Take-Two Confident in Avoiding Tariff Impact

The ongoing tariff situation in the United States has been a topic of concern within the games industry, affecting everything from consoles to accessories and software. However, Take-Two Interactive's CEO, Strauss Zelnick, expressed a calm demeanor during a recent Q&A session with investors, indicating that the company remains largely unaffected by these tariffs.

When asked about potential console price increases and their impact on the gaming ecosystem, particularly in light of recent price hikes for Xbox Series consoles and anticipated increases for the PlayStation 5, Zelnick remained confident. He explained that Take-Two's fiscal guidance for the next ten months is robust and unlikely to be significantly disrupted by tariffs, unless they deviate dramatically 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 have a significant user base. The potential sales of new consoles like the Xbox Series, PS5, or the upcoming Nintendo Switch 2 are not expected to significantly impact Take-Two's performance. Additionally, a large portion of Take-Two's revenue is generated from digital purchases within ongoing games such as GTA V, Red Dead Redemption 2, and their mobile titles, which are not subject to tariffs.

Despite his confidence, Zelnick acknowledged the unpredictability of the tariff situation, aligning with the sentiments of industry analysts who have described the scenario as ever-changing. This leaves room for potential shifts that could affect the industry at large.

In a pre-call discussion with Zelnick about Take-Two's recent quarter, we delved into topics such as the development timeline of GTA 6 and its recent delay to next year. Zelnick also shared his optimistic views on the upcoming Nintendo Switch 2 during the Q&A, further highlighting his belief in Take-Two's stable position amidst the tariff uncertainties.