During Take-Two’s quarterly investor conference call, the publisher’s executive team provided more color on the company’s outlook for microtransactions and more.
Chief Financial Officer Lainie Goldstein explained that recurrent consumer spending is continuing to grow for Take-Two, and it’s a “big focus” for the publisher in all of its games. They feel that there is are a lot more opportunities in the field.
Speaking of microtransactions in NBA 2K18, Chief Executive Officer Strauss Zelnick explained that the strategy is always to “captivate and engage consumers” and revenue is a function of that strategy, and not the other way around. The goal remains to keep consumers excited and make them happy. The effect of doing that is that is that there are “really great results” in terms of recurrent revenue as well.
According to Zelnick, the world has changed. If you do it right, there is an opportunity to keep people engaged. The most exciting element is seeing record numbers of people actually playing.
Asked how the company entices new paying customers to enter the ecosystem in Grand Theft Auto Online, Zelnick responded that the company is “focused on players, not payers.” If they get captivation and engagement right, then everything else will follow. The way they get it right is continuing to give people what they want, which is free content. That’s a strategy that Rockstar Games has done “remarkably well,” and that’s why the game remains so successful.
Zelnick reiterated that the focus is on the players and on the players’ experience, and the monetization will take care of itself if it’s done right.
Asked what makes Grand Theft Auto V so successful, Zelnick explained that he doesn’t think there is a magical answer to that question. It’s recognition that the best quality wins, and GTAV and Grand Theft Auto Online, they became a standard bearer for not just their generation, but also for modern video game business. In past generation of the franchise, there were a couple of other extraordinary titles that could compete, and that doesn’t seem to have been the case with GTAV, which shipped 90 million units in four years.
The “secret sauce” is simply “a really extraordinary experience” that people love, created, delivered, and supported by a label that “never, ever rest on the past, and is utterly focused on innovation and breaking barriers, with an eye towards an amazing entertainment experience.” That’s extremely hard to do and arguably “impossible for others to replicate.”
According to Zenick, a “genuine, not financially-driven, commitment to quality comes first.” On top of that, Take-two has a rational and extremely disciplined business environment which gives creative people a “very safe place to do the best work.”
About the possibility of bringing free-to-play games on consoles, Zelnick believes there are opportunities. For instance NBA 2K online, that is currently available in China, could be a console experience. Yet, on whether the business model might be moving in that direction as a whole, Zelnick feels that it probably can’t. In a free-to-play environment, only ten-ish percent of the consumers maximum is actually paying, and that’s not going to support the very significant investment required by a triple-A title. According to Zelnick consumers understand that, they want to continue AAA experiences, and they’re prepared to pay what “ultimate is a very low price” given the “massive number of hours that one can spend enjoying the titles.”
Asked about the possibility of tapping into the recently-popularized Battle Royale genre, Zelnick remarked that the goal is to be as innovative as possible, and even good titles that are derivative never seem to do as well as unexpected innovations. He doesn’t see Take-Two’s labels being super-excited about being derivative, even if they play in the world and they’re informed of what’s happening, and it’s their job to bring consumers what they want.
If you want to read more about Take-Two’s performance in the past quarter you can check out our dedicated article.