Take-Two: next-gen development may be easier

According to Take-Two CEO Strauss Zelnick, it may be a myth that next-generation game development will be more expensive and complicated than it currently is. Speaking during a post-earnings conference call recently, Zelnick said Take-Two is not expecting to book additional expenses with the forthcoming arrival of new consoles.

"We don't have a ramp up of operating expenses for next-generation," Zelnick said. "Do we believe the titles to be a whole lot more expensive to make for next-gen? And the answer is we do not. In many instances we believe that it may be somewhat easier to make titles for next-gen, depending on how the technology comes together."

Elsewhere during the call, Zelnick responded to a question regarding when next-generation consoles from Microsoft and Sony will arrive. He did not offer a specific window, but made clear that Take-Two is expecting a console transition sooner rather than later.

"We are very mindful of an upcoming transition and the consumer behavior puts a fine point on that," he said. "Because as we head into the maturation of the cycle, we see tie ratios [games sold per console] come down, and you've seen what happens when that happens."

Zelnick added that the maturation of the current console cycle will have a minimal impact on Take-Two because gamers will buy high-quality titles no matter how late in the console cycle it may be.

"It fits very well with our stated strategy, which is we try really hard to do only the highest quality titles; the titles consumers will show up for without regarding to where you are in the hardware cycle," he said. "And that way we can really benefit from a large install base, which we already have, [and] which will grow larger through the holidays."

Zelnick concluded by saying it is paramount that Take-Two develops "must-have" games, because if it doesn't, consumers will seek out other titles from competitors.

"And we are, while not immune, we are less at risk for the lower tie ratios because we are putting out must-have products," Zelnick said. "If we don't put out must-have products, we too will be hurt by the fact that people are more selective with their purchases as we head into the end of the cycle. And everyone in our company is mindful of that, not the least our creative teams."