Take-Two CEO forecasts 25 years of games industry growth

Strauss Zelnick expects sector’s “extraordinary tailwinds” to continue

Take-Two CEO forecasts 25 years of games industry growth

Take-Two CEO Strauss Zelnick has said the video games industry is in rude health and predicted decades of growth for the sector.

“We have this wonderful situation in the marketplace which is that the sector has extraordinary tailwinds and we expect those to continue, and that’s driven by the growth in the cohort that enjoys video games,” the executive said during Take-Two’s first quarter earnings call on Monday.

“Remember, people consume for the rest of their lives the entertainment that they loved at the age of 17. The video game business is about 30 years old, 35 years old effectively, and the average player age today is around 37 or 38, so there’s plenty of room for growth as people age, more people come into the market, but people don’t stop playing video games, so for 20 or 25 years demographics will grow, will cause the industry to grow, and the industry participants who do a good job will benefit from that.

“We’re also seeing growth from geographies that we’re currently not involved in, for example Africa and India, to a lesser extent Russia, the Middle East and of course China, where we currently have a meaningful business but we think there’s a lot of growth opportunity there as well,” Zelnick continued.

“And third, growth in new business models, new technologies such as streaming, and new kinds of games – just observe ten years ago there was no mobile games business and today that’s a $60 billion marketplace. And at the same time that’s sprung up and grown, the core console and PC business has continued to grow at a rapid clip.

“So this industry is the most rapidly growing industry in entertainment and that’s not going to change for the next 10, 20 or 25 years.”

Zelnick’s comments were delivered as Take-Two upped its full-year guidance on the back of better-than-expected results for its first quarter ended June 30, 2019.

First quarter net revenues were up 39% year-over-year to $540.5 million. Recurrent consumer spending on the likes of virtual currency, add-on content and in-game purchases increased 31% year-over-year and accounted for 58% of total revenue.

For the full year ending March 31, 2020, Take-Two now expects to generate revenue ranging from $2.83 to $2.93 billion (up from $2.7 to $2.8 billion forecast in May), and net income ranging from $425 to $454 million (up from $389 to $418 million).

While the company is primarily focused on organic growth, Zelnick said on Monday that mergers and acquisitions also form part Take-Two’s current strategy.

Concluding Take-Two’s earnings call, the executive said: “We’re immensely optimistic about our prospects for the remainder of this year and for the years ahead. It’s a challenge every day, but it’s a challenge that we relish, and we’re proud of what we’ve been able to do so far, and we all firmly believe this is just the beginning.”

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