We've been closely examining the potential impacts of the ongoing tariff situation in the United States on the gaming industry, covering everything from consoles and accessories to software. Despite widespread concern about how these tariffs might affect both consumers and businesses, Take-Two Interactive's CEO, Strauss Zelnick, appeared relatively unfazed during today's Q&A session with investors.
When asked about the potential for console price increases and their impact on the gaming ecosystem—a topic highlighted by recent Xbox Series price hikes and anticipated PlayStation 5 adjustments—Zelnick remained confident. He explained that the tariff situation, although confusing, would not significantly alter Take-Two's fiscal projections for the upcoming 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 game releases will target platforms with established user bases. The potential impact of a few consumers deciding against purchasing an Xbox Series, PS5, or the upcoming Nintendo Switch 2 is minimal. Moreover, a significant portion of Take-Two's revenue is derived from digital sales in ongoing titles like GTA V, Red Dead Redemption 2, and their mobile games, which are not impacted by tariffs.
However, Zelnick acknowledges the unpredictable nature of the tariff situation. We have consulted with analysts multiple times over the past few months, and they consistently describe the tariff landscape as volatile and uncertain, a view that even Zelnick concedes.
In our pre-call interview with Zelnick, we discussed Take-Two's recent quarterly performance and touched on topics such as the development timeline for GTA 6, which has been delayed to next year. We also covered Zelnick's optimistic outlook for the upcoming Nintendo Switch 2, as mentioned in his Q&A remarks.
