Barriers to China will come down - Zelnick

Chinese regulators haven't approved new games for release in six months, but that's not a concern for Take-Two.

When asked about the issue at the Goldman Sachs Communacopia Conference today, Take-Two chairman and CEO Strauss Zelnick noted that the company's big games for the Chinese market---the recently released free-to-play NBA 2K Online 2 and Kerbal Space Program for Tencent's WeGame platform--have already been approved. The bigger issue for Take-Two is what happens with the Chinese market a bit further down the line.

"I have no doubt approvals will start up again," Zelnick said. "The real question is whether--and it really is a 'whether'--there comes a point where the Chinese government says, 'We're not worried that bringing Western entertainment into this country is going to be a problem, and in fact we think that bringing Western entertainment into this country will be good for our consumers and good for our entertainment economy.' I think they'll arrive at that conclusion. I think the barriers will come down, and that would have a massive effect on the space. It's already been established that the Chinese consumers love what we have to offer."

Zelnick emphasized that was simply his own prediction and he was not providing advice to bank on so much as an observation that "the opportunity is huge if things move in that direction. "

While the question was answered, China was clearly a subject about which Zelnick had more to say.

"At the risk of being a little bit political, our government actually does need to take a position with regard to our trade with China," he added. "Because we have a completely odd and unequal situation where Chinese companies can come to the US and buy companies in our space, no problem. And if they don't want to do that, they can bring a title here, market and distribute it no problem, and keep all the proceeds. We, in order to go to China, have to have half of our business owned by a local company. The good news is they provide expertise, which is great, and we have great relationships with companies like Tencent. We're thrilled to be in business with them. But we don't have a choice, to be clear.

"And furthermore, we need government approval, which is politically driven. And I'm not sure why the US government feels that's an OK thing to do with our second largest export category after aerospace. And I would observe that the days when we were borrowing money from China to buy oil in the Middle East, those days are basically gone. And the political landscape has to reflect that. All right, I'll get off my soapbox.

"But I don't think anyone disagrees with that. Oh by the way, the other backdrop is China's been stealing our intellectual property for a really long time. Those things just have to change."