Take-Two Interactive is Missing Out With Its Xbox Game Pass Skepticism

Take-Two Interactive, the parent company of Rockstar, 2K Games, and many others, recently held its quarterly earnings call. In it, CEO Strauss Zelnick talked about how launching games on subscription services like Xbox Game Pass and PlayStation Now don't make much sense from a financial perspective.

This is directly in contrast with a number of developers, who are becoming increasingly keen on putting titles on such services at launch. Of course, Take-Two Interactive doesn't really need to do so in order to earn profits off its biggest releases, but there are a multitude of reasons why this might be leaving money on the table.

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While Zelnick did state that Take-Two's games are not great fits for subscription services, he means games that are relatively old. Games like Grand Theft Auto 5 have been part of the Xbox Game Pass lineup temporarily, and Red Dead Redemption 2 joined the PS Now lineup this month. However, that doesn't take away from the fact that both of these games have been temporary additions, with Grand Theft Auto 5 leaving Game Pass very soon for the second time.

That being said, it's also true that Take-Two's biggest IPs are ripe for such subscription services. Its biggest games such as Grand Theft Auto 5 and Red Dead Redemption 2 have ever-evolving online counterparts that have been a central point of attraction years after their release, and their relatively high price tags can make starting a more expensive ordeal.

However, with Xbox Game Pass and PS Now, players get to taste what's in store essentially for free. This may compel them to buy into more expansions and premium content as well, and even buy the full game should they like it. Recent reports have indicated that Xbox Game Pass customers have been spending 40 percent more money on games, which is a testament to the service's model of allowing gamers to have as much of the experience as they want before going in for the full amount.

Furthermore, Microsoft and Sony have deep pockets and are more than happy to pay the required sum to put Take-Two's biggest IPs on their services. A recent report regarding Google Stadia revealed that the giant spent tens of millions of dollars just to port Red Dead Redemption 2 to Stadia. Given how aggressively Microsoft is pushing for third-party deals for Xbox Game Pass, it wouldn't be a surprise if the Redmond, Washington-based giant also spent similar amounts for such titles.

Of course, Take-Two isn't naive in this regard. It seems to be playing both sides of the field, taking money from these giants for putting their biggest games onto these services temporarily. Meanwhile, at the same time it also bags in great profits from players acquired by these services following this time period.

As mentioned previously, Take-Two Interactive's biggest IPs don't need to be a part of any such services to make decent profits. Its biggest franchises like Grand Theft Auto and Red Dead Redemption are cultural behemoths, capable of raking in record sales and profits at full price. Other subsidiaries such as 2K have annualized sports releases like WWE 2k22 and NBA 2k22 that are also sales giants.

A brief look at the recent earnings report reveals a 72 percent increase in net revenue, which is great for a year without much in the name of major releases. Grand Theft Auto's franchise sales are rivaling that of Call of Duty, an annual release with exponentially more games under its belt. Take-Two simply doesn't need to share any more revenue with giants like Microsoft and Sony than it already does, as profits are seemingly at all-time highs.

Xbox Game Pass is a boon to developers with limited resources, as Microsoft can essentially fund the development or marketing in exchange for launch inclusion on the service. Take-Two doesn't need that, and this legitimizes Zelnick's statement, although the future may be different.

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The question of whether future Take-Two properties will release on Game Pass day one is perplexing for many a fan, but Zelnick's statement does seem to set the stage for this potential future. Its biggest releases cost hundreds of millions of dollars to make, and putting that on a $10/month subscription doesn't make much sense from a business standpoint. This includes the heavily rumored Grand Theft Auto 6, and it doesn't take much to assume that it wouldn't launch on Xbox Game Pass.

Grand Theft Auto sells incredibly well, but the latest line of rumors surrounding an evolving map of sorts might change the picture. If Grand Theft Auto 6 does lean more into its online offerings, it might make more sense to give players a taste of the action right away as a part of these subscription services. However, given the stature earned by Grand Theft Auto over the years, it more or less guarantees sales success even if the product veers away from its traditional formula.

The possibility of adding games to these services later down the line is always there. Both Sony and Microsoft would be quite interested in having that, and with more players like Netflix entering the realm of subscription services, Take-Two wouldn't have to struggle much to get its biggest games a platform to shine. With Xbox Game Pass starting to become an integral part of the industry, there seems to be a transitional shift occurring in the way that fans consume video games. Take-Two's place of luxury does give it some wiggle room to play according to its own rules, but it might not be long until Zelnick might have to change his stance on things.

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