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Take-Two Interactive CEO Strauss Zelnick has suggested that titles developed for next-generation consoles may be easier and cheaper to produce than current-generation titles, noting that the company does not “expect [its] operating expenses to increase” with the launch of next-gen hardware.
“In terms of timing, I think we are very mindful of the potential console transition,” Zelnick said during Take-Two’s earnings conference call last night. “Of course, we rely on the information we receive from our hardware partners as does the market, and we typically don’t comment on it. We are very mindful of an upcoming transition and the consumer behaviour puts a fine point on that, because as we head into the maturation of the cycle we see tie ratios come down and you’ve seen what happens when that happens.
“It fits very well with our stated strategy, which is, we try really hard to do only the highest quality titles, the titles consumers will show up for without regard to where you are in the hardware cycle.”
But how will entering the next-generation affect Take-Two’s financial outlook?
“We don’t have a ramp-up of operating expenses for next-generation,” Zelnick continued. “Like everyone else in the business except one of our competitors, once we reach technical feasibility we capitalise our software development and at that point it no longer hits our P&L [profit and loss] until we release a title, at which point we amortize it in accordance with GAAP as you know. So we wouldn’t expect our operating expenses to increase.
“And I think I’ll answer a question you didn’t necessarily pose, which is, do we believe that titles to be a whole lot more expensive to make for next-gen, and the answer is we do not. In many instances we believe that it may be somewhat easier to make titles for next-gen depending on how the technology comes together.”
Sony and Microsoft have yet to announce their plans for next-generation hardware, but that hasn’t stopped publishers from discussing next-generation development.
Back in August, EA Labels boss Frank Gibeau said that he had “seen” both Sony and Microsoft’s next-gen consoles, and that next-gen development was a “big investment” for EA this year.
He also said that the consoles would be releasing “in about a year’s time”.
Source: Q2 2013 Take-Two Interactive Software, Inc. Earnings Conference Call
