Take-Two 'Reasonably Confident' Amid Tariff Changes

In recent discussions surrounding the impact of the ongoing tariff chaos in the United States on the gaming industry, concerns have been raised about how these tariffs might affect everything from consoles to accessories and software. Despite these worries, Take-Two Interactive's CEO, Strauss Zelnick, displayed a calm demeanor during a recent Q&A session with investors.

When questioned about the potential impact of console price increases on the gaming ecosystem, especially in light of recent price hikes for Xbox Series consoles and anticipated increases for the PlayStation 5, Zelnick remained confident. He highlighted that Take-Two's fiscal guidance for the next ten months remains robust, largely unaffected by the fluctuating tariff situation.

"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 game releases are targeted at platforms that already have a significant installed user base. The potential sales of a few additional consoles like the Xbox Series, PS5, or the upcoming Nintendo Switch 2 are unlikely to significantly alter their financial outlook. Additionally, a substantial portion of Take-Two's revenue is derived from digital sales within ongoing titles such as GTA V, Red Dead Redemption 2, and their mobile offerings, which are not impacted by tariffs.

Despite Zelnick's assurance, he acknowledged the unpredictability of the tariff situation, a sentiment echoed by industry analysts in recent months. The situation remains fluid and subject to change, a point that even Zelnick concedes.

In a pre-call interview, we discussed Take-Two's quarterly performance with Zelnick, touching on topics like the development timeline for GTA 6 and its recent delay to next year. Additionally, we covered his optimistic views on the upcoming Nintendo Switch 2, as shared during the Q&A session.