our overall attrition rate is half the industry average has really helped us and our senior leadership team – and this is both label and corporate – has been together since basically we took over in 2007,” he says.
“One of the factors most highly correlated with an entertainment company that’s successful over a long period of time is the tenure of the senior management team, believe it or not. You know why? Because it’s a very tough business where failure is part of the equation, and if you’re constantly churning out your senior team, you never get your stride.”
“Our people have the confidence that they can live to play another day even if something goes wrong.”
“Our people have the confidence that they can live to play another day even if something goes wrong. And look, if you make the same mistake over and over again, you’re probably in the wrong job, but we have the ability to fail and we have financial flexibility and the human flexibility to try again.”
The ultimate goal, as expressed in his iicon session, is to make Take-Two “the biggest entertainment company on earth”. This is, I suggest, a bold goal for a pure games business, even one with a release the size of GTA 6 waiting in the wings. “The biggest pure-play entertainment company on Earth is Netflix and they do that with just movies and television,” he counters. “We have plenty of room to grow as an interactive entertainment company.”
So he’s not concerned about achieving such a lofty target? “Oh, I didn’t say that. I’m deeply concerned, at all times. I didn’t say it was an easy goal to achieve. To the contrary, I think it’s a very, very ambitious goal, but I think that having that as our North Star is honest because it’s what we’re all trying to do.”
“Maybe it’s out of our reach, but we’re going to try super hard.”
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Jon Hicks