Take-Two 'Reasonably Confident' Amid Tariff Changes

In our recent discussions about the potential impacts of the ongoing tariff disputes in the United States on the games industry, from consoles to accessories and software, there's a range of concern among industry players. However, Take-Two's CEO, Strauss Zelnick, appeared relatively unfazed by the tariff situation during today's Q&A session with investors.

When questioned about the potential for console price increases and their effects on the gaming ecosystem—a topic brought to light by the recent price increase of Xbox Series consoles and the anticipated rise for the PlayStation 5—Zelnick expressed confidence in Take-Two's fiscal outlook for the next ten months. 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 most of Take-Two's upcoming game releases are targeted at platforms with established user bases. The decision of a few consumers to purchase or not purchase an Xbox Series, PS5, or even the upcoming Nintendo Switch 2 is unlikely to significantly impact the company's performance. Additionally, a significant portion of Take-Two's revenue is derived from digital purchases in ongoing games such as GTA V, Red Dead Redemption 2, and their mobile business, which are not subject to tariffs.

Despite this confidence, Zelnick acknowledges the unpredictable nature of the tariff situation. Analysts have consistently pointed out the fluidity and unpredictability of tariffs over the past few months, a sentiment echoed by Zelnick himself, who leaves room for potential changes.

In a conversation with Zelnick prior to the investor call, we delved into Take-Two's quarterly performance, the development timeline for GTA 6, and its recent delay to next year. We also covered Zelnick's optimistic outlook on the upcoming Nintendo Switch 2, as discussed during the Q&A.