Take-Two 'Reasonably Confident' Amid Tariff Changes

In recent discussions about the impact of ongoing tariff fluctuations in the United States on the gaming industry, from consoles to accessories and software, opinions vary. While some industry observers are expressing concerns over potential effects on both consumers and businesses, Take-Two Interactive's CEO, Strauss Zelnick, appeared relatively unperturbed during today's Q&A session with investors.

During the call, Zelnick addressed questions about potential console price increases, such as the recent hike for Xbox Series consoles and the anticipated rise for the PlayStation 5. He acknowledged the complexity of the tariff situation but remained confident in Take-Two's fiscal projections for the coming year:

"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 are targeted at platforms that already have a significant user base. He noted that the potential decision of a few consumers to purchase or not purchase new consoles like the Xbox Series, PS5, or Nintendo Switch 2 would not significantly impact the company's performance. Additionally, a large portion of Take-Two's revenue is derived from digital sales within ongoing games such as GTA V, Red Dead Redemption 2, and its mobile offerings, which are not affected by tariffs.

Despite his confidence, Zelnick acknowledged the unpredictable nature of the tariff situation. Analysts we've consulted over the past few months have similarly described the tariff environment as ever-changing and difficult to forecast, a sentiment that even Take-Two's CEO is mindful of.

In a pre-call interview, we discussed Take-Two's recent quarter with Zelnick, including the development timeline for GTA 6 and its recent delay to next year. We also covered Zelnick's comments during the Q&A regarding the upcoming Nintendo Switch 2 and his optimism about its launch.