Take-Two Interactive reported its earnings for the three months ended June 30 – in which Zynga officially joined the publisher – and that acquisition loomed over the results.
Take-Two Interactive Q1 Songs
Revenue: $1.1 billion (up 36% year-over-year)
Bookings: $1 billion (41% year-over-year increase)
Net loss: $104 million (compared to net profit of $152 million in the same quarter last year)
The Zynga acquisition drove all of those numbers, with nearly $117 million in corporate acquisition costs driving the bottom line into the red.
The revenue and booking numbers are also less impressive when you consider that the combined Zynga and Take-Two are compared to Take-Two’s alone results from last year, when Take-Two reported $813 million in revenue and Zynga alone $720 million. reported.
If we compare this quarter’s sales to individual company sales a year ago, sales would have fallen by about 28%.
Speak with GamesIndustry.bizTake-Two chairman and CEO Strauss Zelnick said he was happy with how the companies have come together, but acknowledged the slump in sales.
“We feel like this is a good start,” Zelnick said. “The integration is going well… The cultures are aligning nicely. We’re definitely seeing the effects of the general economy, which is soft. And I think we’re seeing it more on returning consumer spending than on games.”
Zelnick said Take-Two sales had “excellent” results in full game sales for the quarter, adding that it has been the top publisher for the past 13 weeks according to the NPD Group.
“In the case of mobile games, of course, you can play for free and spend only if you want to,” Zelnick said. “So it shouldn’t surprise anyone that we would see the weaker economy reflected in softer mobile sales versus softer console sales.”
Even if the effects of the economy are more palpable on recurring consumer spending, that portion of the company still accounted for 75% of Take-Two’s revenue for the quarter.
Given Take-Two’s recent emphasis on live-service games and its growing interest in mobile with its acquisition of Zynga, we asked how Zelnick expects the company to fare as the economy faces a protracted slump.
“I’ve never felt like entertainment companies were recession-proof or anything like that, and I’ve said that over and over,” Zelnick said. “In the end, though, we’re not a particularly expensive product for consumers, and if we give consumers what they want, we think they’ll show up.
“But I wouldn’t be surprised if our results would be a little softer than I’d like as long as we’re in a slower period, and my own opinion is that we’re in a slower period now. I don’t’ question is: if we will be in a recession; I think we’re in a recessive environment right now.”
Regardless, Zelnick reiterated his belief that while the industry may return some of the profits it made in the early days of the pandemic, it will still emerge in a better place than before.
Additionally, Take-Two has postponed Firaxis’ upcoming Midnight Suns title “to ensure that the Firaxis Games and 2K teams deliver the best possible experience for our fans.”
The game was previously scheduled for October 7, but is now expected to be released by the end of Take-Two’s fiscal year (March 31, 2023). This is the second time it has been delayed.
Sales updates
Take-Two also provided the usual sales updates, saying its revenue contribution was led by NBA 2K22, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Empires & Puzzles, Tiny Tina’s Wonderlands, WWE 2K22, Rollic’s hyper-casual portfolio, Toon Blast, The Quarry and Top Eleven.
As for specific numbers, NBA 2K22 has sold 12 million units to date, ahead of NBA 2K21’s performance over the same time frame.
Meanwhile, GTA 5 roughly matched its recent pace of 5 million quarterly and has now sold nearly 170 million copies, and the company said GTA Online’s audience is now 49% higher than it was before the pandemic.
Red Dead Redemption 2 has added a million more since its last quarterly report, up to 45 million shipped.
When asked about the announcement that the company would not support the game with further expansions, Zelnick explained, “We support the live services of the titles based on our view of consumer demand and passion from our team for what they’re working on. When they have stories to tell and characters to bring to life, they do it. We’re not driven by a mechanical cadence of updates; we’re driven by creativity and passion.”
Looking forward
For the full fiscal year, Take-Two now expects to post net bookings of between $5.8 billion and $5.9 billion, up from $3.4 billion in net bookings it reported the previous fiscal year. (Zynga posted net bookings of $2.83 billion in its last full fiscal year.)
While acknowledging the forecast was below consensus expectations, Zelnick said it takes into account unspecified movements in the release schedule and macroeconomic concerns.
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