Take-Two Optimistic About Tariff Impact

In recent discussions about the impact of the ongoing tariff situation in the United States on the gaming industry, from consoles and accessories to software, there's a range of opinions. While many are expressing concerns about how tariffs might affect both consumers and businesses, Take-Two Interactive's CEO, Strauss Zelnick, displayed a calm demeanor during today's Q&A session with investors.

When asked about his concerns regarding potential console price increases and their impact on the gaming ecosystem, particularly in light of the recent Xbox Series price hike and the anticipated increase for the PlayStation 5, Zelnick remained unfazed. He addressed the tariff situation's volatility but emphasized that Take-Two's fiscal guidance for the upcoming year is solid:

"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 is grounded in the fact that the majority of Take-Two's upcoming game releases will target platforms that consumers already own. The potential impact of fewer sales of new consoles like the Xbox Series, PS5, or the upcoming Nintendo Switch 2 is minimal. Additionally, a significant portion of Take-Two's revenue is derived from digital purchases within ongoing titles such as GTA V, Red Dead Redemption 2, and their mobile offerings, which are not affected by tariffs.

Despite his confidence, Zelnick acknowledges the unpredictable nature of the tariff situation, aligning with the views of analysts who have consistently pointed out the ever-changing landscape. This unpredictability is something even Zelnick is mindful of, leaving room for potential shifts.

Ahead of the investor call, we had the opportunity to speak with Zelnick about Take-Two's recent quarter, including insights into the development timeline of GTA 6 and its delay to next year. We also covered Zelnick's comments on the Nintendo Switch 2 during the Q&A, where he expressed optimism about its upcoming release.