Take-Two’s latest financials are in, and they come with a few surprises. First off, Take-Two CEO Strauss Zelnick has confirmed that the publisher’s sales are mostly digital, in response to Sony’s controversial decision to stop manufacturing physical disc-based games. “Our business is well over 90% digitally distributed,” he said during the call (thanks, Jason Schreier). “It’s already a digital business.”
This comes as no surprise, really. In fact, it’s almost word-for-word what we heard from Capcom earlier this week; namely, that digital sales outweigh physical by orders of magnitude, and that PlayStation’s move to an ‘all-digital’ future will not have a great impact on the business it runs. Sega has chimed in, also, noting “a digital shift is crucial” for the longevity and health of the games industry. It’s worth noting that even the ‘physical’ version of GTA 6 will just be ‘a code in a box’, marking how significant digital is to Take-Two in the current market.
Industry analyst Daniel Ahmad paints a clear picture of just how important digital sales are to Take-Two, versus physical: “Physical games made up around 2 percent of their revenue this quarter, and was 3 percent for the last full fiscal year,” he explains in a tweet. “This is all net revenue, which includes DLC / microtransactions, [of course]. But it goes to show just how digital oriented the company, and industry at large, is now.”
Elsewhere in Take-Two’s earnings call (via Gamesbeat) we can see that the company has revised its Fiscal 2027 net bookings by 200 million, from $8 billion to $8.2 billion. Why? Because of Grand Theft Auto 6, of course. “Our excellent first quarter results reflect the power of our portfolio and disciplined execution across all of our labels,” said Zelnick during the call. “With these positive trends and excitement around the November 19th launch of Grand Theft Auto 6, we are reiterating our Fiscal 2027 Net Bookings outlook of $8 to $8.2 billion.
“Looking further ahead, we expect to sustain this new level of scale and generate strong cash flows, setting us on a path to deliver continued growth and long-term shareholder returns.” Given the strength of GTA 6’s pre-orders, even at this stage, you can see why Take-Two is feeling buoyed by the promise of the game. “Global excitement for the launch of Grand Theft Auto Six continues to build, with the title having an exceptional start to pre-orders,” Zelnick said in a call with analysts. But there’s a level of caution to this excitement, too :”[Pre-orders] are so unprecedented that we just don’t know how it’ll translate into sales […], and we just don’t believe in claiming victory before it occurs,” he stated in a call with analysts.
Yesterday’s peculiar announcement of an exclusive deal with Netflix to air the next ‘deep dive’ into the game likely helped assure confidence in the game, too.
But it’s not all sunshine and roses for Take-Two. The publisher’s mobile business fell seven percent in Q1 (thanks again, Gamesbeat) – but that is more due to the heights of its previous year than any particular failing in this year. Zelnick states that its mobile games “[remain] a significant driver of revenue and margin enhancement”, and notes that whilst there’s “a bit of pressure on user acquisition at the moment”, studios like Zynga have fallen in line with the company’s expectations.
Despite the apparent strength of this earnings call, Take-Two stock opened down 1.9 percent this morning, coming in at $228.2 a share.
