Take-Two 'Reasonably Confident' Amid Tariff Changes

In recent discussions about the potential impact of ongoing tariff disputes in the United States on the gaming industry, Take-Two Interactive's CEO, Strauss Zelnick, expressed a calm demeanor during today's Q&A session with investors. Despite concerns over potential price hikes on gaming consoles and their effects on the broader gaming ecosystem, Zelnick remains unfazed.

The question posed to Zelnick focused on the ramifications of console price increases, particularly in light of the recent Xbox Series price bump and the anticipated rise in PlayStation 5 costs. However, Zelnick's response was reassuring. He stated that Take-Two's financial projections for the next ten months are robust and unlikely to be significantly affected by tariffs, unless they escalate unexpectedly.

"Our guide is for the next ten months, essentially, that's the part of the fiscal year that hasn't elapsed yet, and it's very difficult to predict where tariffs will land, given how things have bumped around so far. We feel reasonably confident that our guide wouldn't be meaningfully affected, unless tariffs ran off in a very different direction than we currently expect. In any case, there's already a very substantial install base for all of our target platforms except Nintendo Switch 2, which is pre-launch. So we have, I think, enough insight that we wouldn't be affected by any changes."

Zelnick's confidence stems from the fact that most of Take-Two's upcoming releases are slated for platforms that already boast a significant user base. The potential impact of a few consumers deciding against purchasing new consoles like the Xbox Series, PS5, or the forthcoming Nintendo Switch 2 would be minimal. Moreover, a large portion of Take-Two's revenue is derived from digital sales in ongoing titles such as GTA V, Red Dead Redemption 2, and their mobile gaming portfolio, which remain unaffected by tariffs.

However, Zelnick acknowledges the fluidity of the situation. Analysts have consistently pointed out the unpredictable nature of tariffs over the past few months, a sentiment that Zelnick echoes, leaving room for potential shifts in the tariff landscape.

In a separate conversation with Zelnick before the investor call, we delved into Take-Two's quarterly performance, including updates on the development timeline for GTA 6 and its recent delay to next year. Additionally, we covered Zelnick's optimistic outlook on the upcoming Nintendo Switch 2, reflecting his confidence in its future success.