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Take-Two’s Strauss Zelnick on ‘GTA Online’ Versus ‘Red Dead Online,’ Game Streaming

“Red Dead Online,” “Borderlands 3,” “The Outer Worlds,” “Ancestors: The Humankind Odyssey”: It’s shaping up to be one heck of a year for Take-Two Interactive and its collection of studios.

Variety had a chance to sit down with Strauss Zelnick, the massive publisher and developer’s chairman and CEO, during E3 to discuss the rise of game streaming, the impact of China, and the future of the company.

Brian Crecente: Compared to last year, you had a pretty active first few days at E3. How do you think the various things were received,

Strauss Zelnick: It seems like there’s an enormous amount of enthusiasm. We have a hundred stations out there that you can play [“Borderlands 3”] on and we have lines around the entire booth. So it’s feeling good.

Brian Crecente: How do you think things are shaping up for Private Division?

Strauss Zelnick: Great. It looks like it’d be a phenomenal year between the “Outer Worlds” and “Ancestors” and of course the ongoing success of “Kerbel Space Program.” So Michael Worosz and the team have done a terrific job building that from scratch over the past two and a half years.

Brian Crecente: Are they still in a position where they’re trying to expand their portfolio?

Strauss Zelnick: Absolutely. In a very disciplined way. So Private Division is looking for independent creators and teams, whoever, anyone with an incredibly strong creative track record and a passionate point of view about what they want to do next. Our entire approach at the company broadly is to be the most creative, the most innovative and the most efficient company in the interactive entertainment industry.

Brian Crecente: How involved are you with Google Stadia?

Strauss Zelnick: Take-Two in general, has a relationship with Google of course. And thus far we’ve announced “NBA” and “Borderlands 3.”

Brian Crecente: I saw on the list that was released that Rockstar is listed as a developer, but now what they will be releasing. Is that a matter of waiting for the right time to say what’s going to be coming, or is it that you haven’t decided what’s going to Google Stadia?

Strauss Zelnick: Rockstar always announced what they intend to do when the time is right, but by indicating support that reflects the fact that the whole company will embrace any new distribution methodology that makes sense from a technical point of view, a consumer point of view and a business model point of view.

Brian Crecente: When you were having those early discussions Google Stadia, was there any expectation of what they were going to do in terms of how they were going to sell games?

Strauss Zelnick: That’s an ongoing conversation. But we didn’t need to have expectations because they told us.

Brian Crecente: Do you feel that game streaming is where we are headed in terms of how games are going to be distributed?

Strauss Zelnick: I think with any luck, if these services work — and I believe they will at least over time, if not initially — then bringing our games to audiences that don’t have consoles or PCs all around the world is a really exciting opportunity. It remains to be seen just how big a market that will be and what kind of market it will be.

If you’re excited about buying $60 frontline titles, do you really resist owning a $300 console? It seems to me not necessarily. If you are primarily a smartphone consumer, are you interested in a big broad console release even if it is available? And what does that release look like on that screen? So I think it would be facile to say that because there are billions of consumers with connected devices that don’t currently have game consoles or PCs on which to play games, that the market will automatically be a certain size. I think it still remains to be seen. However, as any entertainment industry expands distribution to broader audiences, the market always expands with it. The only question is how high is up?

Brian Crecente: There’s been some sort of a conversation about how much data is going to be used when you’re downloading games because you’ll never be permanently downloading them. Some people are estimating it could be close to a terabyte a month if you’re playing roughly 60 hours a month. We’re not in a world where a terabyte a month is something that I think Comcast would be OK with for games alone. Is that a challenge?

Strauss Zelnick: No one has really talked a lot about how much data will be required to support these services. Right now I think Netflix is one of the biggest consumers of data at certain times of the day here in the U.S. So I think it’s a very fair question. We’ll see. We’ll see. And of course it depends on how many consumers are active as well, but it will also implicate the kind of connection you have.

Brian Crecente: Is your the idea thatyou’ll be supporting Stadia change anything on your end or is it basically just another way to sell games?

Strauss Zelnick: There’ll be some technical requirements on our side to make the title work. And then in certain instances, depending on how consumers use it, we may have to do some development or redevelopment. So for example, if consumers are primarily streaming on to smartphones, then we’ll have to deal with font sizes for text, for example. Those are relatively small matters, but I imagine we’ll have to engage from a development point of view at least somewhat and particularly initially.

Brian Crecente: I was speaking with someone at Google Stadia and they were talking about the different ways that Stadia will be used. And right now we’re only seeing one of those ways, which is basically a game that’s already been created or is going to be created that will also be on Stadia. But the other ways have to do with using some of the technology that would allow someone to, for instance, have in theory limitless computing power. Do you think you, any of your studios would do that? Or do you think you’re going to focus more on games that can run on a bunch of platforms, not just Stadia?

Strauss Zelnick: I think it remains to be seen. I think that will be the intersection of what we make available initially, what others make available and what consumer uptake is. And until we see that we probably won’t be able to apply them. But it’s nice to know that we’ll have an array of choices.

Brian Crecente: Does supporting Microsoft’s Project xCloud require any additional work or is it basically that if the game runs on the Xbox it will support the service?

Strauss Zelnick: I think that’s our expectation minimally. We’ll find out what other opportunities exist. I’m sure there will be more.

Brian Crecente: In terms of the bigger philosophy behind Stadia and Project xCloud, [Microsoft VP of Gaming] Phil Spencer sounds like he thinks it’s going to be a paradigm shift. That it is going to remove all these barriers and ultimately change the way people make their decisions on what they’re going to play. Do you believe that? Do you think that’s a future that we’re headed toward?

Strauss Zelnick: I think some of what he’s saying is talking about include the subscription plans and things like that they’re doing. But again, let’s not confuse distribution technology with business models. What you’re now talking about is a multiplayer or subscription business. And certainly it would, that stands to reason that you would do just that, but that assumes that certain titles will be available.

We’ll see if consumers want to subscribe to interactive entertainment subscription services. We don’t know if they do.

Brian Crecente: What is your thought on where things are headed? Do you think we’re at a point where things are drastically changing for gaming?

Strauss Zelnick: I do and I think it’s really exciting. I think we’re on the cusp of enormous movements and while I can’t predict what the size of the streaming market will be, and I certainly can’t predict even what the first streaming services will look like, how they perform. I haven’t dug into how much data will be used and who’s paying for that. And if you need enough data and what do the pipes look like and what if you really have low latency, if you’ve got a low tech, mobile phone distribution service? Maybe it wouldn’t look very good at all. So we have to see how this all plays out. But if it works, if it looks good, if it gets to smartphones in Africa, that’s very, very exciting. I think there will be enormous developments in distribution technology that will attract broader audiences and that it’s very early days for our industry now as a result. So not only is this not a mature business, these are pioneering times. That’s really exciting.

Brian Crecente: If that’s coming at some point, how do you think that’s going to change the business of development? Is that gonna have a big impact on what games you make or how games are made?

Strauss Zelnick: It depends. It’s possible that if streaming really works out and it’s largely a free-to-play business, which is possible, right? That it might put more, even more emphasis on free to play games.

Brian Crecente: Is “Red Dead Online” living up to the expectations you had for it?

Strauss Zelnick: It’s exciting now. We’ve come out of beta and we have had new content drops and we’re seeing engagement respond accordingly and we’ve much more content to come. So we’re very excited.It’s early days still.

Brian Crecente: Do you get any sense that it’s impacting “GTA Online?”

Strauss Zelnick: There’s no cannibalization. If you had 10 massive hits in the marketplace all at the same time then, and you’re title number eleven, you’d be worried that it’s going to be hard to break into that. But to have a couple of hits at any given time, there’s still room for more. And this is a less crowded field than it used to be. And certainly, if you use the quality rubric it’s way, way, way less crowded. So our goal is to deliver the highest quality titles in the business. More often than not, we’re able to achieve that goal. We’re always trying harder. We’re always embarrassed when we fall short. But more often than not we do achieve that goal. So we think there’s plenty of room for a multiplicity of titles and it really doesn’t matter what label is behind two titles as long as both titles are fantastic.

Brian Crecente: Do you get a sense that people who play “GTA Online” are different from those that play “Red Dead Online?” Or do you think that’s the same audience?

Strauss Zelnick: I think there’s plenty to go around. They’re very different titles. So my guesses: Of course, there’s probably some intersection of the audience. And then I suspect there’s a whole lot of people who see a sort of a gritty crime drama as one creative enterprise and a Western, a historical Western adventure as another kind of enterprise.

Brian Crecente: A lot of things have been happening with China both recently and over the past year including the issues of how they change the way games are approved. Has any of that impacted your business and what is your outlook for how that’s going to continue to impact your business.

Strauss Zelnick: We think that in the absence of this regulatory regime we’d have a much bigger, more robust business. And in fact, we’re optimistic that there will be reform in the coming years and therefore great opportunities. That said, we have great partners in China. We’ve been really happy about our partnership with Tencent and we distribute through Steam as well and that is a pretty big business also. So we do a good business there and we’re happy about that. We think there is plenty of more opportunity.

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