‘Grand Theft Auto’ maker Take-Two plots its next move in a consolidating gaming industry

Consolidation is all the rage in the video game world these days. In the past year, Ubisoft created a new gaming subsidiary with Chinese tech giant Tencent, while Electronic Arts announced a $55 billion deal led by Saudi Arabia’s Public Investment Fund that will take the company private. An industry that, just a decade ago, included more than a dozen publicly traded game makers now has only a handful left.

Take-Two Interactive Software has managed to remain independent while rivals, including Activision-Blizzard and EA, have been absorbed. And as it continues digesting its 2022 acquisition of Zynga, CEO Strauss Zelnick says the company is already eyeing its next acquisition target.

However, he says, that could still be a couple of years away.

“I think for the next couple of years, our story will be one of organic growth, but then if we do things right, we’d be in a position to [do] something inorganic as well,” he tells Fast Company. “But would we be interested in growing? Of course.”

As expected, Zelnick declined to name specific targets, but acknowledged the company already has some in mind.

“We have our eye on a couple opportunities, but . . . they may not be around at that time,” he says. “And there are no guarantees. But I think there still would be some opportunity, no matter what.”

What he did concede is that whenever Take-Two next opens its checkbook, it will likely be focused on app shopping. Mobile gaming now accounts for half of the company’s revenue.

“There are a couple—I’m not going to name names—but there are a couple in the mobile space we’re very impressed with. Less so on the console side,” he says.

Organic growth

Part of the reason for any acquisition delay may simply be that Take-Two will be fully occupied over the next year or two with the launch of Grand Theft Auto VI. The latest installment in one of entertainment’s most lucrative franchises is scheduled for release on Nov. 19.

At the recent iicon conference, an invitation-only summit for video game industry leaders, Zelnick said marketing for the game would begin “soon,” suggesting further delays are unlikely.

Expectations are ludicrously high. Its predecessor, released in 2013, has sold more than 225 million copies and generated nearly $10 billion in revenue for Take-Two. It was still the industry’s 11th best-selling game in March, according to Circana, an astonishing feat for a title more than a decade old. Most games are fortunate to remain on sales charts for a few months. Few last beyond a year.

New challenges

Of course, there is always the possibility that someone could attempt to buy Take-Two itself. Zelnick acknowledges that, but downplays the likelihood, pointing to the company’s dramatic growth since he took over 18 years ago.

“We’ve always been at risk of someone wanting to own us because we’re public and not controlled,” he says. “We’re here for the shareholders. The best protection in terms of remaining independent is doing a great job. When we bought the company, the stock was $11. Today it’s $213. And if we continue to create value in the company, there would be no reason for someone to take it over and it would be hard for them to take it over.”

Part of the challenge in sustaining those financials, even with GTA VI looming, is adapting to shifting player habits. Mobile continues to expand, while console gaming no longer dominates the way it once did. And amid speculation that GTA VI could carry a significantly higher price tag than most major releases, Take-Two will need to stay especially attuned to player behavior.

“The truth is, for the console side of our business, it’s very clear that business is opening up,” Zelnick says. “PC is becoming a more and more important format for what were previously console releases, with a little PC on the side. And now it’s become like PC is becoming the main course. That’s not lost on us at all.”

Despite that shift, there are still no plans to launch GTA VI on PC simultaneously with its console debut. It will eventually arrive on the platform, but there is still no timeline, nor much explanation for the staggered release.

“All of our major titles ultimately make it to PC,” says Zelnick. “In the case of Grand Theft Auto VI, we’re obviously only launching on two consoles, so … there are clearly business reasons to do that.”