Take-Two 'Reasonably Confident' Amid Tariff Changes

We've been delving deep into the potential impacts of the ongoing tariff issues in the United States on the gaming industry, covering everything from consoles and accessories to software. While some industry observers are expressing significant concerns about how these tariffs might affect both consumers and businesses, Take-Two's CEO, Strauss Zelnick, appeared relatively unfazed during today's Q&A session with investors.

Towards the conclusion of the call, Zelnick was directly asked about his thoughts on potential console price increases and their effects on the gaming ecosystem, specifically referencing the recent Xbox Series price hike and the anticipated increase for the PlayStation 5. Despite the uncertainty surrounding tariffs, Zelnick expressed confidence in Take-Two's fiscal outlook for the coming year:

"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 game releases are destined for platforms that already boast significant user bases. Whether a few more people purchase or pass on an Xbox Series, PS5, or even the upcoming Nintendo Switch 2, it's unlikely to significantly impact Take-Two's performance. Additionally, a large portion of Take-Two's revenue is derived from digital sales within established games like GTA V, Red Dead Redemption 2, and their mobile division, which remain unaffected by tariffs.

However, Zelnick acknowledges the inherent unpredictability of the situation. Our discussions with analysts over recent months have consistently highlighted the ever-changing nature of tariffs, a sentiment echoed by Zelnick himself, who leaves room for potential shifts in the tariff landscape.

Before the investor call, we had the opportunity to speak with Zelnick about the company's quarterly performance, which included insights into the development timeline for GTA 6 and the recent decision to delay its release until next year. Additionally, we covered Zelnick's optimistic outlook regarding the upcoming Nintendo Switch 2, as mentioned during the Q&A session.