Take-Two expects Call of Duty will boost Game Pass numbers 'for a period of time'

Take-Two CEO Strauss Zelnick says that putting a game like Call of Duty into Game Pass will inevitably push consumers towards subscribing, at least for a bit.

Take-Two does support subscription services through its legacy titles, yet it has been sceptical around the idea of putting brand new AAA games into the service on the day they come out.

Zelnick told us in 2022: "That doesn't make any sense to us, because economically speaking, we don't think consumers are prepared to pay for that. And we can't afford to turn our business upside down in a way that doesn't make sense economically."

But with Xbox continuing to significantly push Game Pass with the inclusion of Call of Duty: Black Ops 6 into the service this October, does Zelnick expect consumer habits to change?

"I think that offering a frontline title with a premium price in a subscription service, day and date, will push consumers to that subscription service for at least a period of time," Zelnick told GamesIndustry.biz.

However, he added that this move by Microsoft doesn't change how Take-Two views the subscription opportunity. "No, it won't affect our decisions," Zelnick says. "Because our decisions are rational."

Zelnick was speaking to GamesIndustry.biz after the firm's latest financial results, which showed some modest growth during Q1. But it's ultimately a quiet year for Take-Two, and with some of its core properties like GTA Online and NBA 2K not delivering the growth we've seen in previous years, which have been offset by success in mobile, particularly around Match Factory and Toon Blast.

"We have narrowed down the pipeline to focus on the titles that we think will be the most successful"

The company had conducted three different sets of cost reductions (including redundancies) over the last 18 months, some of which was related to its $12.7 billion acquisition of Zynga and some due to the new realities facing the games industry post-pandemic (namely, slower growth, higher costs and a highly competitive landscape). Zelnick tells us that he feels Take-Two is now at the right size for where the market is today.

"Very much so," he says. "We just went through another cost-cutting exercise. We announced we have cut about $165 million out of the annual run-rate of the business. We have a three-part strategy, which is to be the most creative, most innovative and most efficient entertainment company. And we just tuned up that efficiency further."

One of the harder hit areas of Take-Two's business has been its Private Division label, which specialises in smaller, independent titles. It's laid off members of the publishing team and closed internal Private Division studios Roll7 and Intercept Games. However, it is still supporting some independent releases, including two titles for this fiscal year and one more over the next two.

"We have narrowed down the pipeline to focus on the titles that we think will be the most successful," Zelnick says.

The big talking point for Take-Two is around Grand Theft Auto 6. The Rockstar game is expected to be the biggest entertainment launch in history, and the firm has reiterated its release window as the end of the year in 2025.

One of the challenges the game potentially faces is that there are a lot of gamers, including GTA Online players, who are still gaming on the previous generation machines, particularly PlayStation 4. Meanwhile, GTA 6 is only scheduled for the new consoles.

Yet overall, Zelnick says this trend is not a negative for Take-Two, pointing to strong sales of the company's older titles.

"No, it's not a challenge," he insists. "You're right, there are certain players that are really interested in legacy titles. We have a superb catalogue in this company, it's reliable and generates a lot of net bookings every year. So we are thrilled that there are players interested in legacy titles and even legacy systems. That said, the new hit titles do generate an enormous amount of net bookings in the industry. Not just ours, but everyone else's. It really is a Top Ten title business, at the end of the day."

Ultimately, he feels that although players may be slower to upgrade with this generation, they will move eventually.

"Within a couple of years of the launch of new hardware, usually usage of the prior generation hardware does tail off meaningfully. But I think that will be the case here as well, it's just a matter of time."

Zelnick has talked about Take-Two's drive to be 'the most efficient' entertainment business a few times, but when you look at the schedule, there are a few games that seem to have taken a very long time to arrive. GTA 6 will be the first new game in the series in 12 years, with Rockstar only releasing one other major title in that period (2018's Red Dead Redemption 2). Meanwhile, another game on the schedule, Judas by Ghost Story Games, started life a decade ago, and still doesn’t have a release date.

There's been a lot of discussion in the industry around reducing development times on video games, yet Zelnick says that for Take-Two, games like Judas and GTA 6 are not reflective of the entire business.

"On the mobile side, it's actually not the case [that dev cycles are longer]," he says. "We are seeing in certain instances that you can get to market quicker than expected for mobile. In regards to a very big robust title, development cycles can obviously be very long and we have some of those in our company, that’s no secret. But equally we have some titles that are annualised, like NBA 2K and WWE 2K. So those dev cycles have stayed consistent, even though the quality of the titles continues to improve."

Take-Two's financials talk a lot about what's coming. Grand Theft Auto 6 is clearly the big one, but the firm has announced it will release 15 'immersive core' games, one independent game, five mobile releases and three remasters over the 2026 and 2027 financial years, with Civilization VII due to arrive at the end of this one, too. And although the overall games market has faced a brutal two years in terms of layoffs, Zelnick has seen some market improvements that give him confidence that there is growth to come.

"There are modest tailwinds which are positive," he concludes. "It is our job to outperform the industry, and the only way to do that is to generate big hits, and I think we have all the necessary elements to deliver that."