Take-Two 'Reasonably Confident' Amid Tariff Changes

Recent discussions have focused extensively on how the ongoing tariff disputes in the United States could affect the gaming industry, impacting everything from consoles to accessories and software. While many in the industry express concern about the potential effects on both consumers and businesses, Take-Two Interactive's CEO, Strauss Zelnick, appeared relatively unperturbed during today's Q&A session with investors.

As the session drew to a close, Zelnick was specifically questioned about his concerns over potential console price increases and their broader impact on the gaming ecosystem. This inquiry was prompted by recent price hikes on Xbox Series consoles and anticipated increases for the PlayStation 5.

Zelnick acknowledged the complexity and unpredictability of the tariff situation but emphasized that Take-Two's fiscal projections for the upcoming year remain 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 well-founded. He noted that the majority of Take-Two's upcoming game releases will target platforms that most consumers already own. The impact of a few individuals deciding to purchase or forego buying an Xbox Series, PS5, or Nintendo Switch 2 would be minimal. Moreover, a significant portion of Take-Two's revenue stems from digital purchases within ongoing titles such as GTA V, Red Dead Redemption 2, and its mobile games, which are not subject to tariffs.

However, Zelnick also acknowledged the inherent uncertainty surrounding tariffs. Analysts we've consulted over the past few months have consistently pointed out the fluid and unpredictable nature of the tariff landscape, a sentiment that even Zelnick himself echoes, leaving room for potential shifts.

Prior to the investor call, we had the opportunity to speak with Zelnick about Take-Two's performance in the recent quarter, including updates on the development timeline for GTA 6 and its delay to next year. Additionally, we covered Zelnick's optimistic outlook on the upcoming Nintendo Switch 2 during the Q&A session.