Take-Two Confident in Avoiding Tariff Impact

In our ongoing coverage of how the fluctuating tariff situation in the United States could affect the gaming industry, from hardware to software, we've noted a range of reactions. While some industry observers express concern over the potential impacts on both consumers and businesses, Take-Two Interactive's CEO, Strauss Zelnick, displayed a calm demeanor during a recent Q&A session with investors.

During the call, Zelnick was specifically questioned about his views on potential price hikes for gaming consoles, such as the recent increase for Xbox Series consoles and the anticipated rise for the PlayStation 5. He responded with confidence in Take-Two's fiscal projections for the next ten months, suggesting that the company's guidance would remain largely unaffected by tariffs unless they deviated significantly from current expectations.

"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 releases will target platforms that already boast significant user bases. The impact of a few consumers deciding against purchasing new consoles like the Xbox Series, PS5, or the yet-to-be-released Nintendo Switch 2 would be minimal. Additionally, a significant portion of Take-Two's revenue is derived from digital sales within established games like GTA V and Red Dead Redemption 2, as well as their mobile division, which are not influenced by tariffs.

However, Zelnick acknowledges the inherent uncertainty surrounding tariffs, echoing the sentiments of numerous analysts we've consulted over recent months. The situation remains fluid and unpredictable, a reality that even Take-Two's CEO admits could potentially alter future outcomes.

Prior to the investor call, we had the opportunity to discuss Take-Two's performance over the quarter with Zelnick. This included insights into the development timeline for GTA 6 and the reasons behind its delay to next year. Additionally, we covered Zelnick's optimistic outlook regarding the upcoming Nintendo Switch 2, as shared during the Q&A session.