Take-Two CEO Interview: ‘The notion that AI can make GTA is laughable’

The notion that somehow [music] new tools would allow an individual to push a button and generate a hit, and market a hit, and bring it to many millions of consumers around the world, it's it's a laughable notion. Nintendo's also doing just fine. Like, don't worry about Nintendo. I don't think you're going to be having a benefit dinner for Nintendo anytime soon. If you have a console and you're over 17, just explain to me, how is it that you've decided, [music] "No, no, GTA 6, not interested." I just don't see it.
[music]
Hello, and welcome to The Game Business Show. Today, we have a huge interview for you. It's with Take-Two CEO, Strauss Zelnick. Take-Two, of course, being the parent company of 2K and Rockstar, and they've got a big year this year, because, of course, on November 19th, Grand Theft Auto 6 is due for release. But, this conversation, it isn't particularly about Grand Theft Auto. You see, every 3 months, around Take-Two's financials, I get to have a quick chat with Strauss about their numbers. And sometimes, he says something that

catches me by surprise, and that's what happened last time. During our last chat in February, I asked him about AI. Specifically, I asked him about Google's Project Genie, which allows people to create very, very, very short GTA-like experiences through text and image prompts. The introduction of Project Genie caused Take-Two's share price to drop, as investors were spooked by the concept of it. I asked Strauss how he felt about it. I expect him to be dismissive. He's been somewhat skeptical of AI in the past, or at least he appeared to be. But, he wasn't dismissive. In fact, he saw it as an opportunity, not a problem. I'm going to read out his full quote. He said, "This company was built on the use of machine learning and artificial intelligence. All video games are created almost entirely in computers, and we embrace technology. We have hundreds of AI pilots and implementations going on right now across our company, including our labels, and we're really enthusiastic about what this new technology can mean. From one point of view, I'm surprised about the market reaction, because I've been optimistic about all things in the AI since the question came up a couple of years ago. That is how we're built.

That's where we started. Innovation is one of our core tenants. Our three-part strategy to be the most creative, the most innovative, and the most efficient company in the business. And the innovation surrounding AI is definitely driving efficiencies, and we think can also drive creativity because as tools get better, our teams can do cooler and cooler things. I'm even more optimistic than I've ever been, and I thought the release, that's the Google Project Genie release, was a great sign of things to come. Well, I wanted to get into that. But the financial results, that's not the time to get into anything. So, instead, I asked if we could do a follow-up and Take-Two agreed. Now, this interview isn't all about AI. We also talk about succeeding in new territories, the impact of Roblox, the aging gaming audience, and how that affects games like GTA and BioShock, in-game advertising, the mobile market in the West, the DRAM crisis, and a whole lot more. But that's enough introduction. Let's get to the interview. Here is my chat with Strauss Zelnick. Hello, Strauss. Welcome to the show.
Thank you. Very nice to be here, Chris. Thanks for having me.
Uh you know, I've I I've had a lot of

analysts and some of your peers on the show recently, and I said to them that I've got Strauss coming on, and I asked, "Do you have any questions for him? Do you want anything to ask him?" Every single one of them was about GTA 6.
[laughter]
Well, we're we're certainly grateful for the attention.
Well, I I mean, obviously, I I'm not going to ask any of those cuz I know what the answers will be. There's there's no mistake pointing asking them. But it's really fascinating because obviously, there's such huge expectation from fans, which you have to deal with. But to have this from the industry as well, it's quite something, I think. Um well, thank you for joining us today. Um I actually wanted to talk about a subject we briefly talked about last week last month, sorry, which is on AI, cuz I asked you during your um financial call um about Google's Project Genie in particular, and you called it as a you called it a great sign of things to come, which surprised me, actually. I'd imagined you might be a bit more skeptical about it. So, I'm I'm going to start with a sort of general question just so I get a better understanding of it. What opportunity do you see for for AI to affect the games industry

including obviously Take-Two in the sort of near term, the long term, and the long term?
Well, the history of our industry is that we've always used technology to create great entertainment. This is a always been a digital business and the bulk of the work that our teams do obviously is done in and with computers. So, an advance in technology that allows us to do things better and quicker is great for us. And I I was kind of stunned by the the market's reaction because market's reaction was somehow seeing it as a threat to what we do when it's quite obvious that creation tools are beneficial for our industry. I think the notion of the the the bear case for for big entertainment companies is somehow that AI tools will mean everyone can create hits. Kind of doesn't stand to reason. These tools may help you create assets.

But that won't help you create hits. There are loads of assets out there now. I mean, it doesn't matter if it you push a button to create an asset or it takes you 6 weeks. At the end of the day, you have an asset. And thousands of mobile games are launched every year and there are a handful of hits. In the last couple years, most of them have come from Zynga, a division of Take-Two.
Mhm.
Equally sure, you can create assets that might look like a big release or might look like NBA 2K or EA FC or Red Dead Redemption. But creating a hit of that magnitude is a completely different animal and does require human engagement. Does require human creativity.
Well, we'll come back to that, I think. Cuz I mean, when you're you're the way you sort of view AI is you talk about that sort of making things faster. Is that the end goal for for this technology from your point of view? Is it about shorter dev times and smaller budgets?
Okay. The end goal is making the best entertainment on Earth.

Engaging consumers. That's our mission. We have a three-part strategy to pursue that mission, which is be the most creative, be the [clears throat] most innovative, and be the most efficient. So, if we can innovate and enhance efficiency, that's terrific. It's a big part of what we do. But our mission is to create the best entertainment on Earth and to bring it to consumers wherever they are. And technology can assist with that mission. But technology on its own will not replace the fulfillment of that mission.
I'm in a different field. I mean, the media field and there's loads of AI tools in the media field and a lot of it allows me to do things a little better or not better is not the word. In fact, quite the opposite to that. It allows you to do things a little bit faster, but all the tools aren't as good as if I did it myself. You know, and it requires my expertise in order to make the most of those things, which I think is what you were saying in your answer before. The experience I've had of it is is it's a speed thing. It allows you to do things faster, move fast, you know, games are taking so much longer to make and this help in that kind of field. I'm

not necessarily and maybe I'm again, I'm not in a I'm in a different field. I'm not necessarily seeing a quality bar go up as a result of this these these tools.
No, but again, we're asking the the wrong question if we expect a quality bar to go up. But for example, even today, could you use AI tools more quickly to storyboard or to to help you tease out plot points or tease out um alternatives? Sure, because these tools are based on massive data sets that are searchable and translatable into natural language. And that's just more effective than the tools we've had before, like doing an internet search. But ultimately, it's the same thing. So, it all depends on your expectations. You know, no one ever added value with a PowerPoint presentation. Nonetheless, lots of them are made all the time. If you can reduce the amount of time you spend on a PowerPoint presentation and still have a good PowerPoint presentation, like

hallelujah. That's phenomenal. But no one's saying like that's great, Chris. We're going to give you a big promotion cuz the amazing PowerPoint you did for the uh internal committee. Like that's not what we get paid for. What we get paid for is making the best entertainment on Earth. And that requires all kinds of things that technology cannot and will never do on its own.
Is this what the investors and and the people Is this what they're not taking into consideration when they're looking at AI?
Yeah, I think that's This is where where the point is being missed.
Yeah. Um is there anything about their what they're afraid of that concerns are they valid? Isn't Aren't we into a situation where doesn't it level the playing fields to a degree?
I mean, not even not even the littlest bit. As I said, like there's already plenty of technology out there that allowed people to create video games. And as a result, thousands of video games are created every year. And yet, the hits all cluster among the large entertainment companies almost

entirely. And now and then an indie, which is generally speaking well-funded and pretty robust in and of itself. But the notion that somehow new tools would allow an individual to push a button and generate a hit and market a hit and bring it to, you know, many millions of consumers around the world, it's it's a laughable notion. It's just never been the case for that entertainment. And certainly, there are other entertainment businesses that are technically less stro less robust than interactive entertainment. For example, music. And right now, there are programs that allow you to, you know, put in a prompt and get a professionally, you know, recorded song spit back out at you and it sounds like a song, but I defy you to listen to it more than once.
Yeah.
Be great great to send as a greeting card to your partner on on their birthday, but that's about it.
I'm probably not buying tickets to see an AI artist.
Right. But but you know, look, we've been talking about this forever in the entertainment business and that cuz someone's been around forever for better

or worse. You know, there is a creator economy that these tools have enabled. No doubt, but that creator economy stands alongside the professional entertainment economy. It doesn't supplant it. It doesn't replace it. And the history of the entertainment business is as new technologies come along that enable new activities, they they stand alongside the pre-existing businesses. So, you know, I used to give as an example that the only entertainment business that was ever wiped out by new technology in the history of entertainment, electronic entertainment, which is since 1895 and I'm a student of that business, was vaudeville. But now I could argue that vaudeville hasn't exactly been wiped out. We're we're in the golden age of live entertainment. You know, I my son's a comedian. I just went to see him perform in front of thousands people in Boston on Saturday night. I mean, how's that different from what different from vaudeville? It's exactly the same thing.
Mhm.
There're far far more people watching today and attending today than in the 1920s and the 1910s.

So, every every entertainment business that was supposed to be destroyed by new technology driving new forms of entertainment hasn't been.
Where do you feel AI is going to have the most significant impact?
I think it will have an enormous impact across all industries in terms of making mundane office work essentially more efficient or unnecessary.
Do you have any concerns around it at all? Is anything that's um
No, I don't believe you're talking about evil machines like I don't believe machines think and I don't believe machines have the ability to be good or evil. And anyone who knows anything about digital machinery like at the end of the day realizes that. Or as the CEO of Boston Robotics Boston Dynamics robotics company said, "We do build these things with an off switch for a reason."
Well, well, I'll give you my concern around it. I don't have too much concern really. I think there's a lot of positives around it and I talked about some of the things that I can do or you

can use AI and machine learning tools to do like for example this video recording now. It'll it'll transcribe it for me, you know, and there is if I wanted to and I didn't but if I wanted to I could Google what questions should I ask for our Sonic.
And it might actually it might prompt you to come up with some things you wouldn't have thought of.
And that is but it needs my expertise cuz you know, the questions will inevitably I've tried it once before they questions are actually that's not a good question and cuz I know I've been doing it for 20 years I can bring myself to that to go those questions aren't good. That transcription needs this work. Those clips
You also can use it to summarize the the discussion for example if you someone said well, give me sort of the the core points then you can use AI to summarize it also very
But where my slight concern is is the next generation because I've got that expertise built over 20 years of doing it by hand. When you've given these tools to the next generation of people coming in they may not have that expertise to know those questions aren't very good or know this is probably not the best way of doing things cuz they don't have they haven't yet developed those skills. And I think that puts a

bit of pressure on education and possibly my generation and other you know, to to make sure that we are passing on those trainings cuz I don't think I I worry that there's going to be less there to do that on the job than they perhaps they used to be in previous years. That's my that's my concern around that. It's quite specific one.
Perhaps but I think it'll it'll there'll be different forms of training and I just read an article that took the position that because of digital technology people are dumber today than they were 10 years ago. I just don't buy that. I don't think it's true at all. When I was a a little kid, uh calculators came along and parents were all up in arms and now schools would not teach kids math because they had access to calculators. Well, it turns out people are learning math today even though there are calculators.
I hope you I have you right. Well, let let's let's move on from AI. I think I'm an optimist. Well, and and you know, history seems to point in these directions that it tends to be a positive.
Technology is almost always a positive.
And and look, there are there are detriments as well. So, I don't know.

We've greatly benefited from nuclear technology in so many ways and we've also had horrific uses of nuclear technology.
Mhm.
[clears throat]
In the Second World War. Thank God not since then. Not war.
Yeah, I sometimes think the internet might have been a mistake as well. Um
[laughter]
I don't know. I think it's really largely a benefit and and you can moan about the effects of social media, but media's been around for a long time and you know, our grandparents moaned about jazz music. We seem to survive our great grandparents. We seem to have survived that. And our parents, yeah, you know, parents rock and roll music or grandparents, in my case grandparents. You know, and then then parents about hip-hop music. And we're here we are, we're all fine. We're all just fine. We survived.
Well, let's move on a little bit from AI because we recently had um Matthew Ball on the show and we discussed all sorts of topics around his latest reports. And some of it I thought actually I might I'd be interested to get your your views on. And kind of one of the things is is around this next generation of gamers coming through. You touched upon it. Sort of creator economies emerging perhaps in games and that and obviously Roblox is this big

thing that ma- million hundreds of millions of young people are playing at the moment. Um I guess this is a weird way of phrasing the question, but are you confident they'll migrate to more traditional games and platforms in the way that previous generations have?
Some will. Some won't. I mean, there's no argument that just because you're a user Roblox, you'll suddenly become a user of something else. Maybe our thesis is not based on that. But I do believe that people who are engaged in interactive entertainment as creators are probably more likely to be users.
Mhm.
Uh than someone who's not engaged. Anytime people worry incidentally, just doubling back for a moment on your AI questions, that somehow AI tools means that um you know, there's creator economy means that there's no professional economy. This already been tested by Roblox. Roblox is already a really big company with lots of people really engaged. And yet, you know, we're selling more games, mobile and console, than ever before.
I do sometimes read some comments around

uh Roblox is a big challenge for Nintendo, for instance.
Nintendo's also doing just fine, I think.
Doing just fine.
I don't think you're going to be having a benefit dinner for Nintendo anytime soon.
[laughter]
Um but on the other side of this question, cuz obviously we talk about where the next generation is and where they're coming from and what they're going to be playing and that's always something that we'll try to work out. Um but actually, I always forget I think people forget this industry is still quite a young one and that our our older audiences are still, you know, in their 40s and a lot of them. Um and of course your IPs, Take-Two's IPs, they sort of speak to that audience. And that audience today has different pressures than they did 10, 20 years ago. Uh consumers' time is being, you know, increasingly taxed and divided among device and experiences, but they've also got kids, they've got careers, and all those things that that they didn't have to worry about when GTA 3 came out or even the first BioShock or whatever. Is that a conversation that you're having a lot with your labels and teams?
Look, many of our games uh appeal to all

audiences. For example, our NBA game, our WWE game, our mobile games.
Mhm.
Others of our games are specifically tailored to audiences that are 17 and above, for example, GTA. Um so we serve all audiences and we market our products appropriately to the audience in question.
Yeah.
Um, we tend around here to think in terms of making the greatest entertainment on Earth. And in order to do that, we engage with the most creative people on Earth and find a way to encourage them to work within our system. And then when they do work within our system, we give them unlimited resources and insist that they follow their passion. That's our recipe for success. We don't sit around and try to game like uh, who is, you know, the the way like Pillsbury does like, who's our consumer? Why, it's Betty. Betty is 52 and she lives in Milwaukee and she has blonde hair and she makes a cake every Thursday

night. Like, no, we don't do that. We we say, hire the most spirited people. Tell them, all we want you to do around here is pursue your passions. We're going to have a really rational environment. We're all going to be kind. We're going to work as a team. We're going to seek excellence. We're going to get out of your way, make the best entertainment on Earth, we're good to go. And then you know what happens more often than not, everyone shows up.
Mhm. Yeah. I just I'm mindful of the fact that a lot of the people that in in my my world, you know, not my not my gamer friends, but sort of my general um, friends, they're all excited about GTA 6, obviously. But when they played GTA 5, they they were in their early 20s and and they and they they're they're time pressure's different.
Well, I think we're going to have a lot of 17-year-olds playing GTA 6.
Well, yes, indeed.
I don't think there's any risk to be like, all right, yeah, I didn't play 5 or 4 or 3 or 2 or 1, I'm not showing up to the contrary. I think.
Yes.
You know, I think we'll be able to engage every appropriate individual in GTA 6.

And by the way, if you have a console and you're over 17, just explain to me, how is it that you've decided, no, no, GTA 6, no, no, I just don't see it.
[laughter]
Okay, maybe that was a Maybe that was a bad example.
You don't
before it occurs.
Yeah, it's true. Um but I appreciate it was probably the worst example I could give. But the uh it was it's it's just this idea of of um of people aging out of games and I and I'm
It's not happening. I mean, we we stay engaged with the kind of entertainment we fell in love with at the age of 17. Think about it. The music if I leave you if I say to you, "What kind of music do you like?" Like everyone else, you'll say, "Oh, I listen to everything." That's just isn't true, incidentally. But if I say, "Okay, you're by yourself, you have an hour, and all you're going to do in this hour is listen to music, then I want you to have the best possible time and the most relaxing time." You will listen to the music you listen to at the age of 17. If you fell in love with video games at 17 and you're 40, guess what you still do? Play video games. That's why the cohort is

continuing to grow as we age. That's why we have industry tailwinds. I know Matthew Ball doesn't really believe that, but our experience here at Take-Two is we are benefiting from industry tailwinds. Now, we only benefit to the extent we make something great, of course.
One of the things that I did talk to Matthew Ball about, and I know that I spoke to Frank Gibo about last year actually, was emerging territories, you know, Southeast Asia, Middle East, and sort of North Africa, Brazil, those sort of places. And cuz these are markets where the platforms are different, right? You know, these are they're not typically on console, they're often low-end Androids in a lot of places. Some of these markets are pre-monetization. But in order to target those markets and make the most of those markets, it sort of can be quite tricky to do that when you've got your high-end console users and those sort of those sort of titles. I'm interested to hear how you think about those markets. How do you think about them when it comes to the opportunity for for Take-Two?
First of all, I love your phrase pre-monetization. It's sort of like my sort of like my kids. I uh

I'm going to try that sometime, pre-monetization. Look, we're very um focused on developing markets as you know for the video game business today the bulk of our revenue comes from the US uh the UK Western Europe and couple of countries in Asia which is to say there's this massive population that loves interactive entertainment that we're not really serving. For example, India and and as you said Africa um I would argue we under serve the Middle East. We certainly under serve much of Asia. We under serve Latin America. And we need to change that. One of the ways you have to do it is um localize which costs us money requires us to invest. And the other thing that we have to do is create distribution partnerships uh largely for mobile. Uh we also have to support streaming services that make sense. And finally, we have to be willing to use our geo pricing tool and we have a proprietary geo pricing tool and take the risk that someone might use a VPN to circumvent our our geo geo

pricing which is a risk we we will take in in limited circumstances. I think that if you you look at our numbers now, we run about 65 35 ish in favor of the US in terms of our revenue. That's certainly not true of population with the US having the population of 330 million people. So um as the the world opens up technologically in that on the console side that means going more to PC which is already becoming much greater share of so-called console releases. On the mobile side, it means um having technology that that allows us to address less technical technologically advanced devices in developing markets. As those things occur which they will both um and as the distribution models open up either for regulatory reasons or commercial reasons or both uh we have the opportunity to serve the rest of the world and those numbers should really change and I would guess in 10 years if we do things right, the US is 20 to 25% of our business and the

rest is outside of us.
Oh, wow.
And the And the obviously the scale of our business will grow materially.
Do you Do you think you're going to make any sacrifices to your core, you know, when you're when you're targeting devices that perhaps aren't as powerful and you're not probably able to hit that the level the the graphics bar perhaps you have in the past and that might Is there Is there a risk of alienating your core?
No, because wherever the technology exists to enjoy the material highest level of fidelity, we'll make that available.
Okay. We talked about mobile a little bit there. The mobile market market in the West, certainly the data that's coming out for 2025, it does seem to appear to be stagnating. I don't know if you saw the comments from um Supercell around their latest financials.
Not not a big deal.
Uh well, I know.
We're up year-over-year materially.
How are you meeting that challenge then? How are you bucking the trend? I guess if I'm going to rephrase the question.
Well, we're I mean that is a personal pronoun cuz it would be appropriate. Our teams at Zynga, led by Frank and other creative leaders

in the company, are developing, delivering, and distributing more hits than anyone else. That's why That's why we're doing well. And the minute we stop doing that, guess what? We'll stop doing well. We have great live services games including legacy games like Tune Blast that's been around for a long time. It continues to set records. Our Empires & Puzzles, Words With Friends also setting records. Um and we have new titles like like Match Factory and Color Block Jam. So, you know, we have to do both. We have to run our legacy titles incredibly effectively and serve our our loyal consumers and we have to make great new hits. And our team is doing just that.
Okay. Um I also ask you the other question that came up with Matthew Ball was um in-game advertising cuz obviously in mobile it's now so big. It's worth almost the entirety of the PC console content revenue combined. Um but given that trend and the success you've had with ads and through your mobile games through Zynga, do you see an opportunity for advertising within the PC and console space?

Well, for free-to-play titles, yes. For titles for which you've paid 70 or 80 bucks, no.
No.
We've Look, we've some limited advertising inside games like NBA 2K because that, you know, it it fits with the vernacular. You want to see advertising in in an arena, you know, in a stadium because you would if you were there in real life. Um but that's not a big economic contributor.
No. I'm just interested in I think Matthew was talking about um the idea that in you know, when you when you like watch Bridgerton or whatever on Netflix and you press pause, you might get an advert in the pause menu. I guess if you've not paid for the subscrip you know, the the the the the advertising level of Netflix. And I guess he was he was sort of talking about those opportunities, but I do think you I think from what your answer suggests, you probably would be upsetting that core player that's coming at $70, $80.
Very difficult for me to believe that we would want to have interstitial advertising in a game that someone paid

70 or 80 bucks for. It would seem unfair.
Um I'll wrap up ask a couple of topical questions. Um because you we talk about the console space. We've spoken about it before and it seems to be a little challenged. Um PC's taking a bigger share of things. But obviously one of the big issues at the moment is this current um um crisis around RAM, DRAM, and storage and how it's impacting the hardware space, how it might impact things going forward. How much is that playing into your planning at the moment?
We don't see it affecting um delivery of consoles to the market.
I see. I hope you're right.
[laughter]
And also new um is Asha Sharma has just been appointed the lead at Xbox which is which is great. Um she's new to the industry. She's not a gamer. Uh and it's triggered a conversation around whether those things are important for the role. I mean I I know I think I know where you are. You you think about this, but what do you think? What do you think are the important things a CEO in video games should be concerned about?

Well, first of all, I I don't I don't think the newly appointed head of Xbox needs any advice from me. So, let's just start there.
Yeah. Oh, yeah.
Highly accomplished executive who's done just great.
Yeah.
Without ever having that meeting, I'm going to I'm going to bet on her continuing to do great. Moreover, um I like focus on myself doing better uh before I
Yeah.
take pains to talk about other CEOs. With all that said, um look, our recipe for success around here is is be the most creative, be the most innovative, be the most efficient. And um you'd want to study the dynamics of the business um and but the individual you mentioned in fact has operated successfully in any number of different businesses. Uh so, I can't imagine uh she wouldn't be examining the underlying dynamics of the business and then, you know, lean into them. But at the end of the day, what drives success in our business is is making the best entertainment. You know, the the rest does tend to take care of itself. I used to say when I was in the movie business a long ago um when I when I

first became president of Fox, my my job as president of Fox initially, although it changed, was I was just responsible [clears throat] for the business side of the equation. My boss when I first got there was the chairman of the studio named Joe Roth. He was responsible for the creative side of the equation. So, there were a couple of things that came out of that. The first was people would say, "So, what's it like being president of 20th Century Fox?" I said, "Well, here's what it's like to be chairman of 20th Century Fox, which is not my job. The chairman of 20th Century Fox gets to say yes 25 times a year. The president of 20th Century Fox gets to say no 10,000 times a year. That's the difference in our jobs." But not the point. What I used to say about success is if um I did my job well running the business side and Joe did his job poorly running the creative side, we would fail. If he did his job well on the creative side, and I did my job poorly on the business side, we would succeed. And if we both did our jobs well, we would succeed mightily. And you know, we we did, thankfully. We're number one at the

box office for three out of four years we were together there as a team. Um, but the truth is that hits cure all ills. And in the absence of making hits, you won't have a successful entertainment business. So, that's the thing to focus on. Now, here at Take-Two, we try to do all of the above. We try to run an amazing creative enterprise, and we try to run a highly rational, highly effective business enterprise. Sometimes you get it wrong, uh, but that's what we try to do.
Strauss, I'm aware that I've run out time, um, but I always love talking to you. Thank you so much for your time, and I look forward to what should be an exciting year ahead.
Me, too. Take care.
That's it for today's edition of The Game Business Show. Thank you to Strauss for joining us today. We'll be back, of course, with more interviews, insight, news, and analysis in the coming days. To make sure you catch all of our shows and newsletters, do head to the gamebusiness.com and subscribe. You can also become a paying subscriber and receive our bonus micro-podcast on a Monday, plus our monthly market report.

But, that's it for me for today. Until next time, thank you for tuning in.