Strauss Zelnick, the man at the top of market-leading video game company Take-Two Interactive, is sounding a note of caution over subscription services in gaming. And he’s worth listening to. Not only is he CEO of the company that’s behind breakout success franchises like Grand Theft Auto and Red Dead Redemption, but he’s quickly emerging as one of the most reasonable – and prescient – voices in gaming.
Take-Two Interactive’s share price has appreciated by 25% so far this year
Source: Yahoo Finance
Zelnick is dubious as to whether there’s room in the gaming market for multiple subscription services. Despite some of these services’ apparent popularity, he told listeners at a recent Goldman Sachs entertainment event that gamers’ relative lack of time made “all-you-can-eat” services less attractive. He said:
“It’s not clear to me consumers want an all-you-can-eat offering in interactive entertainment. At the end of the day, for any new offering to work, you have to start by appealing to consumers. It also though has to work for the content providers and distributors, so you have to find that intersection. I haven’t yet been convinced we’ll be able to find that intersection in a subscription vehicle. But to be clear, if consumers demand, then that’s where we’re going to have to be.”
Zelnick added that, if Take-Two was to go the subscription route, big releases would be held back. He said: If we go that route, will we see our frontline releases wrapped in a subscription? Well no. Netflix hasn’t done that except for their own originals. Motion picture tentpole releases have not been tied to any subscription offerings, and I’m skeptical they will be. My guess is you’ll have a robust subscription offering, however it’ll be much more of a catalog offering rather than a frontline offering in interactive entertainment. You’ll continue to have really big tentpole high-quality releases, but they’ll be a limited number of them. Consumers will pay a premium for them, and then you’ll have a robust free-to-play market as well.”
Disclosure
Dominion holds Take-Two Interactive in its Global Trends Luxury Fund.
Author: Theo Leworthy
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