Take-Two: Digital sales growing fast but won't hurt retail

Take-Two CEO Strauss Zelnick has predicted rapid growth of the publisher's digital distribution business, but claimed this will be in addition to rather than instead of retail success.

"Right now digital distribution of our interactive entertainment represents something less than 15 per cent of our revenue," he told Bloomberg TV, "and that's clearly growing.

"The packaged goods business isn't going away for our business - why? - because we have huge file sizes and it's pretty hard to interact with huge file sizes when latency issues are meaningful if you're entirely in the cloud. But there are companies that are doing a phenomenal job on addressing that challenge like OnLive."

Over the next two to three years, he predicted, "I think you can see digital distribution growing to be 20, 30, 40 per cent of our business - however I believe our business is going to grow, so I don't think it actually takes a bite out of retail and I doubt it takes a bite out of consoles. I think it's a growth business.

"For interactive entertainment everything grows, the wind is at our back."

Despite Zelnick's breezy comments, Take-Two is facing a net loss of $11 million for the first nine months of 2010 - but that's up from last year's loss of $116 million, thanks to over 7 million sales of Rockstar's Red Dead Redemption.