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Take-Two's Zelnick: Digital Growth Won't Cannibalize Packaged Biz
Take-Two's Zelnick: Digital Growth Won't Cannibalize Packaged Biz
October 18, 2010 | By Leigh Alexander

October 18, 2010 | By Leigh Alexander
More: Console/PC

Digitally-distributed games could account for as much as 40 percent of Take-Two's business three years from now, says chairman and CEO Strauss Zelnick, but he believes growth of new platforms and business models won't equate to a decline in existing ones.

"Right now, digital distribution of our interactive entertainment represents something less than 15 percent of our revenue, and that's clearly growing," Zelnick tells Bloomberg Television's "Inside Track" program. "Packaged goods isn't going away for our business... because we have huge file sizes," he says.

There are challenges for cloud computing, too: "It's pretty hard to interact with huge file sizes where latency issues are meaningful, if you're entirely in the cloud," he points out. But he also cites OnLive as one company he feels is "doing a phenomenal job of addressing that challenge", thus earning Take-Two's vote of support.

The publisher's Mafia II was heavily involved in OnLive promotions as a key title on the service; OnLive users received early access to the game, and received a free OnLive game with their purchase.

Like many publishers, Take-Two has also been exploring iOS, recently releasing a version of Grand Theft Auto: Chinatown Wars for iPad. But tablet computers thus far represent only a minor share of Take-Two's revenues, says Zelnick.

"It's small for tablet, because we support largely consoles," he explains. "That's the bulk of our business... because it allows us to do incredibly robust products. However, what's exciting about the tablet revolution... is that tablets are going to become more and more robust platforms, and allow you to do incredible things. And they're portable, and they're cheap and they're getting cheaper."

Zelnick cites Gartner data that predicts 20 million tablet devices will be sold this year, 60 million next year, and 200 million in 2014, platform growth he calls "pretty remarkable."

Amid all this digital evolution, "I think you can see digital distribution to be 20, 30, 40 percent of our business" in three years, says Zelnick. "However, I believe our business is going to grow. So I don't think it actually takes a bite out of retail, and I doubt it takes a bite out of consoles."

"I think it's a growth business; I think for interactive entertainment, everything grows, the wind is at our back," he adds.

"While we're not exactly platform-agnostic... the fact that a middle-sized platform is going to grow is phenomenal news for us. The most important news for us is, how great is our next title."

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Dave Sodee
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What does he know.. Mafia 2 doesn't even work on my high end pc when all other games do work. And with Steam I am stuck with a dud and nothing I can do but throw the damn game out ! No more Take 2 games for me ever..

Alan Rimkeit
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PC gaming? Sounds like the norm. Just wait for the patch... ;)

Skip McGee
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Packaged goods will go away the moment Microsoft and PS3 sell games direct to my console. As soon as one of them decides to do release day digital distro, the packaged goods market will die die die. I'm sure we'll see some experimentation with this approach with a platform exclusive sometime in the next 2 years as a test.

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digital wont cannibalize packaged goods? uhhh what hole is he living under? console packaged goods have been in decline past two years. 2009 down nearly -10% and down similar level so far this year. digital revs on the other hand are growing rapidly. just look at steam growing +200% this year.

yeah right, packaged goods not being cannibalized....