After a strong quarter of recurring consumer spending earnings, Take-Two plans to continue embedding live services into its biggest games.
Take-Two is among the top publishers earning hundreds of millions every year from live games. This strategy, which sees games like GTA V and Red Dead Redemption 2 get online modes with microtransactions and free updates, is working quite well. Successfully monetizing engagement is a billion-dollar market in the games industry, and Take-Two is adept at the practice. In its Fiscal Year Q3'19 results, the publisher earned about $300 million from recurring consumer spending, which includes microtransactions, subscriptions, DLC, and RDR2 special editions. This monetization represents 24% of Take-Two's total $1.249 billion in net revenues during the period.
According to Take-Two CEO Strauss Zelnick, live services aren't going anywhere. The company will continue focusing on ways to maximize engagement monetization over time, most notably in its annual sports games like NBA 2K as well as GTA Online and Red Dead Online.
"At Take-Two, our goal is to serve our audiences by delivering the highest quality entertainment that exceeds expectations in terms of the value they receive from both the money and time that they spend on our products. If we deliver on that goal consistently, we'll engage our customers and provide returns for our shareholders over the long-term," Mr. Zelnick said in the company's FYQ3'19 earnings call.
"A hallmark of our approach is finding new and exciting ways to drive engagement through a creativity and innovation. The execution of this philosophy results in our audiences remaining immersed in our titles well after their initial launch and has been a key driver of our ongoing success. This is reflected in the strong growth and engagement and recurrent summer spending on our titles over the past several years."
This trend gives slight visibility into the new game being developed by 2K Games. The label recently opened up a new studio led by Call of Duty veteran Michael Condry, and we should see the game have similar principles when it's released, namely with monetization and possibly an action focus.
Borderlands 3 is also likely to launch in Take-Two's Fiscal Year 2020 timeline. This FPS should be monetized with some sort of live service-style engagement method, too, and possibly even DLC to boot.
On the heels of stellar NBA 2K19 performance (both game sales and microtransactions are up) and Red Dead Redemption 2 sales, Take-Two upwardly revised its forecast to up to $580 million in net revenue and $89 million in net income.