With GTA VI six days out, Take-Two boss Strauss Zelnick told Bloomberg's David Rubenstein the company doesn't need a buyer to compete. "We can do very well as an independent company," he said. For Xbox, an independent Take-Two locked into a decade-long partnership might be the best of both worlds.
The company behind Grand Theft Auto isn’t looking for a new owner. Take-Two CEO Strauss Zelnick told David Rubenstein on Bloomberg’s David Rubenstein Show that the Rockstar and 2K parent has no need to sell itself the way some of its biggest rivals have.
“I think we’ve proven that we can do very well as an independent company,” Zelnick said, as quoted by GamesRadar+. “We’re at scale, and we’re at a point where we have a terrific balance sheet. At the end of this fiscal year, we should be a net cash company again. We are not in a place where we need to be part of a bigger organization to be competitive.”
Rubenstein asked the question after pointing out that major competitors had been sold or taken private. He didn’t name them, but the two biggest examples in recent memory are obvious: Microsoft’s purchase of Activision Blizzard, and EA’s $55 billion sale to a group including Saudi Arabia’s Public Investment Fund, Silver Lake and Affinity Partners. According to Power Up Gaming, the interview was recorded on October 19 and published this week.
Zelnick’s case: past $1 billion, bigger stops helping
Zelnick’s argument is simple. Scale matters, until it doesn’t. “Below about $1 billion in revenue, it’s hard to field a competitive creative team, it’s hard to field worldwide marketing and distribution, and it’s hard to survive the inevitable flops that occur,” he said. “But once you’re well over $1 billion in annual revenue, and we’re way beyond that point, our guidance is $8 to $8.2 billion this fiscal year, additional scale doesn’t seem to help you succeed.”
He also talked about how Take-Two grew from a company leaning heavily on one huge franchise into a publisher with 15 substantial franchises, and credited the creative teams behind them, per Power Up Gaming.
It’s hard to argue with his timing. GTA VI is the most pre-ordered title of all time on the Microsoft Store, according to Xbox Wire, and Take-Two told investors this month that pre-orders were at “unprecedented levels,” as we covered in our Take-Two earnings story. A company about to launch the biggest game of the decade isn’t going to shop itself around.
Why this is a good thing for Xbox
Here’s where it gets interesting for Xbox fans. A lot of people’s first instinct is “Microsoft should just buy Take-Two.” We get it. But look at what Xbox already has without spending a dime on an acquisition.
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Earlier this week, Xbox CEO Asha Sharma announced a 10-year strategic partnership with Take-Two, with GTA VI streaming to Xbox One on day one as “the first step,” and GTA V and Red Dead Redemption 2 headed to Xbox Cloud Gaming next. Zelnick saying Take-Two is staying independent means that deal is with a stable, cash-rich partner that isn’t about to be flipped to a new owner with new priorities. Ten years is longer than a console generation. Xbox gets Rockstar and 2K working with it through Helix and beyond, and Take-Two keeps the creative independence Zelnick clearly values.
The other side of this is what happens when a publisher does sell. EA’s buyout came with $20 billion in debt, GamesRadar notes, and not long after, EA moved to close BioWare, the studio behind Mass Effect and Dragon Age. That’s the nightmare scenario for fans of any studio, and it’s exactly the kind of shake-up Zelnick is steering away from.
So no, Microsoft isn’t buying the house that built GTA. It doesn’t need to. It signed a 10-year lease on the best seat in it.
Image: Rockstar Games / Take-Two Interactive
Sources
- Bloomberg: Take-Two’s Zelnick Traded Movies for ‘Grand Theft Auto’ Games
- GamesRadar+: Take-Two CEO says he isn’t interested in an EA-style $55 billion buyout
- Power Up Gaming: GTA Publisher Says It Doesn’t Need a Buyout to Compete
- Xbox Wire: Grand Theft Auto VI Comes to Xbox One and Xbox Series X|S Through Xbox Cloud Gaming on November 19
- OnPoint 4 Gamers: Xbox Signs a 10-Year Partnership With Take-Two
