Take-Two Interactive (NASDAQ:TTWO) CEO Strauss Zelnick made comments suggesting that the company is far from gung-ho on subscription-based gaming services. Zelnick said that he was highly skeptical that subscription services, such as Microsoft's (NASDAQ:MSFT) Netflix-like Xbox Games Pass, would emerge as the primary distribution channel for games.
Continued growth for the subscription-based gaming model could be great for a platform holder like Microsoft, but it could present real threats to other leading games companies. Game development is expensive, and Zelnick specifically mentioned games being relatively cheap in terms of the hours of entertainment they offer as a reason why subscription services might not be a great fit for the industry.
Take-Two is smart not to push for a subscription future
Given Take-Two Interactive's focus on big-budget game development, it makes sense that the company would be tepid about a future in which major releases would likely have diminished earnings potential. The company's biggest games have production and marketing budgets that stretch into the hundreds of millions of dollars, and it expects to sell triple-A releases starting at $70 per unit. Meanwhile, the base-level subscription tier of Xbox Game Pass offers users a library of hundreds of games for $10 per month.
Take-Two has already made some of its games available on subscription services, and it will likely continue to do so, but the big-budget release model is still working very well for the company.
While Take-Two appears is far from eager to throw its full weight behind the subscription model, its management team has repeatedly stated that company will be where the consumer is. Take-Two's core franchises put up great sales under the current retail model, so it makes sense that the company isn't looking to change it.