Take-Two 'Reasonably Confident' Amid Tariff Changes

In recent discussions about the impact of U.S. tariffs on the gaming industry, ranging from consoles and accessories to software, there's been a mix of concern and confidence among industry leaders. Notably, Take-Two Interactive's CEO, Strauss Zelnick, expressed a calm demeanor regarding the potential effects of tariffs during a recent Q&A session with investors.

The conversation took a specific turn when Zelnick was questioned about his concerns over possible console price increases and their broader implications on the gaming ecosystem. This query was in response to the recent price hike of Xbox Series consoles and the anticipated increase for the PlayStation 5.

Despite the ongoing tariff uncertainties, Zelnick remains confident in Take-Two's financial projections for the upcoming fiscal year. He stated:

"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 the majority of Take-Two's upcoming game releases are slated for platforms that already boast a significant user base. The potential impact of a few consumers choosing not to purchase an Xbox Series, PS5, or even the upcoming Nintendo Switch 2 would be minimal. Additionally, a substantial portion of Take-Two's revenue is derived from digital sales within established titles such as GTA V, Red Dead Redemption 2, and their mobile games, which remain unaffected by tariffs.

However, Zelnick acknowledges the unpredictable nature of the tariff situation, echoing the sentiments of industry analysts who have noted the ever-changing landscape. Even with his confidence, Zelnick leaves room for unforeseen changes.

In a pre-call interview, we delved into Take-Two's recent quarterly performance with Zelnick, touching on topics like the development timeline for GTA 6 and its delay into next year. Additionally, we covered Zelnick's optimistic outlook for the Nintendo Switch 2, as discussed during the Q&A session.