Top video game companies have been busy acquiring other game studios lately to bolster their pipelines and add talented game developers to their ranks. But Take-Two Interactive (NASDAQ:TTWO) went a different route recently by acquiring France-based Dynamixyz, a leader in facial animation services.
Financial details weren't disclosed, which usually means the size of the deal is not material for the acquiring company, but the addition of a team of Ph.D.s who spend their time working on facial analysis, motion capture, and computer graphics could have big consequences for the future of Take-Two's video game development. Here are three things to know.
1. Graphics sell games
The video game industry has been growing ever since electronic games took off in the 1970s. One of the fundamental drivers of growth has been improvements to visual graphics technology. Take-Two's Rockstar Games, the creator of Grand Theft Auto V and Red Dead Remption 2, has excelled at creating experiences with stunning visuals. Both titles have sold tens of millions of copies in recent years -- no doubt a result of engaging gameplay and superb animation work.
Dynamixyz worked on Red Dead Redemption 2 for Rockstar Games and has also had a hand in Take-Two's titles from its 2K label, such as NBA 2K21, which is known for developing highly accurate facial animations for real NBA players. Moreover, Dynamixyz previously contributed to the Netflix animated series Love, Death & Robots, as well as Avengers: Endgame, the blockbuster Marvel film.
As CEO Strauss Zelnick said during Take-Two's fiscal fourth-quarter earnings call, "What moves the dial in our business is amazing creativity, great characters, great stories, great graphics, great gameplay, the ability to enjoy those experiences with other people all around the world."
2. Dynamixyz tech could boost future game sales
In the past, Dynamixyz has worked with Take-Two only as a partner. Now that it's officially part of Take-Two's business, it will have exclusive access to all of the company's intellectual property, and this is likely the main reason Take-Two wanted to bring Dynamixyz under its umbrella.
In the press release, Take-Two said, "Dynamixyz is the company's latest strategic initiative to invest further in its internal development capabilities and to continue its goal to be the most creative, innovative, and efficient entertainment company."
This deal comes ahead of what Take-Two has called its deepest game pipeline in history with 62 new releases planned from new and existing franchises through fiscal 2024. It's possible one of these releases could be the next installment of Grand Theft Auto.
There's already speculation that the acquisition of Dynamixyz points to further innovation in facial animation for Grand Theft Auto VI as strong sales of the current installment have created massive buzz for the next release. Grand Theft Auto V (GTA V) has been an incredible success over the last eight years, selling 145 million copies.
3. Take-Two is ready for more growth
Over the last year, Take-Two has also hired 700 new developers and acquired several studios to expand the company's capabilities. As Zelnick explained on the fiscal fourth-quarter earnings call in May, these moves are intended to enhance the organization and grow the business for the long term.
Acquiring Dynamixyz would certainly fit this strategy. It may take a few years to see the benefits of the deal materialize, but it is easy to imagine how this latest addition will help Take-Two infuse its franchises with cutting-edge graphics animation, creating even more compelling gameplay experiences and helping the company sell more copies of its upcoming releases, especially future installments of its biggest franchises.